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- 1. Multiple ChoiceAn economist would probably state that in a market economy, prices are generally determined by the interaction betweenbuyers and sellerswholesalers and retailersproducers and labor unionsconsumers and government officials
- 2. Multiple ChoiceWhich of the following is likely to increase the demand for peanut butter?Fewer children in the populationNews that insects have destroyed much of the peanut crop and that there will be less peanut butter on the shelves in three months.A big increase in the price of jelly.A report from the Surgeon General of the United States that eating peanut butter makes people nutty.
- 3. Multiple ChoiceIn economics, a shortage of a product occurs whenthe product's price falls below its market-clearing levelthe product's market-clearing level reduces overall demandthe people who buy the product consume more than they needthe businesses producing the product become less efficient
- 4. Multiple Choice
The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes.
Which country has the comparative advantage in producing trucks and what is their opportunity cost?Japan, 1/3 airplane per truckUS, 1/2 airplane per truckUS, 2 airplanes per truckJapan, 3 airplanes per truck - 5. Multiple ChoiceThe US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes.
Which country has the comparative advantage in producing airplanes and what is their opportunity cost?Japan, 1/3 trucks per airplaneUS, 1/2 trucks per airplaneUS, 2 trucks per airplaneJapan, 3 trucks per airplane - 6. Multiple Choice
Suppliers often reduce prices because they
have a shortage of products
have a surplus of products to sell
want decrease consumer demand
want to increase the product supply
- 7. Multiple ChoiceWhen a point lies inside of the PPF it can be said thatResources are under employedResources are fully utilizeProduction is beyond the resource potentialOpportunity cost of production is constant
- 8. Multiple ChoiceThe opportunity costs seen in a linear PPF would most likely be1 for 32 for 43 for 51 for 1
- 9. Multiple ChoiceWhat does the Production Possibilities Frontier represent?A. A catalog of all possible production options, represented as percentages.B. The tradeoffs between possible production levels for two goods.C. The amount that a society could produce if it devoted all its resources to producing one good.D. The possible gains from international trade in two or more goods.
- 10. Multiple ChoiceThe resource that includes equipment, machinery, buildings, and tools.LandLaborCapitalEntrepreneur
- 11. Multiple ChoiceWhich of the following is NOT one of the three basic questions of economics when looking at economic systems?What goods should be produced ?What is the price of the goods?How should the goods be produced?Who gets to consume the goods?
- 12. Multiple ChoiceThe major types of resources used to make a product are callednatural resourcesfactors of reductionfactors of productioncapital resources
- 13. Multiple Choice
In economics, the pleasure, happiness, or satisfaction received from a product is called:
status fulfillment
marginal cost
rational outcome
utility
- 14. Multiple Choice
Economics may best be defined as the:
interaction between macro and micro considerations.
social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants.
empirical testing of value judgments through the use of logic.
use of policy to refute facts and hypotheses.
- 15. Multiple Choice
Which of the following will not produce an outward shift of the production possibilities curve?
an upgrading of the quality of a nation's human resources
the reduction of unemployment
an increase in the quantity of a society's labor force
the improvement of a society's technological knowledge
- 16. Multiple Choice
Refer to the above diagram. This economy will experience cyclical unemployment if it produces at point:
A
B
C
D
- 17. Multiple Choice
Refer to the above diagram. At which point will this economy NOT be able to produce, it is currently unattainable?
A
B
C
E
- 18. Multiple Choice
Which of the following might shift a nation's production possibilities curve inward?
improved technology.
devastation by war.
improved health care.
a business downturn in which unemployment temporarily rises.
- 19. Multiple Choice
When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower. This statement describes:
an inferior good.
the rationing function of prices.
the substitution effect.
the income effect.
- 20. Multiple Choice
An increase in demand means that:
given supply, the price of the product will decline.
the demand curve has shifted to the right.
price has declined and consumers therefore want to purchase more of the product.
the demand curve has shifted to the left.
- 21. Multiple Choice
Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in supply may have been caused by:
an increase in the wages paid to workers producing this good.
the development of more efficient machinery for producing this commodity.
this product becoming less fashionable.
an increase in consumer incomes.
- 22. Multiple Choice
Which of the following is a fundamental characteristic of the market system?
property rights
central planning by government
unselfish behavior
government-set wages and prices
- 23. Multiple Choice
Which of the following is not a characteristic of the market system?
private property
freedom of enterprise
government ownership of the major industries
competition in product and resource markets
- 24. Multiple ChoiceThe thing you give up to pursue the next best alternative iscapitalproduct allocationopportunity costrelative distribution
- 25. Multiple ChoiceLabor Hours to Produce:
COUNTRY Wheat Cloth
France 5 10
England 20 60
Which statement is true?France has AA in wheat but not clothFrance has neither AA or CAEngland has AA in bothEngland has AA in neither - 26. Multiple ChoiceThe "Invisible Hand" is the term Economist Adam Smith used to describe:comparative advantageeffect of self interest on marketsdiminishing marginal utilityhow some countries utilize resources better
- 27. Multiple ChoiceThe Wealth of Nations is ______________'s most famous work.David RicardoAdam SmithF.A. HayekFriedrich Neitsze
- 28. Multiple ChoiceAccording to comparative advantage, a good should be produced at the point whereits explicit costs are least.its opportunity costs are leastthe cost of real resources used is least.production can occur with the greatest impact on employment
- 29. Multiple ChoiceInferior goods react ___________ to income shifts.directlysometimesconstantlyinverse
- 30. Multiple ChoiceThe Law of Demand says that price and quantity have a(n)direct relationshipinverse relationshipPPC focusDiminishing Motility
- 31. Multiple Choice
Related goods impacts Demand because its relationship to what determinant of Demand?
Increasing Marginal Cost
Diminishing Marginal Utility
Scarcity
Substitution Effect
- 32. Multiple ChoiceIn a mixed economy, what to produce and how much to produce are determined bya central planning agencya private planning agencylarge corporations and small entrepreneursmarkets and the government
- 33. Multiple ChoiceThe diagram shows the production possibilities curve for Country Y. Which of the following statements is true?If Country Y is producing at point C, it is using all its resources efficientlyThe opportunity cost of producing more machines is constantCountry Y cannot produce at point EThe most efficient point of production is point D
- 34. Multiple ChoiceTwo alternative production possibility frontiers for apples and wheat are shown in the figures. As more wheat is produced, how will the opportunity cost of producing wheat, as represented in Figures 1 and 2, be affected?Figure 1: Decrease / Figure 2: IncreaseFigure 1: Increase / Figure 2: DecreaseFigure 1: No Change / Figure 2: IncreaseFigure 1: No Change / Figure 2: Decrease
- 35. Multiple ChoiceIn the economy of the Bushmen of the Kalahari Desert the people follow the examples of their ancestors. This is what kind of economy?TraditionalMarketCommandCentrally planned
- 36. Multiple ChoiceThe Country of North Korea has a dictator that makes all of the economic decisions. What type of economy is this?TraditionalMarketCommandCentrally Planned
- 37. Multiple Choice
The economic problem is that
resources are limited and wants are limited.
resources are unlimited and wants are limited.
resources are limited and wants are unlimited.
resources are unlimited and wants are unlimited.
- 38. Multiple ChoiceWhat is the difference between a shortage and scarcity?A shortage is temporary but scarcity always existsA shortage results from rising prices; scarcity results from falling pricesA shortage is lack of all goods and services; scarcity concerns a single itemThere is no real difference between a shortage and scarcity
- 39. Multiple Choice
In the time period covered by the production possibilities curve, the company decides to make 4 gallons of red paint. How many gallons of blue paint can the company make with the available time and resources?
2
3
6
8
- 40. Multiple ChoiceThe term __________ is used to describe what those in one country buy from those in other countries.A. exportsB. importsC. tradeD. surplus
- 41. Multiple ChoiceTrade allows each country to take advantage of _________________ in the other country.A. economies of scaleB. lower opportunity costsC. specializationD. worker productivity
- 42. Multiple ChoiceThe special human resource, distinct from labor, which takes initiative, makes business decisions, innovates, and takes risk, the income from which is called profit.Productive EfficiencyEntrepreneurshipUtilityFactors of Production
- 43. Multiple ChoiceThese are goods which are used in the production of consumer goods; they satisfy wants indirectly and increase future productive capacity.Durable GoodsNon-durable goodsCapital GoodsConsumer Goods
- 44. Multiple ChoiceGoods which satisfy wants directly, and are used in the present.Consumer goodsCapital goodsDurable goodsNon-durable goods
- 45. Multiple ChoiceDemonstrated by an outward shift of the Production Possibilities Curve, it indicates an increased capacity for economic production within an economy.InflationProductive EfficiencyInvestmentEconomic Growth
- 46. Multiple ChoiceThe process of producing and purchasing capital goods, often confused with the microeconomic concept of buying stocks and bonds, etc.Full employmentEconomic GrowthProductive EfficiencyInvestment
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