Economics Flashcards
Economists consider time to be a scarce resource.
true
Emerson County has two large lakes. The county runs a fish hatchery that raises three kinds of fish that are used to keep the lakes stocked. Anyone can go boating or canoeing on the lakes, but only people who buy a license are allowed to fish in them. Which of the following economics questions is Emerson County focusing on by requiring a license to fish?
i. What should be produced?
ii. How should it be produced?
iii. Who will use what is produced?
A.
i only
B.
ii only
C.
iii only
D.
i and iii only
C.
iii only
Which of the following would solve the problem of scarcity in the world and eliminate the need for economics? A. an unlimited supply of resources B. unlimited want and demand from consumers C. a scarcity of resources D. a shortage of demand
A.
an unlimited supply of resources
Two name brand electronic companies have decided join the cellular phone production market. To save money on how much they pay their employees, they have decided to have their new phones manufactured overseas. Which of the basic economics questions have these companies answered? i. What should be produced? ii. How should it be produced? iii. Who will use what is produced? A. i only B. iii only C. i and ii only D. i, ii, and iii
C.
i and ii only
It is possible for a resource to be scarce in one part of the world and plentiful in another.
true
Scarcity is an ongoing part of the human condition.
true
Economists believe it is important to make \_\_\_\_\_\_\_\_\_\_ decisions about \_\_\_\_\_\_\_\_\_\_ resources. A. wise . . . scarce B. quick . . . plentiful C. popular . . . scarce D. popular . . . plentiful
A.
wise . . . scarce
Crude oil, which is found only in certain regions of the world, is used for using the gasoline Americans use every day. Oil can also be refined into diesel and jet fuel. Additionally, it is used to make plastic and man-made fibers such as nylon. Which of the following characteristics of scarcity does oil exemplify?
i. limited in quantity
ii. desirable
iii. has more than one use
A.
i only
B.
ii only
C.
ii and iii only
D.
i, ii, and iii
D.
i, ii, and iii
A shortage can be either short-term or long-term, but it is not an ongoing condition.
true
A higher demand for a good or service than what is currently available in the market is the definition of \_\_\_\_\_\_\_\_\_\_. A. surplus B. scarcity C. shortage D. supply
C.
shortage
Which best describes how consequences are different from costs when making a decision?
D. Consequences require accepting an outcome.
The cost of something is what a person ______ as a result of choice.
relinquishes
In economics, money always represents \_\_\_\_\_\_\_\_\_\_ because it could always be spent on something else. A. opportunities B. negative consequences C. positive consequences D. margins
A.
opportunities
Which of the following is an accurate paraphrase of the statement below?
Each time we select one alternative, we give up another.
A.
Each time we make a choice, we give up a benefit.
B.
Each time we make a choice, we give up a different choice.
C.
Each time we select a consequence, we are given a cost.
D.
Each time we select a marginal benefit, we are given a cost.
B.
Each time we make a choice, we give up a different choice.
Robotics Inc., a company that sells robotics, wants to economize. Which of the following strategies illustrates how Robotics Inc. could successfully economize?
A.
reducing the cost of producing robots and increasing the price
B.
reducing the price of the robots while increasing costs to produce them
C.
reducing the opportunity cost of building robots while increasing the monetary cost
D.
increasing the marginal benefits while reducing the number of low cost decisions
D.
increasing the marginal benefits while reducing the number of low cost decisions
Monetary cost is also known as \_\_\_\_\_\_\_\_\_\_ to economists. A. revenue B. profit C. price D. tax
C.
price
Positive consequences are also known as \_\_\_\_\_\_\_\_\_\_. A. monetary costs B. opportunity costs C. benefits D. resources
C.
benefits
Jackie has always wanted a diamond engagement ring and tells her boyfriend, Tom, that she will not accept anything other than a diamond ring. Tom goes to the jewelry store and can only find a $5,000 ring, which is far more than he can responsibly afford. Which of the following choices pairs a monetary cost with a positive consequence? A. buying the ring, the loss of Jackie B. buying the ring, engagement to Jackie C. not buying the ring, the loss of Jackie D. not buying the ring, engagement to Jackie
B.
buying the ring, engagement to Jackie
Which of the following are examples of scarce resources?
i. money
ii. time
iii. energy
A.
i and ii only
B.
i and iii only
C.
ii and iii only
D.
i, ii, and iii
D.
i, ii, and iii
Julie has three free hours on her Saturday afternoon and two things she wants to do. First, she wants to complete the math assignment that is due on Monday for school because she has no time to do it on Sunday. Secondly, she wants to go get coffee with her best friend, Carol. Julie decides to spend two hours completing her math assignment.
If she decided to increase her current marginal benefit by one unit (one unit equals one hour), what would be the marginal cost of that decision?
A.
She would have no time to spend with Carol.
B.
She would be able to spend one hour with Carol.
C.
She would be able to spend two hours with Carol.
D.
She would be able to spend all three hours with Carol.
A.
She would have no time to spend with Carol.
Entrepreneurs bring new \_\_\_\_\_\_\_\_\_\_ and \_\_\_\_\_\_\_\_\_\_ to the market. A. products . . . ideas B. services . . . training C. training . . . experience D. production . . . diversity
A.
products . . . ideas
Each of the following investments contributes to a higher quality labor force EXCEPT: A. health care B. retaining experienced workers C. additional vacation and sick leave D. additional education and training
C.
additional vacation and sick leave
Societies make choices about goods and services based on the availability of \_\_\_\_\_\_\_\_\_\_. A. land B. workers C. resources D. new technology
C.
resources
Entrepreneurs are different from the rest of the labor force because they are \_\_\_\_\_\_\_\_\_\_ and \_\_\_\_\_\_\_\_\_\_. A. innovators . . . risk takers B. imaginative . . . creative C. accountable . . . specialized D. determined . . . profit seekers
A.
innovators . . . risk takers
Domestic resources are usually \_\_\_\_\_\_\_\_\_\_ than imported resources. A. cheaper B. lower quality C. higher quality D. more expensive
A.
cheaper
Infrastructure can consist of all of the following EXCEPT: A. roads B. airports C. forests D. canals
C.
forests
Improved technology allows workers to be more \_\_\_\_\_\_\_\_\_\_ and productive. A. skilled B. efficient C. capable D. economical
B.
efficient
When businesses invest in domestic resources they \_\_\_\_\_\_\_\_\_\_. A. reduce capital B. require a larger workforce C. increase imports D. make higher profits
B.
require a larger workforce
How do entrepreneurs differ from labor, or members of the workforce?
A. Entrepreneurs earn money for their work.
B. Entrepreneurs are considered human capital.
C. Entrepreneurs innovate and take risks.
D. Entrepreneurs help produce goods and services.
C. Entrepreneurs innovate and take risks.
Which one of the following professionals provides goods for society’s consumers? A. dentist B. butcher C. lawyer D. accountant
B.
butcher
Define capitalism. What factor determines whether a country’s economy is more or less capitalist?
Capitalism is the use of private resources to make a profit. The factors that determine whether a country’s economy is more or less capitalist is if it’s closer to a pure market economy or a total command economy.
According to the diagram, which country is closest to a pure market economy? A. China B. Sweden C. Hong Kong D. United States
C.
Hong Kong
Explain the difference between government subsidies and transfer payments. Give an example of a transfer payment.
Transfer payments is when the government takes money from one group of people and gives it to another group of people. For example, social security and Medicare and Medicaid. Government subsidies is government financial aid meant to stimulate the economy or promote certain goods. For example, corn production because corn can be turned into ethanol.
According to the circular flow diagram, the government purchases products from \_\_\_\_\_\_\_\_\_\_. A. firms B. households C. foreign governments D. government agencies
A.
firms
Explain how governments send tax money back to households and firms.
The tax money that the government collects is used to build roads and pay for services that households and firms may find useful. The government also gives the money back through transfer payments.
Explain why the US economy is referred to as a mixed market.
The US economy is referred to as a mixed economy because it has a mix of a market forces and central planning, but mostly market forces.
According to the diagram, which country is closest to a total command economy? A. China B. Cuba C. Hong Kong D. Sweden
B.
Cuba
According to the circular flow diagram, the government buys factors of production from \_\_\_\_\_\_\_\_\_\_. A. firms B. households C. business owners D. government agencies
B.
households
Explain the difference between market forces and central planning. In what type of economic system are they both present?
Market forces is private business dealings based on supply and demand. Central planning is national government decision making about the economy. In a mixed market economy, such as the US, both market forces and central planning are present.
Describe the three roles of the government within the economic flow.
The three roles of the government within the economic flow are to give payment subsidies to firms, regulate wages and interest, and transfer payments.
In a mixed market economy, money goes to the government in the form of \_\_\_\_\_\_\_\_\_\_. A. rent B. taxes C. loans D. interest
B.
taxes
The US government’s assistance to people who have lost their jobs is to offer them \_\_\_\_\_\_\_\_\_\_. A. a government loan B. unemployment counseling C. a new employment opportunity D. unemployment compensation
D.
unemployment compensation
A pure market economy is based on the interaction of \_\_\_\_\_\_\_\_\_\_ and \_\_\_\_\_\_\_\_\_\_. A. buyers . . . sellers B. buyers . . . consumers C. sellers . . . producers D. producers . . . distributors
A.
buyers . . . sellers
All modern economies use some combination of \_\_\_\_\_\_\_\_\_\_ and \_\_\_\_\_\_\_\_\_\_. A. capitalism . . . socialism B. market forces . . . capitalism C. central planning . . . government D. market forces . . . central planning
D.
market forces . . . central planning
A country that is close to a pure market economy is referred to as a \_\_\_\_\_\_\_\_\_\_ nation. A. nationalist B. capitalist C. socialist D. communist
B.
capitalist
Private business dealings based on supply and demand define \_\_\_\_\_\_\_\_\_\_. A. mixed markets B. market forces C. central planning D. command economics
B.
market forces
There is usually a large black market presence in which economy? A. socialist B. pure market C. total command D. mixed market
C.
total command
According to the diagram, who is provided goods from firms? A. only households B. only governments C. both households and governments D. neither households nor governments
C.
both households and governments
Market forces and government interaction blend to form a \_\_\_\_\_\_\_\_\_\_ economy. A. mixed B. blended C. central D. merged
A.
mixed
Which economic system is defined as the use of private resources to make a profit? A. socialism B. capitalism C. communism D. total command
B.
capitalism
Define the term laissez-faire. What is the role of the government in a laissez-faire economy?
Laissezfaire literally means “let them act,” and refers to an economy based on capitalism and limited government involvement in the economy. Laissezfaire promotes economic freedom, economic growth, and a higher standard of living in society.
The invisible hand of the marketplace refers to the idea that self-interest and competition work together to ensure that the market __________.
A.
is not threatened by foreign competition
B.
never needs any type of government regulation
C.
creates enough jobs to keep citizens throughout the nation fully employed
D.
provides the goods and services consumers want at reasonable prices
D.
provides the goods and services consumers want at reasonable prices
Describe the four elements that markets need for success.
The four elements that markets need for success are specialization, selfinterest, competition, and economic freedom. Specialization will result in a variety of goods/services and quality goods/services, all in a short time frame and with little waste. Selfinterest promotes competition and that regulates prices.
Adam Smith is regarded as the father of \_\_\_\_\_\_\_\_\_\_. A. Marxism B. modern economics C. mixed market economics D. the socialist movement
B.
modern economics
Explain how self-interest and competition work together to regulate prices.
Selfinterest refers to when consumers seek certain goods/services at the cheapest prices possible, which means that producers aim to meet those needs better than their fellow competitors. This results in competition between the companies to try to make better products or lower their prices.
Explain Adam Smith’s ideas about what the government’s role should be.
Adam Smith believed that there should be as little government involvement in the economy as possible. He believed that the government should only try to protect domestic businesses from foreign competitors and have a strong national defense system.
Describe how Adam Smith’s ideas are seen in the United States economy.
Adam Smith’s ideas are seen in the United States economy because we have a mixed economy where there is more market forces than central planning. This means that the government has little involvement in the economy. The United States has a capitalistic economy.
Which type of economic system did Adam Smith believe could provide for society's needs? A. mixed B. market C. command D. traditional
B.
market
Adam Smith wrote his economic theories in a book titled \_\_\_\_\_\_\_\_\_\_. A. The Future of Capitalism B. The Wealth of Nations C. The History of Market Economics D. The Wealth of the New World
B.
The Wealth of Nations
Explain how the invisible hand regulates the economy.
The invisible hand refers to selfinterest and competition in the economy. Consumers seek out goods/services with the best price, so they are acting on their selfinterest. So the producers will try outdo their competitors by lowering their prices or upgrading their products/services. As this continues, this regulates prices and advances the products/services for better performance.
In a market economy, specialization enables the creation of
high-quality goods and services.
When consumers seek to buy goods at the best possible price they are exercising self-\_\_\_\_\_\_\_\_\_\_. A. interest B. control C. confidence D. promotion
A.
interest
The invisible hand is created when \_\_\_\_\_\_\_\_\_\_ and \_\_\_\_\_\_\_\_\_\_ work together. A. specialization . . . self-interest B. self-interest . . . competition C. specialization . . . competition D. confidence . . . economic freedom
B.
self-interest . . . competition
Self-interest motivates producers to offer \_\_\_\_\_\_\_\_\_\_ products. A. less expensive B. more expensive C. consumer demanded D. environmentally safe
A.
less expensive
Specialization makes each of the following possible EXCEPT: A. surplus of goods and services B. goods available in a short time frame C. variety of goods and services D. high-quality goods and services
A.
surplus of goods and services
Specialization occurs when a corporation concentrates on producing \_\_\_\_\_\_\_\_\_\_. A. low-quality items B. limited supplies of a good C. one particular good or service D. rare and authentic items
C.
one particular good or service
A competitor will often lower prices in an effort to \_\_\_\_\_\_\_\_\_\_. A. increase trade B. attract business C. create monopolies D. decrease production
B.
attract business
A laissez-faire government approach to the economy is based on the ideas of \_\_\_\_\_\_\_\_\_\_. A. socialism B. communism C. traditionalism D. capitalism
D.
capitalism
A \_\_\_\_\_\_\_\_\_\_ is an agreement between two or more people or parties. A. contract B. security C. dialogue D. monopoly
A.
contract
_______ have the economic freedom to save, spend, and invest money as they see fit.
?
Government programs in which money is taken from one group and given to another are called \_\_\_\_\_\_\_\_\_\_. A. political capital B. transfer payments C. market economies D. factors of production
B.
transfer payments
According to the diagram, in a mixed market economy taxes are paid by all of the following EXCEPT: A. firms B. labor C. government D. households
C.
government
Adam Smith believed that the role of the government should include all of the following EXCEPT: A. ensuring a stable and peaceful nation B. providing a stable and secure economy C. guaranteeing an honest judicial system D. granting patents and copyrights
B.
providing a stable and secure economy
Each of the following is a sign of economic freedom EXCEPT:
A.
producers produce what is profitable
B.
wages and prices are controlled by the government
C.
people save, spend, and invest money as they wish
D.
consumers use private property for their own benefit
B.
wages and prices are controlled by the government
The invisible hand of the marketplace refers to the idea that self-interest and competition work together to ensure that the market __________.
A.
is not threatened by foreign competition
B.
never needs any type of government regulation
C.
creates enough jobs to keep citizens throughout the nation fully employed
D.
provides the goods and services consumers want at reasonable prices
D.
provides the goods and services consumers want at reasonable prices
According to Figure 5.4, how many slices of pizza will one pizzeria be willing to supply at a market price of $1.50 a slice? a. 100 c. 300 b. 200 d. 1,000
b.
200
Consider this scenario:
In response to an increase in the product’s price, producers of MP3 players have increased the quantity supplied.
This is an example of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_. a. elastic supply b. elastic demand c. inelastic supply d. inelastic demand
a.
elastic supply
the amount a supplier is willing and able to supply at a certain price
quantity supplied
The market price of a slice of pizza has risen from $1.50 to $2.00. Based on the Market Supply Curve in Figure 5.4,the average pizzeria would respond by \_\_\_\_\_\_\_\_\_. a. making 50 fewer slices a day. c. making 500 fewer slices a day. b. making 50 more slices a day. d. making 500 more slices a day.
d.
making 500 more slices a day.
a chart that lists how much of a good all suppliers will offer at different prices
market supply schedule
Which of the following is the best example of the law of supply?
a.
A sandwich shop increases the number of sandwiches they supply every day when the price is increased.
b.
A food producer increases the number of acres of wheat he grows to supply a milling company.
c.
A catering company buys a new dishwasher to make their work easier.
d.
A milling company builds a new factory to process flour to export.
A sandwich shop increases the number of sandwiches they supply every day when the price is increased.
Which of these events would indicate a movement along a supply curve for batteries?
a.
Workers at a major battery factory go on strike and stop production.
b.
A new law requires battery manufacturers to spend more money on environmentally-sound trash disposal.
c.
Battery manufacturers raise the price of eight AA batteries from $3.50 to $3.95 a set.
d.
A new trade agreement enables stores to import foreign batteries.
c.
Battery manufacturers raise the price of eight AA batteries from $3.50 to $3.95 a set.
Which product’s supply could be elastic in the short run? a. large handmade pizzas c. large diamonds b. large handmade rugs d. large jet airplanes
a.
large handmade pizzas
Elasticity of supply is a measure of the way suppliers respond to a change in price.
true
According to the law of supply, the higher the price, a. the more consumers are willing to pay. b. the larger the quantity produced. c. the smaller the quantity produced. d. the more the availability of a good is reduced.
b.
the larger the quantity produced.
A baker calculates that by spending $16 on labor and materials, she can bake 10 cakes a day. $24 will allow her to bake 12 cakes, while $36 spent on labor and materials produces 14 cakes. In terms of capital and labor, the baker has a. increasing marginal returns. c. decreasing marginal returns. b. constant marginal returns. d. negative marginal returns.
c.
decreasing marginal returns.
Which of the following is a fixed cost for a store? a. short-term workers c. advertising b. rent d. inventory
b.
rent
A firm will produce a level of output at which marginal revenue is equal to: a. average revenue. c. marginal cost. b. fixed costs plus variable costs. d. average cost.
c.
marginal cost.
A cost that stays constant is a: a. variable cost c. marginal cost b. fixed cost d. total cost
b.
fixed cost
Profits are maximized when marginal revenue and marginal costs are \_\_\_\_\_\_\_\_. a. set c. equal b. less than market price d. greater than market price
c.
equal
The cost of producing one more unit of a good is the: a. fixed cost c. marginal cost b. total cost d. variable cost
c.
marginal cost
A firm’s total cost of production is: a. marginal cost plus average cost. c. marginal cost plus variable cost. b. variable cost plus fixed cost. d. none of the above.
b.
variable cost plus fixed cost.
the cost of producing one more unit of a good
marginal cost
An entrepreneur knits sweaters for sale. The entrepreneur has fixed costs of $100. When he makes 10 sweaters in one month, he must spend $15 on wool. To make eleven sweaters in one month, he must spend $17 on wool. If he has no other costs, what is the marginal cost of the eleventh sweater? a. $1 c. $17 b. $2 d. $117
b.
$2
the additional income from selling one more unit of a good
marginal revenue
Which of the following is an example of lower production costs brought about by the use of technology?
a.
the delivery costs of gasoline to the consumer by diesel trucks
b.
the use of e-mail to replace slower surface mail
c.
the making of breads and pastries in local shops rather than large bakeries
d.
the importing of fresh vegetables from South America rather than using canned vegetables
b.
the use of e-mail to replace slower surface mail
What is the effect of import restrictions on prices?
a.
They cause prices to drop.
b.
They cause prices to rise.
c.
They often cause prices to rise steeply and then drop.
d.
They usually do not have any lasting effect on price.
b.
They cause prices to rise.
What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future?
a.
sell the goods now and try to invest the money instead of resupplying
b.
sell the goods now but try to get the higher price for them
c.
store the goods until the price rises
d.
store the goods indefinitely regardless of when the price rises
c.
store the goods until the price rises
The United States government is currently requiring all car companies to produce more gas efficent automobiles. All car companies must produce cars that get more than 25 miles per gallon by 2012. This is known as a subsidy.
false
Which of the following is an example of government influence on supply? a. law of supply c. marginal costs b. subsidies d. market supply curve
b.
subsidies
A reduction in the number of sellers will shift the supply curve to the right.
false
Which example best demonstrates the practice of the U.S. government providing subsidies to American industry?
a.
Offering a decrease in the excise tax for automakers who produce environmentally friendly cars.
b.
Deregulating the utilities and power companies.
c.
Encouraging farmers to switch to organic methods by supplying financial support.
d.
Allowing the telephone and communications companies to become privatized.
c.
Encouraging farmers to switch to organic methods by supplying financial support.
If a factor input is increased and all other factor inputs remain the same, what happens to the quantity supplied of this good at each and every price? a. it remains the same c. it increases b. it decreases d. none of the above
b.
it decreases
Items that are harmful to the public good such as alcohol, cigars and high-pollutant gasoline are sometimes regulated by government with through excise taxes.
true
Technology can cause a drop in input costs.
true
What happens to the individual demand curve as the price of an item increases?
a.
An individual demand for an item will increase causing an upward slope.
b.
An individual demand for an item will decrease causing a downward slope.
c.
An individual demand will increase, causing the price to increase further.
d.
An individual demand curve will remain unchanged and price is never a factor.
b.
An individual demand for an item will decrease causing a downward slope.
The change from the old demand curve to the new demand curve shown in the table represents a a. movement upward along the demand curve. b. movement downward along the demand curve. c. shift of the demand curve to the left. d. shift of the demand curve to the right.
d.
shift of the demand curve to the right.
For most products and services, increased price results in a. demand for fewer products. c. reduced demand for substitutes. b. demand for more products. d. increased demand for complements.
a.
demand for fewer products.
When the price of an item decreases, the quantity demanded increases. When the price of an item increases, the quantity demanded decreases.
true
All of the following must exist for there to be demand EXCEPT a. a necessity to buy a product. c. an ability to buy a product. b. producers to sell a product. d. a willingness to buy a product.
not b
A?
A demand schedule shows
a.
an upward-sloping curve that illustrates the positive relationship between price and quantity demanded.
b.
a listing of the various quantities demanded of a particular product at all prices that might prevail in the market.
c.
the fluctuations in demand that occurred over a specified period of time.
d.
the fluctuations in demand scheduled to occur over the following year.
b.
a listing of the various quantities demanded of a particular product at all prices that might prevail in the market.
A demand curve illustrates the quantity demanded at every possible price at a given time.
true
Marginal utility is the extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product.
true
Find the price of $15 on the demand schedule. What point does this price and quantity correspond to in the graph? a. v c. x b. w d. y
c.
x
diminishing marginal utility
the decrease in satisfaction or usefulness received from each additional unit of a product
What does the movement shown on this graph represent?
a.
a change in demand
b.
the inverse relationship between price and quantity demanded
c.
the inverse relationship between price and marginal utility
d.
diminishing marginal utility
b.
the inverse relationship between price and quantity demanded
Joe goes to the grocery store to buy steak. He expects that he will be spending $5.99 per pound for his steak as there is only one brand to choose from and their price has remained the same for about a year. However, to Joe’s surprise, the grocery store has begun selling a generic store brand of the same cut of steak for $3.99 per pound. Joe decides that to save the $2.00 per pound he will try to store brand steak.
Based on the information provided above, which of following terms bests describes the scenario that occurred?
a. Income effect
b. Substitution effect
c. Change in quantity demanded
d. Change in quantity supplied
b. Substitution effect
Which of the following choices could cause the movement shown in this graph? a. a decrease in income. b. an increase in population c. an increase in the price of a substitute d. a decrease in the price of a complement
a.
a decrease in income.
Ceteris paribus means “all other things held constant”.
true
substitutes
products that can be used in place of other products
Ceteris paribus means “put your two cents in”.
false
An increase in the price of milk causes a decrease in the demand for cereal. The two products are a. substitutes. c. unrelated. b. complements. d. demand elastic.
b.
complements.
If the demand for beef decreased because a society focused more on vegetarianism the cause for the change would be \_\_\_\_\_\_\_. a. population. c. preferences. b. prices of other goods and services. d. incomes.
c.
preferences.
Based on this graph, how many Beanie Babies™ were demanded at a price of $6 before they became a fad? a. 100 c. 300 b. 200 d. 400
b.
200
In the early 2000’s, MP3 players replaced CD players as the preferred portable music player. This shift in demand was likely the result of the a. increased cost of CD players. c. decreased cost of CD players. b. effect of Ceteris Paribus. d. improved technology of MP3 players.
d.
improved technology of MP3 players.
When a customer's need for a product is not urgent, demand tends to be a. inelastic. c. complementary. b. elastic. d. unit elastic.
b.
elastic.
All of the following are determinants of demand elasticity EXCEPT
a.
whether the purchase of the product can be delayed
b.
whether there are adequate substitutes for the product.
c.
whether the purchase of the product requires a large portion of income.
d.
whether the product has utility.
d.
whether the product has utility.
Which of the following best describes demand elasticity?
a.
Measures if a change in price will cause a larger, smaller, or proportional change in the quantity demanded.
c.
A change in price will cause a small change in the quantity demanded
b.
Measures how consumers will react to a change in quantity supplied.
d.
A change in price will not cause a change in the quantity demanded.
not c
A?
A product that has few substitutes tends to be: a. elastic c. unit elastic b. inelastic d. a complimentary good
b.
inelastic
If the price of a product goes down by 10% and the quantity demanded goes up by 20% the product is: a. elastic c. cheap b. inelastic d. is an inferior good
a.
elastic
Because a price increase has little or no effect, the demand for the product is a. complementary. c. elastic. b. inelastic. d. unit elastic.
b.
inelastic.
All of the following statements are true EXCEPT:
a.
Unit elastic demand is described as a change in price causing a proportional change in quantity demanded.
b.
Raising the prices of the products that you sell will guarantee that you will make better profits.
c.
Inelastic demand describes those items that you cannot live without despite how much the price may rise.
d.
When the elastic demand curve is inverse means that when the price goes down total expenditures go up.
b.
Raising the prices of the products that you sell will guarantee that you will make better profits.
Which of the following best describes the concept of elastic demand?
a. Elastic demand describes demand when a given change in price causes a relatively larger change in the quantity demanded.
b. Elastic demand describes demand when a given change in price causes a relatively smaller change in the quantity demanded.
c. Elastic demand describes demand when a given change in price causes no change in the quantity demanded.
d. Elastic demand describes demand when a given change is price causes no change in the quantity supplied.
a. Elastic demand describes demand when a given change in price causes a relatively larger change in the quantity demanded.
A business decreases the price of their product by 10%, as a result, consumer demand for the product has also increased by 10%. Which term does the scenario best describe?
a.
demand elasticity
c.
inelastic demand
b.
elastic demand
d.
unit elastic demand
not a
If the price of a product goes up by 10% and the quantity demanded goes up by 20% the product is an inferior good.
false
The initial signal that demand for a good exceeds production in an economy is that the \_\_\_\_\_\_\_\_\_\_. A. price rises B. supply increases C. price declines D. quality improves
A.
price rises
According to the above graph, the demand shift in the market would cause the new equilibrium price to be \_\_\_\_\_\_\_\_\_\_. A. $5.00 B. $12.50 C. $10.00 D. $15.00
B.
$12.50
In order to satisfy an increased demand for a good or service, more \_\_\_\_\_\_\_\_\_\_ often appear in the market. A. taxes B. producers C. restrictions D. consumers
B.
producers
When the quantity supplied is the same as the quantity demanded, the market is \_\_\_\_\_\_\_\_\_\_. A. falling B. saturated C. balanced D. unstable
C.
balanced
A shift in demand moves in the same direction as \_\_\_\_\_\_\_\_\_\_. A. supply B. price C. quantity D. quality
B.
price
The above graph is an example of a \_\_\_\_\_\_\_\_\_\_ shift in the market. A. price B. supply C. demand D. equilibrium
C.
demand
In the example above, what is the equilibrium price for Perfect Pepperoni Pizza? A. $5.00 B. $10.00 C. $15.00 D. $17.50
B.
$10.00
Prices provide \_\_\_\_\_\_\_\_\_\_ to both consumers and producers. A. incentives B. security C. assurance D. quantities
A.
incentives
Changes in supply and demand cause a market’s \_\_\_\_\_\_\_\_\_\_ to change. A. quality B. technology C. freedom D. equilibrium
D.
equilibrium
Producers are able to produce more of a good and to make more profit from \_\_\_\_\_\_\_\_\_\_. A. high prices B. limited demands C. high production costs D. government involvement
A.
high prices
Profit is best described as
a.
a gain in material items or money after any type of transaction.
c.
a monetary loss after a transaction.
b.
a monetary gain that occurs as the result of a transaction.
d.
the term used to describe an equal trade in goods or services.
b.
a monetary gain that occurs as the result of a transaction.
Brian is starting his own business producing chairs designed to be used while playing video games. This is an example of _________.
a. creating a monopoly b. specialization c. the factor market d. self-interest
b.
specialization
A \_\_\_\_\_\_\_\_\_\_\_ is an economy in which private enterprise exists with considerable government regulation. a. market economy c. centrally planned economy b. mixed economy d. traditional economy
b.
mixed economy
What is the product market?
a.
the market in which payments are received for selling products to consumers
b.
the market in which income is received for supplying land, labor, or capital
c.
the market in which firms purchase the factors of production from households
d.
the market in which households purchase the goods and services that firms produce
not a
An example of laissez-faire, is the government deciding what to produce and how to produce it.
false
Which best describes how producers benefit from consumer sovereignty?
c.
Producers receive guidance on what to produce.
Which of the following statements regarding the circular flow model is not accurate?
a.
Firms supply households with goods and services.
c.
Firms pay households for land, labor, and capital.
b.
Households pay firms for goods and services.
d.
Households supply firms with goods and services.
d.
Households supply firms with goods and services.
What is an important advantage of a free market?
a.
It does not change unless the government directs it.
b.
It offers a wide variety of goods and services.
c.
It is easy to regulate.
d.
It protects the less fortunate.
b.
It offers a wide variety of goods and services.
A market is any place that brings together buyers and sellers with a view to agreeing a price for \_\_\_\_\_\_\_. a. delivery. c. collateral. b. exchange. d. a quote.
b.
exchange.
Why is consumer sovereignty considered an advantage?
d.
because consumers help determine what is produced
The eminent domain clause of the Constitution states that the government can not take away an individual’s property without providing just compensation.
true
In which system is private property found? a. centrally planned c. free enterprise b. command d. communism
c.
free enterprise
Why does the government use its powers to make sure that businesses disclose information to the public?
a.
to make buyers more knowledgeable and safer
b.
to make it hard for businesses to make an excess profit
c.
to make it easier for consumers to save money
d.
to make it easy for businesses to have good information
a.
to make buyers more knowledgeable and safer
A large telephone company has hired lobbyists to try to persuade lawmakers to reduce governmental regulation over the telecommunications industry. Why might the company do this?
a.
Some regulations are costly to implement and cut into profits.
b.
Many regulations promote too much competition, driving down prices.
c.
Certain regulations result in rapid business growth, which some companies find difficult to handle.
d.
All of the above
a.
Some regulations are costly to implement and cut into profits.
In which way does a public disclosure law help consumers?
a.
by allowing consumers to file grievances about products and businesses with the government
b.
by requiring companies to give consumers important information about their products
c.
by forcing companies to pay taxes based on the amount of goods and services they sell or buy
d.
by requiring businesses to report business relationships that could constitute a monopoly on the marketplace
b.
by requiring companies to give consumers important information about their products
What are some of the basic principles of free enterprise?
a.
research institutions, government restriction, and stock qualifications
b.
profit motive, legal equality, private property rights, free contract, and competition
c.
interest groups, disclosure laws, public interest, and negative regulation
d.
absolute organizations, low prices, and quality control indexes
b.
profit motive, legal equality, private property rights, free contract, and competition
requirements for companies to provide full information about their products
public disclosure laws
Due process and eminent domain are found in the 7th Amendment of the Constitution.
false
The principle that everyone can compete in the marketplace is called
open opportunity
What best describes the role of government in a free enterprise system?
a.
Control business activities.
b.
Decide what companies will be formed and then allow the managers to run them.
c.
Allow individuals to operate their businesses in ways they think will maximize their profits.
d.
Require companies to disclose information to consumers.
c.
Allow individuals to operate their businesses in ways they think will maximize their profits.
Which of the following was NOT part of the 1962 Consumer Bill of Rights? A. the right to safety B. the right to return C. the right to choose D. the right to be heard
B.
the right to return
Which US president established the Consumer Bill of Rights in 1962? A. Dwight D. Eisenhower B. Lyndon B. Johnson C. Harry S Truman D. John F. Kennedy
D.
John F. Kennedy
Patents and copyrights are two forms of protection for A. physical property B. intellectual property C. imaginary property D. potential property
B.
intellectual property
The consumer’s right to be heard means that consumers should expect positive action from government and businesses when they \_\_\_\_\_\_\_\_\_\_. A. organize mass protests B. speak up about problems C. praise the quality of their purchases D. make contributions to top officials
B.
speak up about problems
Having property rights refers to the legal authority to do all of the following EXCEPT:
A.
own property
B.
take property that others have abandoned
C.
use the property as one sees fit, within the law
D.
receive any income the property generates
B.
take property that others have abandoned
Which of the following is NOT a way that the Federal Trade Commission protects consumers?
A.
making complaints about fraud and identity theft available to law enforcement
B.
suing companies and people who violate consumer protections laws
C.
educating consumers and businesses about rights and responsibilities
D.
ensuring that factory safety standards are in line with current laws
D.
ensuring that factory safety standards are in line with current laws
Original works of authorship are protected by \_\_\_\_\_\_\_\_\_\_. A. patents B. insignias C. trademarks D. copyrights
D.
copyrights
Which of the following is NOT intellectual property? A. a new office building B. the design for the building C. a painting of the building D. software used inside the building
A.
a new office building
Property owners have a strong incentive to improve their property because they can __________.
A.
increase the value of their neighbor’s property, even if it does not increase the value of their own
B.
be confident that they will receive the financial benefits of improving their property if they choose to sell
C.
be sure that improvements on property will intimidate new buyers, keeping the population of the neighborhood low
D.
increase the amount of their annual property tax
B.
be confident that they will receive the financial benefits of improving their property if they choose to sell
The consumer’s right to safety means that goods and services will not be hazardous \_\_\_\_\_\_\_\_\_\_. A. if used by any responsible adult B. under any circumstances whatever C. if used for their intended purposes D. when purchased in their original packaging
C.
if used for their intended purposes
The rise and fall of economic activity through periods of expansion and recession is known as the \_\_\_\_\_\_\_\_\_\_. A. business cycle B. percentage change C. unemployment rate D. consumer price index
A.
business cycle
All of the following categories are part of the CPI market basket EXCEPT: A. education and communication B. food and beverages C. career promotion D. medical care
C.
career promotion
Inflation is a decrease in the average price level in the economy.
false
People who want to work and have jobs are said to be \_\_\_\_\_\_\_\_\_\_. A. employers B. employed C. retirees D. military
B.
employed
The percentage increase in the average price of the economy’s goods and services is known as \_\_\_\_\_\_\_\_\_\_. A. market basket B. price index C. deflation rate D. inflation rate
D.
inflation rate
People age 16 years or older who are working in a job for which they are overqualified for are said to be \_\_\_\_\_\_\_\_\_\_. A. underemployed B. full-time student C. nonlabor force D. retired
A.
underemployed
Each month, government employees interview about 60,000 persons in sample households to determine what percentage is unemployed. This is used to determine the \_\_\_\_\_\_\_\_\_\_ rate. A. price index B. unemployment C. market basket D. business cycle
B.
unemployment
The percentage of decrease in the average price of the economy’s goods and services is known as the \_\_\_\_\_\_\_\_\_\_. A. nonlabor force B. deflation rate C. unemployment rate D. consumer price index
B.
deflation rate
The total US noninstitutionalized population 16 years and older is known as the \_\_\_\_\_\_\_\_\_\_. A. discouraged workers B. underemployed C. labor force D. households
C.
labor force
A \_\_\_\_\_\_\_\_\_\_ contains thousands of specific items that represent what average urban households purchase month after month. A. price index B. dollar value C. business cycle D. market basket
D.
market basket
The benefits of long-term economic growth include all of the following EXCEPT a. an increase in the standard of living. b. an increase in employment. c. a boost in economic growth of other nations. d. an increase in the availability of land.
d.
an increase in the availability of land.
A table that shows annual compound rates of growth between selected periods of time is the standard of living.
false
capital-to-labor ratio
total capital stock divided by the number of workers in the labor force
The numbers in this table were calculated by a. adding the dollar value of all final goods and services produced in the nation. b. subtracting net exports from GDP. c. multiplying GDP by total population. d. dividing GDP by total population.
d.
dividing GDP by total population.
_______ is a factor that influences economic growth.
labor
A table that shows annual compound rates of growth between selected periods of time. a. quality of life c. growth triangle b. real GDP d. standard of living
c.
growth triangle
labor productivity
ratio of output produced per unit of labor input
Increasing productivity results in a. increasing economic growth. c. stabilization of economic growth. b. decreasing economic growth. d. sporadic economic growth.
a.
increasing economic growth.
Which of the following is not a factor that could lead to economic growth? a. labor c. land b. capital d. opportunity cost
d.
opportunity cost
The capital-to-labor ratio influences
a.
economic growth
In a sole proprietorship, \_\_\_\_\_\_\_\_\_\_ receive all of the profits. A. banks B. owners C. partners D. investors
B.
owners
Sole proprietorships are often owned by \_\_\_\_\_\_\_\_\_\_. A. financial institutions B. a small group of investors C. one person or a married couple D. people with a common interests
C.
one person or a married couple
What is one reason why a business owner might choose a for-profit business over a nonprofit business?
to avoid facing stricter business regulations
When corporations and shareholders each pay taxes on the same money it is called \_\_\_\_\_\_\_\_\_\_ taxation. A. dual B. repeat C. double D. shadow
C.
double
Profit motive and a sense of \_\_\_\_\_\_\_\_\_\_ act as powerful incentives for many entrepreneurs. A. power B. uncertainty C. independence D. impulsiveness
C.
independence
Ownership of a corporation is \_\_\_\_\_\_\_\_\_\_ to transfer. A. easy B. difficult C. impossible D. impractical
A.
easy
What is one feature of a nonprofit business that is different from a for-profit business?
Nonprofits are exempt from taxes.
Shareholders have \_\_\_\_\_\_\_\_\_\_ liability because they are not responsible for the debts or actions of the corporation. A. limited B. personal C. unlimited D. corporate
A.
limited
Each of the following is a risk of entrepreneurship EXCEPT: A. loss of savings B. being your own boss C. damage to relationships D. possibility of unemployment
B.
being your own boss
When a business’s purpose is to benefit the general public, the business is called a ________ business.
nonprofit
In a perfectly competitive market, prices and production costs are kept
low
All of the following are examples of a commodity, except a. strawberries c. milk b. a designer handbag d. petroleum
b.
a designer handbag
Some examples of barriers to entry are technology and start-up costs.
true
In a perfectly competitive market, competition drives prices to the point where they
not a
prob “just cover costs”
product that is considered the same no matter who makes or sells it.
commodity
As competition drives prices down in a perfectly competitive market, ________
will reach a point that allows suppliers to just cover costs.
?
not “prices”
Which of the following is a condition of a perfectly competitive market? a. a few buyers c. a market in which there is only one barrier to entry b. identical products d. uninformed buyers and sellers
b.
identical products
the expenses a firm must pay before it can begin to produce and sell goods
start-up costs
One of the four conditions for perfect competition is few sellers and buyers.
false
If an individual seller tries to increase the price of their product in a perfectly competitive system then:
a.
other sellers will increase their prices.
c.
the seller will increase their profit.
b.
the individual will not be able to sell any of their product.
d.
none of the above
b.
the individual will not be able to sell any of their product.
Which of the following is a characteristic of a monopoly? a. no barriers to entry c. it is always government owned b. a single buyer d. a single seller
d.
a single seller
Which of the following can destroy a monopoly? a. technology c. a reduction in the price of factor inputs b. increased barriers to entry d. a law which outlaws price discrimination
a.
technology
Why do companies practice price discrimination?
a.
Price discrimination enables companies to charge all consumers the same price for a good or service.
b.
Price discrimination allows companies to defend an illegal monopoly against free market competition.
c.
Price discrimination provides individual producers with an advantage in perfectly competitive markets.
d.
Price discrimination recognizes that groups of consumers are willing and able to pay different amounts and maximizes profits by charging each group a different price.
d.
Price discrimination recognizes that groups of consumers are willing and able to pay different amounts and maximizes profits by charging each group a different price.
A natural monopoly is a market that runs most efficiently when one large firm supplies all the output.
true
A monopolist will set its production at a level where marginal cost is equal to a. marginal revenue. c. total revenue. b. the equilibrium market price. d. quantity supplied.
a.
marginal revenue.
Which of these is an example of economies of scale?
a.
A shoe store finds it can increase profits by hiring high school students who are willing to work for minimum wage.
b.
A ranch increases its profits by expanding from 400 to 800 cattle without buying or renting additional land.
c.
A restaurant charges customers $1 a glass for water that was once provided for free.
d.
An Internet access company charges customers different rates for using the Internet at different times of day.
b.
A ranch increases its profits by expanding from 400 to 800 cattle without buying or renting additional land.
A market dominated by one seller is called a monopoly.
true
Factors that cause a producer’s average cost per unit to fall while output rises are known as _____.
a. franchise scale
b. price discrimination
c. economics of scale
d. market power scale
c. economics of scale
Why can an industry that enjoys economies of scale easily become a natural monopoly?
a.
because average costs drop as production rises
b.
because the market taxes less as production rises
c.
because consumers tend to appreciate monopolies
d.
because our government traditionally supports monopolies
a.
because average costs drop as production rises
