ECO 202 CMU EXAM 1 Questions With Well Elaborated Answers 100 Verified.

Scarcity - correct answer the most fundamental economic problem is an opportunity cost - correct answer because we face scarcity, every choice involves the highest valued alternative you give up to get it - correct answer the opportunity cost of something you decide to get is "the cost of living has increased 10 percent over the past 10 years" - correct answer positive normative statements are about - correct answer what ought to be ceteribus paribus - correct answer Latin phrase "all other things held constant" the law of demand implies that if nothing else changes, there is - correct answer a negative relationship between the price of a good and the quantity demanded rightward - correct answer a decrease in the price of a game of bowling shifts the demand curve for bowling balls If a good is an inferior good, then purchases of that good will decrease when - correct answer income increases A good that experiences a increase in demand when income increases - correct answer Normal good Autoworkers negotiate a wage increase; how does this change affect the supply of cars - correct answer It decreases the supply A shortage causes the - correct answer price to rise A surplus causes the price - correct answer to fall A surplus occurs when the price is - correct answer greater than the equilibrium price When quantity supplied is bigger there is a - correct answer surplus When quantity demanded is bigger there is a - correct answer shortage Demand is perfectly inelastic when - correct answer shifts of the supply curve results in no change in quantity demanded price elasticity of demand - correct answer a measure of the sensitivity of demand to changes in price demand is inelastic if - correct answer a leftward shift of the supply curve raises the total revenue producers total revenue will decrease if - correct answer price rises and demand is elastic The more substitutes there are for a product the _______ elasticity of demand - correct answer higher If goods are compliments, definitely their - correct answer cross elasticities are negative All normal goods have - correct answer positive income elasticities of demand Area equation - correct answer 1/2 (LxW) producer surplus is - correct answer price paid for a good minus the opportunity cost of making it Elasticity - correct answer a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants inelastic demand - correct answer demand in which changes in price have little or no effect on the amount demanded