ECON 201 midterm prep

(T/F) The production possibilities frontier represents the minimum output an economy can produce.

• True

• False

An decrease in demand with no change in supply will result in a ______ equilibrium price and a _______ in equilibrium quantity.

Equilibrium, or a market-clearing price, is the point at which the quantity demanded _______ the quantity supplied.

Economics is the study of how people allocate their ________ resources to satisfy their ________ wants.

(T/F) The production possibilities frontier indicates a country's opportunity cost.

In the context of supply and demand, what happens to equilibrium price when supply decreases and demand increases?

(T/F) Perfectly elastic supply curves are horizontal straight lines.

(T/F) An decrease in demand with no change in supply will result in a higher equilibrium price and a higher equilibrium quantity.

_______ utility is the additional benefit received from consuming one more unit of a good.

A ________ externality occurs when the consumption of a good by one person reduces the enjoyment of the good by others.