EC 110 Test 1

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1

comparative advantage is related to

opportunity cost

2

when each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy..

rises

3

if a decrease in income increases the demand for a good, then the good is

an inferior good

4

when we move along a demand curve

all nonprice determinants of demand are held constant

5

when demand is elastic, a decrease in price will cause

an increase in total revenue

6

a decrease in demand is represented by

leftward shift of demand curve

7

the quantity demanded of a good is the amount that buyers are

willing and able to purchase

8

two goods are substitutes when a decrease in the price of one good

decreases the demand for the other good

9

on a downward sloping linear demand curve, total revenue reaches its maximum value at the

midpoint of the demand curve

10

demand is inelastic if the price elasticity of demand is

less than 1

11

which of the following is not a determinant of the demand for a particular good

the prices of the inputs used to produce the good

12

an increase in the price of a good will

decrease quantity demanded

13

a decrease in the price of a good will

decrease quantity supplied

14

The most obvious benefit of specialization and trade is that they allow us to

consume more goods than we otherwise would be able to consume

15

the law of demand states that, other things equal, when the price of a good..

falls, the quantity demanded for the good rises

16

other things equal, the demand for a good tends to be more inelastic, the..

fewer the available substitutes

17

the opportunity cost of an item is

what you give up to get that item

18

a production possibilities frontier is a straight line when

the rate of tradeoff between the two goods being produced is constant

19

wheat is the main input in flour, if the price of wheat decreases, then we would expect the..

supply of flour to increase

20

the price elasticity of demand measures how much

quantity demanded responds to change in price