Microeconomy U2 Flashcards
(16 cards)
A shift in demand is___________.
Select one:
a.
when a change in some economic factor (other than price) causes a different quantity to be demanded at every price
b.
when a change in some economic factor (other than price) causes a different quantity to be supplied at every price
c.
when the average cost of producing each individual unit declines as total output increases
b.
when a change in some economic factor (other than price) causes a different quantity to be supplied at every price
p.55
- a shift in demand happens when a change
in some economic factor (other than price) causes a different quantity to be demanded at every price
Excess supply is at the existing price, the quantity demanded exceeds the quantity supplied; also called a shortage.
Select one:
a.
True
b.
False
b.
False
p.51
- In fact, at any above-equilibrium price, the quantity supplied exceeds the
quantity demanded. We call this an excess supply or a surplus
What does the term inferior good mean?
Select one:
a.
A good in which the quantity demanded falls as income rises, and in which quantity demanded rises and income falls
b.
A good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls
c.
A good that can replace another to some extent, so that greater consumption of one good can mean less of the other
a.
A good in which the quantity demanded falls as income rises, and in which quantity demanded rises and income falls
p.54
- A product whose demand falls when income rises, and
vice versa, is called an inferior good. In other words, when income increases, the demand curve shifts to the left
An increase in demand and supply will create changes in the financial market to lead an increase in the quantity of automobiles made and purchased.
Select one:
a.
True
b.
False
a.
True
What are the steps when using the supply and demand framework to think about how an event will affect the equilibrium price and quantity?
Select one:
a.
(1) sketch a supply and demand diagram to think about what the market looked like before the event; (2) decide whether the event will affect supply or demand; (3) decide whether all workers at a firm can be required to join a union as a condition of employment;; (4) compare the new equilibrium price and quantity to the original ones
b.
(1) sketch a supply and demand diagram to think about what the market looked like before the event; (2) decide whether there is enough information necessary to make an informed decision; (3) decide whether the effect on supply or demand is negative or positive, and draw the appropriate shifted supply or demand curve; (4) compare the new equilibrium price and quantity to the original ones
c.
(1) sketch a supply and demand diagram to think about what the market looked like before the event; (2) decide whether the event will affect supply or demand; (3) decide whether the effect on supply or demand is negative or positive, and draw the appropriate shifted supply or demand curve; (4) compare the new equilibrium price and quantity to the original ones
c.
(1) sketch a supply and demand diagram to think about what the market looked like before the event; (2) decide whether the event will affect supply or demand; (3) decide whether the effect on supply or demand is negative or positive, and draw the appropriate shifted supply or demand curve; (4) compare the new equilibrium price and quantity to the original ones
p. 77
What is an example of a shortage?
Select one:
a.
A gasoline company lowering gas prices, because demand is low
b.
A store increasing the price of toilet paper during a pandemic, because supply is low
c.
None of the above
c.
None of the above
p.51
When the price is below equilibrium, there is excess demand, or a shortage—that is, at the given price the quantity demanded, which has been stimulated by the lower price, now exceeds the quantity supplied, which had been depressed by the lower price
A price floor is the lowest price that one can legally pay for some good or service.
Select one:
a.
True
b.
False
a.
True
p.69
A price floor is the lowest price that one can legally pay for some good or service
In the market for financial capital, households and firms can be on either side of the market.
Select one:
a.
True
b.
False
a.
True
p.103
In the market for financial capital, households and firms can be on either side of the market: they are suppliers of financial capital when they save or make financial investments, and demanders of financial capital when they borrow or receive financial investments
Maximum loss is the loss in social surplus that occurs when the economy produces at an inefficient quantity.
Select one:
a.
True
b.
False
b.
False
p.72
The loss in social surplus that occurs when the economy produces at an inefficient quantity is called deadweight loss
An increase in the price of some product signals consumers that there is a surplus.
Select one:
a.
True
b.
False
b.
False
p.99
An increase in the price of some product signals consumers that there is a shortage
A good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls is called .
Select one:
a.
Inferior good
b.
Quality good
c.
Normal good
c.
Normal good
p.54
A product whose demand rises when income rises, and vice versa, is called a normal good
Producer surplus is larger at the equilibrium quantity and price than it will be at any other quantity and price.
Select one:
a.
True
b.
False
b. False p.77 Total surplus is larger at the equilibrium quantity and price than it will be at any other quantity and price p.72 producer surplus: the extra benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept price
What is another term for minimum wage?
Select one:
a.
Equilibrium wage
b.
Living wage
c.
Hourly wage
b. Living wage p.90 The U.S. government sets a minimum wage, a price floor that makes it illegal for an employer to pay employees less than a certain hourly rate. In mid-2009, the U.S. minimum wage was raised to $7.25 per hour. Local political movements in a number of U.S. cities have pushed for a higher minimum wage, which they call a living wage
Which one is an example of intertemporal decision making?
Select one:
a.
Deciding what meal you will buy for dinner
b.
Deciding on a retirement investment
c.
Deciding on buying a new article of clothing for a job interview
b.
Deciding on a retirement investment
p.95
Participants in financial markets must decide when they prefer to consume goods: now or in the future. Economists call this intertemporal decision making because it involves decisions across time. Unlike a decision about what to buy from the grocery store, people make investment or savings decisions across a period of time, sometimes a long period
What is the definition for factors of production?
Select one:
a.
Manufacturers produce goods where the opportunity cost is lowest, so total production increases, benefiting both trading parties
b.
The resources such as labor, materials, and machinery that are used to produce goods and services
c.
The market economy coordinates a process in which firms seek to produce goods and services in the quantity, quality, and price that people want
b.
The resources such as labor, materials, and machinery that are used to produce goods and services
p.75
factors of production: the resources such as labor, materials, and machinery that are used to produce goods and services; also called inputs
How can you measure the quantity of labor?
Select one:
a.
Number of hours
b.
Number of workers
c.
All the above
c.
All the above
p.85
In this example we measure labor by number of workers, but another common way to measure the quantity of labor is by the number of hours worked
