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- 1. Multiple Choice
What do economic profits and losses provide firms?
They answer the question "Who will get the output?"
They answer the question "How will the goods and services be produced?"
They help determine which industries survive or fail.
They are the expected outcomes of a decrease in dollar votes and an increase in dollar votes, respectively.
- 2. Multiple Choice
If a change in consumer preferences results in many more consumers registering their "dollar votes" in favor of peaches, which of the following will most likely follow?
Profits of peach growers will rise and peach production will rise.
Profits of peach growers will rise and peach production will fall.
Profits of peach growers will fall and peach production will rise.
Profits of peach growers will fall and peach production will fall.
- 3. Multiple Choice
Which of the following best characterizes the free market system?
Widespread use of government price controls.
Centralized decision-making.
Limited use of capital goods.
Private property rights
- 4. Multiple Choice
What best determines if a firm will earn a positive economic profit?
Its total sales revenue equals the total cost of labor, capital, raw materials, and entrepreneurship
It produces its output utilizing the least-cost production method
It is regulated by government.
Its total sales revenue exceeds the sum of all its costs.
- 5. Multiple Choice
With reference to the table. If A firm can produce a single unit of output by combining labor and capital in any of the combinations shown in the following table. Labor costs $2 per unit and capital costs $4 per unit. Which is the most efficient technique for producing the output?
A
B
C
D
- 6. Multiple Choice
What does it mean when an economist says that the demand for a product has increased?
Quantity demanded is greater at each possible price.
Firms make less of the product available for sale.
Consumers respond to a lower price by buying more.
The demand curve becomes steeper.
- 7. Multiple Choice
When movie ticket prices increase, families tend to spend less time watching movies and more time at home watching videos instead. What is best reflected in the scenario?
Diminishing marginal utility.
The income effect.
The rationing function of markets.
The substitution effect.
- 8. Multiple Choice
If consumer incomes increase, what will happen to the demand for product Y on the Demand Curve?
It will necessarily remain unchanged.
It will shift to the right if Y is a complementary good.
It will shift to the right if Y is a normal good.
It will shift to the right if Y is an inferior good.
- 9. Multiple Choice
When drawing demand and supply curves, which of the following is the primary influence on production and purchasing decisions as assumed by economists?
Price.
The cost of production.
The overall state of the economy.
Consumer incomes.
- 10. Multiple Choice
With refer to the following diagrams, which one of the diagrams best illustrates the effect of an increase in crude oil prices on the market for gasoline?
A
B
C
D
- 11. Multiple Choice
Why will a decrease in the price of a product increase the amount of it demanded?
The supply curves are upsloping.
The lower price will decrease real incomes.
The lower price induces consumers to use this product instead of other products.
The firms produce more at lower prices.
- 12. Multiple Choice
Using the data from the supply and demand schedule for a competitively produced good. What will be the equilibrium price (the quantity exchanged ) in this market?
190
220
245
250
- 13. Multiple Choice
"Because of unusually good growing conditions, the supply of strawberries has substantially increased." What is best indicated by this statement?
The demand for strawberries will necessarily rise.
The equilibrium quantity of strawberries will fall.
The amount of strawberries that will be available at various prices has increased.
The price of strawberries will rise.
- 14. Multiple Choice
Goods X and Y are complements while goods X and Z are substitutes. What will happen If the supply of good X increases?
The demand for both Y and Z will increase,.
The demand for Y will increase while the demand for Z will decrease.
The demand for Y will decrease while the demand for Z will increase.
The demand for both Y and Z will decrease.
- 15. Multiple Choice
What will be caused by an improvement in production technology for a specific good?
The increase in demand and an increase in price.
The increase in demand and a drop in price.
The drop in price and increase in quantity demanded.
The increase in supply and an increase in price.
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