Tara notices that studying for one hour after class increases her economics grade by 11 points. We cannot tell because we can only compute costs from this information, not benefits. The table gives five production possibilities, options A through E. Each option shows what alternative mixes of cars and airplanes that society can choose to produce. Concepts covered include efficiency, inefficiency, economic growth and contraction, and recession. can lead to increased efficiency in the market. In the short run, a firm will produce as long as the price is greater than its: When firms price-discriminate, people with _____ price elasticity of demand will pay _____ prices relative to those purchasing the same product who have a _____ price elasticity of demand. Kookie's friends give her gift cards that she forgets to use before they expire. The broccoli market is perfectly competitive. Demand for gasoline in Orlando is: The price elasticity of demand for cabbage has been estimated to be 0.25. This means that the price of broccoli is _____ than the price would be if the market were monopolistically competitive, and broccoli output is _____ than if it were monopolistically competitive. This is an example of: technological progress shifting the demand for horses to the left. The most likely reason the government implements a _____ is because it feels the price is too high for _____. Ignoring opportunity cost in your calculation of economic cost. The cost of going to college, for example, includes not only the money a person spends on tuition (which could be spent on something else), but also includes the time spent studying and going to classes. 1/2 b. Assume an economy is operating on its production possibility frontier, which shows the production of military and civilian goods. People who have higher levels of human capital will tend to: receive higher salaries than those who have lower levels of human capital. Children raised in poverty have a greater likelihood of living in poverty as adults than do those raised in nonpoor families, because low income is highly correlated with higher: high school dropout rates, risk of mental problems and behavioral disorders, and with higher rates of illness and hospitalization. Which statement is true about advertising for Budweiser? The circular-flow diagram illustrates how firms _____ goods and services and _____ factors of production. A local grocery store benefits when a new furniture factory moves to town and hires workers because: the new jobs at the new factory will increase local incomes, some of which will be spent at the local grocery store. If a monopolist is producing a quantity that generates MC = P, then profit: can be increased by decreasing production. Increases in resources or improvements in technology will tend to cause a society's production possibility frontier to: (Table: Production Possibilities Schedule II) Examine the table Production Possibilities Schedule II. Sam and Bob are both policemen with the same educational background. A statement that says that the minimum wage should be increased is a(n): simplify reality in order to highlight what really matters. If a perfectly competitive firm is producing a quantity where P > MC, then the firm can increase profit by: The marginal revenue received by a firm in a perfectly competitive market: In the short run, if a perfectly competitive firm chooses to produce, then its profits are maximized by producing the quantity of output where marginal cost equals marginal revenue. Benefits depend on the goals Crusoe has, and the production-possibilities frontier has no information about them. If this represents the production possibility frontier and Urbanville is producing at combination C and moves to combination D, what is its opportunity cost of this move? The Coase theorem asserts that, in the right circumstances, inefficiencies created by externalities can be dealt with through, One example of a source of external benefits is. cause an upward movement along the labor supply curve. The price elasticity of demand between the prices of $10 and $8, using the midpoint method, is approximately: The substitution effect always involves a change in consumption in the _____ the _____ change. The price elasticity of demand (using the midpoint formula) between the prices of $10 and $8 is approximately: On a linear demand curve, demand at lower prices will be: The demand for agricultural output is price inelastic. If a person engages in mental accounting, he or she: The process of assigning different values to dollars in different accounts is known as: The optimal consumption bundle is always represented by a point. Which of the following is true for a perfectly competitive industry? Within the circular-flow diagram, the market for goods and services is the place where. Although most citizens have access to police protection, they also take measures, such as putting locks on their doors, to protect themselves. has an income effect that is always negative with respect to the quantity of labor supplied. If Gehrig buys the cap for $71, he will have an individual consumer surplus of $71. Which of the following defines the short run? For these customers, cups of coffee are differentiated by: Among the drawbacks of brand names is the fact that they: may encourage the consumption of expensive substitutes for generic items. (Figure: Guns and Butter) Examine the figure Guns and Butter. The table identifies six production possibilities, options A through F. Each option represents the amount of food and clothing that our island economy can produce given full and efficient utilization of our available resources. Which situation best creates potential economic growth? //-->. (Table: The Demand for Chocolate-Covered Peanuts) Examine the table The Demand for Chocolate-Covered Peanuts. A list of all the possible combinations of fish and coconuts open to Crusoe makes up his production possibilities.The production-possibilities frontier separates outcomes that are possible for an individual (or a group) to produce from those that cannot be produced.Because Crusoe cannot exchange, his production-possibilities frontier is also his consumption-possibilities frontier. Consider two competing motorcycle manufacturers: Harley-Davidson and Honda. google_color_border = "808080"; If you reflect on this table, you will see the importance of scarcity. What could have caused it? For both to become better off, each should specialize in the production of some good. An increase in the price of substitutes for ice cream, such as frozen yogurt. If a monopoly market structure was transformed into a perfectly competitive one, one would find that price would _____ and output would _____. For this economy, an increase in the quantity of capital goods produced without a corresponding decrease in the quantity of consumer goods produced: is represented by a movment from point E to point B. An economy is said to have a comparative advantage in the production of one good if it: has the lowest opportunity cost for producing a particular good. Which of the following is true? He pays for it with his credit card rather than with money from his checking account. 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