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Macro Hammock Final (for exam 1_ Chapters 1-6) (1
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Macro Hammock Final (for exam 1: Chapters 1-6)opportunity cost - ANS-the value of the best opportunity that must be sacrificed in order to take
that action
economics is primarily the study of.... - ANS-the choices we must make among alternatives
because of scarcity
positive economic statement - ANS-an assertion about economic reality that can be supported
or rejected by reference to the facts
EX. "An 10% increase in the minimum wage will increase unemployment by 1%"
"the unemployment rate is 4%"
"a decrease in price of gas will cause the quantity supplied to fall, ceteris paribus"
normative economic statement - ANS-an opinion, which cannot be shown to be true or false by
reference to the facts; expresses value
production possibilities frontier - ANS-Represents the possible combinations of two goods that
can be produced in a certain period of time under the conditions of a given state of technology
and fully employed resources.
what basic principle does the production possibilities curve illustrate? - ANS-illustrates that if all
the resources of an ecnomy are being used efficently, more of one good can be produced only if
less of another good is produced
a point inside the production possibilities curve represents a combination of goods that is.. -
ANS-inefficient
In Europe during the 14th century, the Black Plague killed 24 million people or close to 37
percent of the population. How would this affect the production possibilities curves for the
countries of Europe at that time? - ANS-the production possibilities curves for these countries
would have shifted inward
Noah values his car at $10,000, and Emily values it at $14,000. If Emily buys it from Noah for
$11,000, which of the following is true? - ANS-Noah gains $1,000 of value, and emily gains
$3,000 of value
inferior goods - ANS-goods that consumers demand less of when their incomes rise
EX."if your income falls, you will eat more taco bell"
, simple trade - ANS-Exchange of goods and services
Consumer Surplus (CS) - ANS-the amount a buyer is willing to pay for a good minus the amount
the buyer actually pays for it
Producer Surplus (PS) - ANS-the difference between what producers are paid and the marginal
cost of production
producer surplus on a graph - ANS-The area above the supply curve and below the market
price is equal to total producer surplus
total surplus - ANS-the sum of consumer surplus and producer surplus
consumer surplus on a graph - ANS-area above the price but below the demand curve
Ceteris Paribus - ANS-a Latin phrase that means "all other things held constant"
The market for printed economic textbooks is in equilibrium. As incomes rise, students buy
fewer printed textbooks, and buy more e-books instead. You can conclude (ceteris paribus)
that... - ANS-printed text books are inferior goods
The Law of Demand is - ANS-general tendency in human behavior
The law of demand states that - ANS-as price increases, quantity demanded decreases
when economists say the supply of a product has decreased, they mean that.. - ANS-supply
curve has shifted to the left
According to the law of supply, - ANS-more of a good will be offered by suppliers as the price
rises
suppose the price of FSU branded T-shirts rises. Cetreis paribus, which of the following will
occur? - ANS-the quantity of FSU branded shirts supplied will rise
Law of Supply - ANS-the claim that, other things equal, the quantity supplied of a good rises
when the price of the good rises
a new law requiring plumbers to pass strict certification tests that reduce the number of
plumbers would - ANS-increase the wage rate of plumbers
an increase in supply will cause.. - ANS-an increase in quantity demanded
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