Economy (topic 1,2&3)

Connect the correct concept. Invisible Hand. Market Failure.

Connect the correct concept with the definition. Microeconomics. Macroeconomics.

Select which are NOT from the 12 principles of economics: Choices are necessary because resources are scarce. The true cost of something is its opportunity cost. Markets move toward chaos and inequity. People usually respond to incentives, exploiting opportunities to make themselves better off. Resources are unlimited. Markets move toward equilibrium. Resources should be used efficiently to achieve society’s goals. Markets do not lead to efficiency. When markets don’t achieve efficiency, government intervention can improve society’s welfare.

Connect this concpets from the third principle of economics to the correct definition: TRADE-OFF. MARGINAL DECISIONS. MARGINAL ANALYSIS. INCENTIVE.

What is the opportunity cost?. is what you must give up in order to get something. decisions about whether to do a little bit more or a little bit less of an activity. is the actual amount of a good or service consumers are willing to buy at some specific prince. is a change in the quantity demanded of a good arising from a change in the good’s price.

What is a competitive market?. is a market in which there are many buyers and sellers of the same good or service, none of whom can influence the price at which the good or service is sold. is a market in which there are few buyers and sellers of the same good or service, who can influence the price at which the good or service is sold. is a market in which there are many buyers and sellers of the same good or service, who can influence the price at which the good or service is sold. is a market in which there are many buyers and sellers of different goods or services, none of whom can influence the price at which the good or service is sold.

According to the principles in economics, "One person’s spending is another person’s income" is. True. False. Depends on the type of market. Depends on the area of production.

What does the law of demand say?. a higher price for a good or service, other things equal, leads to demand a smaller quantity of that good or service. a higher price for a good or service, other things equal, leads to demand a bigger quantity of that good or service. a lower price for a good or service, other things equal, leads to demand a smaller quantity of that good or service. a lower price for a good or service, other things equal, leads to suply a bigger quantity of that good or service.

When the price of petroleum goes up, the demand for natural gas ______, the demand for coal ______, and the demand for solar power ______. (Assume these goods are substitutes for petroleum.). increases; increases; increases. increases; increases; decreases. decreases; decreases; increases. decreases; decreases; decreases.

Which of these is an example of a substitudes?. Tea and coffee. Car and TV. Apple and bread. Public transport and restaurant.

When are two goods subtitudes?. when a decrease in the price of one leads to a decrease in demand for the other. when a decrease in the price of one leads to a increase in demand for the other. when a increase in the price of one leads to a increase in demand for the other.

Which applies for an inferior good?. the demand for them increases when consumer income rises. the demand for them decreases when income increases.

Which applies for a normal good?. the demand for them increases when consumer income rises. the demand for them decreases when income increases.

Is this statement true or false: "Two goods are COMPLEMENTS IN PRODUCTION if an decrease in the price of one leads to an increase in supply for the other"?. True. False.

Which of the following will cause an increase in the demand for autos?. Price of car tires increases because of a Malaysian rubber shortage. Concrete steel reinforcing rods are replaced by aluminum along the Atlantic coast to prevent rusting. Gasoline prices drop by 50% when OPEC nations increase production. McDonald’s increases its hamburger production in response to consumer trends.

When Qs = Qd at a certain price, the market is ________. in equilibrium. declining. at risk. perfect.

What does the yellow card represents?. Surplus. Benefit. Shortage. Sales.

What does the yellow card represent?. Shortage. Surplus. Benefit. Sales.

Which of this two demand curves shows the graphic of an INELASTIC product?. A. B.

If the price of a sushi roll drops from $8 to $4 and sales rise from 20 to 40 units, what is the (absolute value) of the price elasticity of demand using the midpoint formula?. 0.5. 0.66. 1. 2.

The elasticity of demand for eggs has been estimated to be 0.1. If egg producers raise their prices by 10 percent, what will happen to their total revenue?. It will increase. It will decrease. It won't change.

If a fashionable clothing store raised its prices by 25%, what does that tell you about the store’s estimate of demand for its products?. They think it is elastic. They think it is inelastic.

If the market have many substitutes, that makes it a _________ product. However, if there are few substitutes, it is _________. elastic / inelastic. inelastic / elastic. elastic / elastic. inelastic / inelastic.

When the patent expires on a brand-name drug and five generic drugs come on the market, what happens to elasticity of demand for the original drug?. It rises. It falls.

Which good or service is the most inelastic?. Luxury goods. Neccesity goods.

Connect the sentences about cross-price elasticity of demand. For substitutes,. For complements,.

The price of good B increases by 4%, causing the quantity demanded of good A to decrease by 6%. The cross-price elasticity of demand is _____, and the goods are ______. 1.5; substitutes. –1.5; complements. 0.67; complements. –2.4; substitutes.

Tonya consumes 10 boxes of ramen noodles a year when her yearly income is $40,000. After her income falls to $30,000 a year, she consumes 40 boxes of ramen noodles a year. Calculate her income elasticity of demand for ramen noodles (use the midpoint method). 4.2. –4.2. –2.25. 2.25.

Check the correct ones about the graphic: The purple zone is the producer surplus. The purple zone is the consumer surplus. The green zone is the producer surplus. The green zone is the consumer surplus. The purple zone is the deadweight loss. The green zone is the deadweight loss.

If the cost of wood falls, what will happen to equilibrium price and quantity in the violin market?. Both fall. Both rise. Price falls and quantity rises. Price rises and quantity falls.