Macro Questions
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| 578464557 | State the law of demand. | Quantity demanded rises as price falls, other things constant. Quantity demanded falls as price rises, other things constant. | |
| 578464558 | Why is price inversely related to quantity demanded? | Price is inversely related to quantity demanded because as price rises, consumers substitute other goods whose price has not risen. | |
| 578464559 | List four shift factors of demand and explain how each affects demand. | 1. Change in consumer tastes. As the taste for a product rises, demand increases 2. Change in income. As income rises, demand increases. 3. Change in taxes paid by consumers. As taxes rise, demand falls. 4. The price of a related consumer good changes. As the price of a complement falls, demand increases. | |
| 578464560 | Distinguish the effect of a shift factor of demand on the demand curve from the effect of a change in price on the demand curve. | A change in the price of a good causes a movement along the demand curve, a movement to a new point on the same curve. A shift in the demand curve means that the quantities will be different at all prices. | |
| 578464561 | State the law of supply. | Quantity supplied rises as price increases, other things constant. Quantity supplied falls as price decreases, other things constant. | |
| 578464562 | Why is price directly related to quantity supplied? | Price is directly related to quantity supplied because, as price rises, people and firms rearrange their activities to supply more of that good in order to take advantage of the higher price. | |
| 578464563 | Mary has just stated that normally, as price rises, supply will increase. Her teacher grimaces. Why? | Because as price rises, quantity supplied will increase. | |
| 578464564 | List four shift factors of supply and explain how each affects supply. | 1. Change in taxes paid by producers. As the taxes producers pay increases, supply decreases. 2. A new production technology is invented. When new production technologies are introduced, supply increases. 3. Producers expect prices of their products to change in the future. As the prices producers expect to sell their products for increases, supply decreases. 4. The price of inputs changes. As the price of inputs rises, supply decreases. | |
| 578464565 | Explain what a sudden popularity of "Economics Professor" brand casual wear would likely do to prices of that brand. | The increase in demand would lead to excess demand, which will lead to higher prices. The net result is higher equilibrium price and quantity. | |
| 578464566 | In a flood, usable water supplies ironically tend to decline because the pumps and water lines are damaged. What will a flood likely do to prices of bottled water? | The price of bottled water will increase because bottled water is a substitute for water from pumps and waterlines. Demand for bottled water would increase enormously, leading to upward pressure on prices. | |
| 578464567 | The price of gas shot up significantly in 2008 to over $4.00 a gallon. What effect did this likely have on the demand for diesel cars that get better mileage than the typical car? | The demand for diesel cars will increase. | |
| 578464568 | OPEC announces it will increase oil production by 20 percent. What is the effect on the price of oil? | The effect on the price of oil decreases. | |
| 578464569 | In the United States, say gasoline costs consumers about $2.50 per gallon. In Italy, say it costs consumers about $6 per gallon. What effect does this price differential likely have on the size of cars in the United States and in Italy? | The cars in Italy are most likely much smaller than in the United States. | |
| 578464570 | In the United States, say gasoline costs consumers about $2.50 per gallon. In Italy, say it costs consumers about $6 per gallon. What effect does this price differential likely have on the use of public transportation in the United States and in Italy? | Italians likely use public transportation more than Americans use it. | |
| 578464571 | In the United States, say gasoline costs consumers about $2.50 per gallon. In Italy, say it costs consumers about $6 per gallon. What effect does this price differential likely have on the fuel efficiency of cars in the United States and in Italy? | The cars in Italy are most likely more fuel efficient than in the United States. | |
| 578464572 | In the United States, say gasoline costs consumers about $2.50 per gallon. In Italy, say it costs consumers about $6 per gallon. What would be the effect of raising the price of gasoline in the United States to $4 per gallon? | It will decrease the size of cars driven in the U.S., increase U.S. use of public transportation, and increase the fuel efficiency of cars purchased in the U.S. | |
| 578464573 | In most developing countries, there are long lines of taxis at airports, and these taxis often wait two or three hours. What does this tell you about the price in that market? | Price is above equilibrium. There is an excess supply . | |
| 578464574 | Define the fallacy of composition. How does it affect the supply/demand model? | The fallacy of composition is the false assumption that what is true for a part will also be true for the whole. It affects the supply/demand model by drawing our attention to the possibility that supply and demand are interdependent. Feedback effects must be taken into account to make the analysis complete. | |
| 578464575 | State whether supply/demand analysis used without significant modification is suitable to assess the impact of an increase in the demand for pencils on the price of pencils. | Yes | |
| 578464576 | State whether supply/demand analysis used without significant modification is suitable to assess the impact of an increase in the supply of labor on the quantity of labor demanded. | No | |
| 578464577 | State whether supply/demand analysis used without significant modification is suitable to assess the impact of an increase in aggregate savings on aggregate expenditures. | No | |
| 578464578 | State whether supply/demand analysis used without significant modification is suitable to assess the impact of a new method of producing CDs on the price of CDs. | Yes | |
| 578539202 | The opportunity cost of getting a job is: | The benefit you would have obtained if you had not taken the job. | |
| 578539203 | Macroeconomics is the study of: | inflation, unemployment, business cycles, and growth. | |
| 578539204 | Nepalese villagers sell their kidneys as a way to earn much-needed money. Unfortunately, while the demand for such kidneys in developed economies is high and the medical facilities are available to conduct kidney transplants, the selling and buying of organs is illegal. What idea from Chapter 1 of the text does this situation best illustrate? | Social and political forces sometimes rein in market forces. | |
| 578539205 | More than 10,000 people waited in line for more than two hours to see the Titan Arum (a rare flower) at Cambridge's Botanic Garden. An economist would conclude that: | people felt they got great benefit from seeing the flower. | |
| 578539206 | An economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in: | macroeconomic research. | |
| 578539207 | What is NOT a characteristic of the Industrial Revolution? | Decline of the middle class. | |
| 578539208 | Which economist is credited with developing the theory of comparative advantage in support of international trade? | David Ricardo. | |
| 578539209 | Private/Public property rights are essential to market economies. | Private. | |
| 578539210 | Feudalism and mercantilism relied on ____ to solve the three main coordination problems. | Feudalism solved these problems by relying on tradition while mercantilism relied on government intervention. | |
| 578539211 | Households supply factors of production to business and are paid by business for doing so. The market where this interaction takes place is called: | The factor market. | |
| 578539212 | Businesses produce goods and services and sell them to households and governments. The market where this interaction takes place is called: | The goods market. | |
| 578539213 | Market economies are based upon: | private property and individual planning. | |
| 578539214 | Markets coordinate economic activity through: | the price mechanism. | |
| 578539215 | Suppose that at the current price consumers would like to purchase 10 million large-screen televisions and 15 million are available. When the market coordinates the demand and supply for large-screen televisions, the price of large-screen televisions will: | fall. | |
| 578539216 | Suppose that at the current price producers of CDs offer 5 million CDs for sale but consumers want to buy 6 million. When the market coordinates the demand and supply for CDs, the price of CDs will: | rise. | |
| 578539217 | In the former USSR, state planners decided what was to be produced. They passed orders down to factories, allocating raw materials, workers, and other factors of production to them. This is an example of (a): | command economy | |
| 578539218 | In principle, socialism is: | more concerned about fairness than capitalism. | |
| 578539219 | The Industrial Revolution was important to the history of economic systems because it: | increased the power of capitalists and eventually led to a revolution instituting capitalism as the dominant economic system. | |
| 578539220 | In a feudalist society, in comparison with mercantilism: | tradition plays a more important role than the government. | |
| 578539221 | Households are on the ___ side of factor markets and _____ side of goods markets: | supply side of factor markets and the demand side of goods markets. | |
| 578539222 | Businesses do all of the following: | pay taxes to the government, demand labor services from households in the factor market, supply goods and services to the government in the goods market. | |
| 578539223 | Corporations are legal entities that, in law, are treated as: | Persons. | |
| 578539224 | Both stocks and bonds are ____ assets. | Financial. | |
| 578539225 | In principle, households ultimately control: | both businesses and the government. | |
| 578539226 | When Coca Cola introduced a new, low-calorie version of Coca Cola called C2, despite a major marketing effort, sales of C2 were weak and by the fall many doubted that the product would last. Coke's experience with C2 illustrates the economic concept of: | consumer sovereignty. | |
| 578539227 | In the United States, government performs all of the following functions: | redistributing income, purchasing goods and services, regulating the economy. | |
| 578539228 | What is most likely an action that supports competition? | Preventing two dominant firms in the same market from merging. | |
| 578539229 | When my neighbors benefit from my cleaning up of my yard. They are experiencing a: | Positive externality. | |
| 578539230 | In feudalism, serfdom was maintained primarily through: | tradition. | |
| 578539231 | Adam Smith advocated laissez-faire because he believed it was in the interest of: | society as a whole. | |
| 578539232 | What was one of Marx's predictions? | Firms would become larger and larger. | |
| 578539233 | What was a Marxist prediction? | There would be significant differentiation between workers and owners of factories. | |
| 578539234 | Adam Smith believed that the division of labor | was a force that would make workers "as stupid and ignorant as it is possible for a human creature to become." but also increase productivity | |
| 578539235 | The Neolithic Revolution was characterized by: | adoption of agriculture and domestication of animals. | |
| 578539236 | "It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest." The preceding quote was made by: | Adam Smith. |
