question

The situation in which there is not enough of something to satisfy all the desires for that thing is called: A) abundance. B) scarcity. C) demand. D) plethora.

answer

B

question

The situation in which limited resources are being used most effectively is called: A) efficient. B) economic. C) abundant. D) scarce.

answer

A

question

The study of the behavior of firms, individual markets, and households is called: A) normative economics. B) positive economics. C) macroeconomics. D) microeconomics.

answer

D

question

The study of the behavior of the overall economy is called: A) normative economics. B) positive economics. C) macroeconomics. D) microeconomics.

answer

C

question

If we believed that event b occurs simply because it follows event a, then we would be trapped by the: A) failure to hold other things equal. B) fallacy of composition. C) post hoc fallacy. D) Adam Smith syndrome.

answer

C

question

The three fundamental questions of economic organization are: A) when, for whom, and how. B) how, what, and for whom. C) who, how, and when. D) what, who, and why.

answer

B

question

Economic questions that can be answered by examining data and making observations are part of: A) normative economics. B) positive economics. C) macroeconomics. D) microeconomics.

answer

B

question

Economic questions that can be answered through political debate and decisions are part of: A) normative economics. B) positive economics. C) macroeconomics. D) microeconomics.

answer

A

question

The _______ of a decision is the value of the good or service forgone. A) opportunity cost B) efficiency C) economics D) scarcity

answer

A

question

Productive _______ exists when an economy cannot produce more of one good without producing less of another good. A) scarcity B) economics C) efficiency D) opportunity cost

answer

C

question

An economic system in which markets are the governing force in day-to-day economic life while government regulates social conditions and provides health care and social programs. A) democratic state B) communist state C) welfare state D) steady state

answer

C

question

As economists, we refer to the doctrine that holds that government should leave economic affairs primarily to the market as: A) capitalism B) laissez-faire C) dormez-vous D) communism

answer

B

question

A market is: A) a mechanism through which buyers and sellers interact to set prices and exchange goods and services. B) a place where goods are traded. C) both a and b D) neither a nor b

answer

C

question

_______ coordinate the decisions of producers and consumers in the market. A) Ushers B) Directors C) Governments D) Prices

answer

D

question

______ and ______ provide incentives and disincentives to firms for them to produce the desired goods in an efficient manner. A) Profits; losses B) Prices; profits C) Prices; losses D) Profits; government

answer

A

question

Which of the following determine society's point on the production-possibility frontier (PPF)? A) profits and losses B) prices and profit C) tastes and technology D) tastes and profits

answer

C

question

_______, in his 1776 work _______, introduced the concept of the invisible hand. A) Eli Hecksher; The Wealth of Nations B) Adam Smith; The Wealth of Nations C) Paul Samuelson; Economics D) Karl Marx; The Wealth of Nations

answer

B

question

When different people specialize in the production of different goods, their interactions in the market will lead to _______. A) anarchy B) a welfare state C) capitalism D) gains from trade

answer

D

question

The recent growth in the flows of goods and services across national borders is described as: A) globalization B) capitalism C) communism D) marketism

answer

A

question

When market players impose costs or benefits on those outside the market _______ arise. A) externalities B) internalities C) public goods D) none of the above

answer

A

question

Which of the following shows the relationship between the price of a good and the amount of that good that consumers want at that price? A) supply curve B) demand curve C) supply schedule D) production possibilities frontier

answer

B

question

When the price of good X increases and consumers substitute good Y for good X, we call that the: A) income effect. B) backwards effect. C) substitution effect. D) demand effect.

answer

C

question

When the price of good X increases and consumers demand less of good X because the increase in price has made them relatively poorer, we call that the: A) income effect. B) supply effect. C) substitution effect. D) money multiplier effect.

answer

A

question

If we were to sum the quantity demanded by every consumer in the market at every price and plot those sums versus the price, we would obtain the: A) supply curve. B) summed demand curve. C) market demand curve. D) vertical demand curve.

answer

C

question

Which of the following is not a determinant of demand for good X: A) average income. B) population. C) tastes and preferences. D) price of good X.

answer

D

question

The demand curve will shift when: A) the price of the good changes. B) the price of the good changes and when the underlying determinants of demand change. C) the underlying determinants of demand change. D) never.

answer

C

question

Which of the following factors will cause the supply curve to shift: A) Changes in technology. B) Changes in input prices. C) Changes in the prices of related goods. D) Changes in government policies. E) All of the above.

answer

E

question

The market-clearing price is also called the ___________ and is the price at which: A) prevailing price; the supply and demand curve cross. B) prevailing price; the supply curve crosses the y-axis. C) equilibrium price; the supply and demand curve cross. D) special price; the supply and demand curve cross.

answer

C

question

Other things held equal, if demand increases, equilibrium price will __________ and equilibrium quantity will __________. However, if supply increases, equilibrium price will _________ and equilibrium quantity will __________, other things held equal. A) decrease; decrease; increase; increase B) increase; increase; decrease; increase C) decrease; decrease; increase; decrease D) increase; increase; decrease; decrease

answer

B

question

The forces of demand and supply determine: A) What is produced. B) For whom the goods are produced. C) How the goods are produced. D) All of the above.

answer

D

question

The price elasticity of demand measures: A) the change in quantity demanded of a good given a change in income. B) the change in quantity demanded of a good given a change in the price of another good. C) the change in the quantity demanded of a good given a change in the price of the good. D) the change in the quantity demanded of a good given a change in the price elasticity of supply.

answer

C

question

If a good has price-inelastic demand, A) a 1 percent increase in price produces less than a 1 percent decrease in the quantity demanded. B) a 1 percent increase in price produces less than a 1 percent increase in the quantity demanded. C) a 1 percent increase in price produces more than a 1 percent increase in the quantity demanded. D) a 1 percent increase in price produces more than a 1 percent decrease in the quantity demanded.

answer

A

question

When the price is 5, the quantity demanded is 10. When the price is 7, the quantity demanded is 5. What is the price elasticity of demand? A) 1 B) 0.5 C) 0.33 D) 2

answer

D

question

A perfectly inelastic demand curve will be ______ on a graph while a perfectly elastic demand curve will be ______ on a graph. A) vertical; horizontal B) horizontal; vertical C) vertical; vertical D) horizontal; horizontal

answer

A

question

P x Q = A) MC B) TR C) MR D) TC

answer

B

question

A percentage change in quantity supplied divided by a percentage change in price is called: A) income elasticity. B) price elasticity of demand. C) price elasticity of supply. D) elasticity of substitution.

answer

C

question

When the price is 5, the quantity supplied is 10. When the price is 10, the quantity supplied is 20. What is the price elasticity of supply? A) 1 B) 0.5 C) 0.33 D) 2

answer

A

question

The burden of a gasoline tax will be borne mostly by _______ because the demand curve is relatively _______. A) producers; inelastic B) producers; elastic C) consumers; inelastic D) consumers; elastic

answer

C

question

If demand is inelastic relative to supply, most of the burden of a tax will be borne by ______. A) consumers B) producers C) firms D) none of the above

answer

A

question

Price ceilings generally lead to: A) unemployment. B) shortages. C) surpluses. D) none of the above.

answer

B

question

What is the term that economists use to describe how consumers rank different goods and services? A) satisfaction index B) goodness C) utility D) none of the above

answer

C

question

Marginal utility refers to: A) the additional product produced as the firm adds one additional unit of an input. B) the additional utility that a consumer derives from consuming one additional unit of a good. C) the amount of utility divided by the number of units produced. D) all of the above.

answer

B

question

The law of diminishing marginal utility states: A) the supply curve slopes upward. B) your utility grows at a slower and slower rate as you consume more and more units of a good. C) the elasticity of demand is infinite. D) none of the above.

answer

B

question

Consumers will maximize satisfaction when: A) the price of each good is exactly equal to the price of every other good consumed. B) the price of each good is exactly equal to the total utility derived from the consumption of every other good. C) the marginal utility of the last dollar spent on each good is exactly equal to the marginal utility of the last dollar spent on any other good. D) marginal utility is equal to average utility.

answer

C

question

The demand curve generally slopes downward because: A) a higher price increases the consumer's desired level of consumption. B) a higher price decreases the consumer's desired level of consumption. C) that's just the way that it is. D) none of the above.

answer

B

question

The substitution effect explains that when the price of a good increases, consumers will consume A) less of the more expensive good and more of some other good. B) more of the more expensive good and less of some other good. C) more of the good because their real incomes are lower after the price increase. D) less of the good because their real incomes are lower after the price increase.

answer

A

question

The income effect explains that when the price of a good increases, consumers will consume A) less of the more expensive good and more of some other good. B) more of the more expensive good and less of some other good. C) more of the good because their real incomes are lower after the price increase. D) less of the good because their real incomes are lower after the price increase.

answer

D

question

Which of the following groups of goods are complements? A) steak and steak sauce B) gasoline and cars C) CD-ROM's and computers D) all of the above

answer

D

question

If goods X and Y are substitutes, an increase in the price of Y will cause _______ in the demand for good X. A) an increase B) a decrease C) no change D) an inversion

answer

A

question

______ is the extra value that consumers receive above what they pay for that good. A) producer surplus B) utility C) marginal utility D) consumer surplus

answer

D

question

A point inside a production possibilities boundary may indicate any of the following except: A. a combination of outputs that is not attainable B. the existence of some unemployed resources C. inefficient production D. more of one type of good could be produced without any sacrifice of the other E. none of the above

answer

A

question

Whenever a time dimension is required to give a variable significant meaning, we know it is: A. a flow variable B. an endogenous variable C. a stock variable D. an exogenous variable E. none of the above

answer

A

question

All of the following should be noted when reading graphical displays of economic time-series data except: A. per-capita figures B. small time periods C. large numbers on small scales (or axes) D. small numbers on large scales E. none of the above

answer

E

question

If a production possibilities boundary indicates the attainable combinations of military and civilian goods, then the opportunity cost of an increase in military goods output is shown by: A. the area under the new point on the production possibilities boundary B. the distance on the military goods axis from the origin to the new point C. the distance on the civilian goods axis from the old point to the new point D. the distance on the civilian goods axis from the origin to the new point. E. none of the above

answer

C

question

An increase in households' demand for a product, other things equal, will cause all of the following except: A. a shortage B. a rise in price C. a decrease in the profitability of producing the product D. an increase in its output

answer

C

question

A decrease in the supply of a product will cause, other things equal: A. a surplus B. a rise in price C. a decrease in the profitability of producing the product D. and increase in its output

answer

D

question

The use of money for transactions: A. makes specialization of labor more difficult B. increases the use of barter C. makes exchange easier D. fosters self-sufficiency

answer

C

question

Specialization of labor means that: A. everyone is a skilled worker B. different tasks are allocated to different people C. the worker is his or her own boss D. each worker is self-sufficient

answer

B

question

An economic system that also could have slavery is: A. fascism B. etatism C. capitalism D. all of the above E. none of the above

answer

D

question

"Lying with statistics" could happen when A. the graphs are drawn to scale B. graphs show time on the axis C. Units are used to emphasize a person's point of view D. all of the above E. none of the above

answer

D

question

Economic theory is a positive science only to the extent that it yields: A. scientifically testable predictions B. moral answers to ethical disputes C. absolutely correct descriptions of how the world works D. optimistic, rather than pessimistic, answers to life's problems E. rigid definitions of social phenomenon

answer

A

question

A hike in the relative price of a good will quickly raise the: A. rate of inflation B. market supply C. quantity demanded D. quantity supplied

answer

D

question

The most difficult concepts to illustrate with a graph of a production possibilities frontier would be: A. relative prices and opportunity costs B. productive inefficiency and unemployment C. scarcity and choices D. inflation and absolute prices E. diminishing returns

answer

D

question

Movements from under utilization of some resources to an economically efficient situation would be shown graphically in a production possibilities frontier (PPF) by a/an: A. expansion of the PPF B. inward shift of the PPF C. pa along the PPF curve toward its midpoint D. arrow piercing and then passing through the PPF's boundary. E. movement from inside the PPF to a point on the PPF

answer

E

question

The person with the best claim to the title of "father of economics" was: A. John Stuart Mill B. Karl Marx C. John Maynard Keynes D. Joan Robinson E. Adam Smith

answer

E

question

The Consumer Price Index (CPI) is used to: A. convert current real values to long-term nominal values B. adjust contracts that have "escalator clauses" governing future monetary payments C. indicate how well policies dampen seasonal unemployment D. directly measure real economic growth E. ascertain the percentage consumers save at discount store

answer

B

question

Each year's CPI is listed after the dollar price of a gallon of gasoline. In which year was the relative price of gasoline highest? A. 1973 $.35 (125) B. 1977 $.95 (160) C. 1981 $1.20 (299) D. 1989 $1.25 (401)

answer

B

question

If W is the money wage and P is the price level (where P = CPI/100), the real wage is: A. W X P B. W + P C. W/P D. W - P

answer

C

question

Assume that raw materials are purchased for $100 and are used to make a product which the producer sells for $200 to a retail store which sells the item to a consumer for $275. Using the value-added approach, how much GNP has been generated? A. $100 B. $575 C. $135 D. $200 E. $275

answer

E

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