Unite 1 test Flashcards
dd (28 cards)
Which of the following is true if the production possibilities curve is a curved line concave to the origin?
As more of one good is produced, more and more of the other good must be given up.
Which of the following is true of the concept of increasing opportunity cost?
It suggests that the use of resources to produce a set of goods and services means that as more of one is produced, increasing amounts of the other must be sacrificed.
When one decision is made, the next best alternative not selected is called
opportunity cost.
In which way does a straight-line production possibilities curve differ from a concave production
possibilities curve?
A straight-line production possibilities curve has a constant opportunity cost.
) The law of increasing opportunity cost is reflected in the shape of the
production possibilities curve concave to the origin.
Which of the following would cause a leftward shift of the production possibilities curve?
A decrease in working-age population
Which of the following would cause an outward or rightward shift in the production possibilities
An increase in capital equipment
According to the theory of comparative advantage, a good should be produced where
its opportunity costs are least.
A country can consume beyond its present production possibilities curve when it
trades with other countries, thus taking advantage of different opportunity costs.
Which of the following will not change the demand for oranges?
A change in the price of oranges
Which of the following situations best illustrates the law of demand?
c. In the past several months, as the price of compact disc players has decreased, the quantity of compact disc players sold has increased.
A downward sloping demand curve can be explained by
the income effect
If there is an increase in demand for a good, what will most likely happen to the price and quantity of the good exchanged?
Increase and Increase
If hot dogs are an inferior good, an increase in income will result in
a decrease in the demand for hot dogs
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 complements
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.
If the cost of producing automobiles increase, the price, equilibrium quantity and consumer surplus will most likely change in which of the following ways?
increase Decrease Decrease
Compare 2000 to 2001. Which of the following statements is (are) true?
Demand has increased. Quantity supplied has increased.
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.
) Producer surplus is the
amount the seller is paid minus the cost of production.
Which of the following will not cause the demand curve for athletic shoes to shift?
A decrease in the price of athletic shoes
Which of the following statements about price controls is true?
Price ceilings and price floors result in a misallocation of resources.
If an excise tax is imposed on a product, consumer surplus and producer surplus for this good will
most likely change in which of the following ways?
Decrease Decreace
The substitution effect causes a consumer to buy less of a product when the price increases because
product is now more expensive compared to similar products.
