First Semester Exam Flashcards
When one decision is made, the next best alternative not selected is called
Opportunity cost
The value of the best alternative forgone when a decision is made defines the concept of
Opportunity cost
If the country is currently producing at point c, it can produce more computers by doing which of the following
Moving to point d
How might point e be attained?
If improvements in technology occurred in either the computer sector or the farming sector
The PPC of the country would be most likely to shift to the right if the country were producing at which of the following points?
Point d
According to the theory of comparative advantage, a good should be produced where
It’s opportunity costs are least
“If you want to have anything done correctly, you have to do it yourself.” This quote violates the principle of which of the following economic concepts?
Comparative advantage
Economics is best defined by which of the following?
The science of scarcity
If hotdogs are an inferior good, an increase in income will result in
A decrease in the demand for hotdogs
An increase in the price of gasoline will cause the demand curve for tires to shift in which direction?
To the left, because gasoline and tires are compliments
On the graph above, what area represents consumer surplus when the price is $10?
C
On the graph above, what area represents producer surplus when the price is $10?
B
Producer surplus is the
Amount the seller is paid less the cost of production
Which of the following will occur if a legal price floor is placed on a good below its free market equilibrium?
The equilibrium price will ration the good
Assume that coal is a normal good. If the price of coal increases and the quantity sold increases, which of the following is consistent with these observations?
The price of oil increased, oil and coal being substitutes
Which of the following will not cause the demand curve for Nike shoes to shift?
A decrease in the price of Nike shoes
Economic costs can be defined as
Compensations that must be received by resource owners to insure their continued supply
To the economist total cost includes
Explicit and implicit costs, including normal profit
Implicit costs are
Non expenditure costs
Explicit costs are
A money payment made for resources not owned by firm
The long run is characterized by
The ability of a firm to change its plant size
Marginal product is
The increase in total output attributable to the employment of one more worker
Refer to the data above. Diminishing marginal returns becomes evident with the addition of the
3rd worker
Refer to the data above. The marginal product of the 6th worker is
15 units of output
The basic characteristic of the short run is that
The firm doesn’t have sufficient time to change the size of its plant
At output level Q, total variable cost is
0BEQ
