General Micro Review 1

(2) Which of the following resources would economists classify as “capital”?    

• Raw Bauxite in a South African mine 
• A hammer used in framing a house 
• A worker hired to repair engines 
• Trees used to make paper 

The United States has decided to spend more money on military goods and less on education. The opportunity cost for spending more money on military goods would be which of the following?

• the satisfaction of destroying our enemies
• the money used to fund the military
•  money to spend on education
• better paid soldiers

Movement along the Demand curve to the right is called

• decrease in demand
• decrease in quantity demanded
• increase in demand
• increase in quantity demanded

As the price of a good rises in a market, it acts as a signal:

• consumers that they should buy a greater quantity of the good.
• to producers that they should supply a greater quantity of the good.
• to consumer that they should increase their demand for the good.
• to producers that they should increase their supply of the good.

The ideal price and level of output occurs where

• Marginal Revenue and Marginal Cost cross
• MR = AVC
• Average Fixed Cost equal ATC
• MR = MT

A  point above the PPF curve represents

• efficiency
• inefficiency
• Unemployment
• Unattainable

When economists measure the responsiveness of consumers to changes in price, they are measuring:

• the percentage change in price
• the price elasticity of demand.
• the price elasticity of supply.
• income elasticity.

Organizers of many high-interest sporting events such as the Super Bowl and the World Series usually set ticket prices lower than the equilibrium price, citing fairness to the public as their reason. What names do economists give to the resulting set price and disequilibrium situation?

• price ceiling; surplus
• price ceiling; shortage
• price floor; shortage
• price floor; surplus

In which market structure does a firm have greatest control over its product’s price?

• perfect competition
• monopoly
• oligopoly
• monopolistic competition

Interdependence and price leadership are characteristics of firms in what kind of market structure?

• monopoly
• oligopoly
• monopolistic competition
• perfect competition