What causes movement along a supply curve?
change in price
Suppose price of sugar, an input used to produce cereal, rises, As a result,
supply curve for cereal would shift to the left
Price of cotton used in making jeans increases, which will occur?
supply curve for jeans will shift inward (leftward)
Demand for production remain the same, & supply falls
market clearing price will rise & the equilibrium quantity will fall
Supply increase & at the same time, demand decreases, we
cannot predict equilibrium quantity, but know that equilibrium price will decrease
Price floor is set below current market clearing price, then
quantity demanded will remain equal to quantity supplied at current market clearing
Marginal tax rate & the average tax rate are the same under a
proportional income tax system
Economics is a study of how people
make choices to satisfy their wants
A straight-line production possibilities curve has
a constant opportunity cost between the two goods
The production possibilities curve represents
the maximum combination of goods & services that can be produced with fixed resources & technology, given efficient use of the resources
In economics, "demand" refers to
the quantities of a good that people will buy at various prices
The relationship between quantity supplied & the price of output is such that
an increase in price will lead to an increase in quantity supplied
Price floors are designed to
establish minimums that prevent the market clearing price from being achieved
Which of the following best fits the definition of unemployed?
not working, but looking for a job
Which of the following will NOT cause an increase in unemployment?
an engineer quits a job to take care of his children
The type of unemployment that rises when the economy goes into a recession is called
cyclical unemployment
What results in scarcity?
results from unlimited wants together with limited resources
To distinguish change in demand from changes in quantity demanded, which of the following is true?
if a good's price goes down, then quantity demanded increases
Which of the following will cause a movement along the demand curve for shoes?
an increase in the price of shoes
Which of the following is NOT a determinant of demand?
the cost of inputs in production
A shortage will occur when
the price is below the market-clearing level; quantity demanded is greater than quantity supplied
Price floors set above a market equilibrium price cause surpluses or shortages?
surpluses
If demand increases while supply decreases, then quantities
may increase or decrease
If demand increases while supply decreases, then prices
always increase
Price below the equilibrium causes a shortage or surplus?
shortage