Scarcity
What are the three factors of production?
A. Needs, wants, choices
B. Workers, management, entrepreneurs
C. Land, labor, capital
D. Human capital, physical capital, intellectual capital
C. Land, labor, capital
What are economists referring to when they say “choosing is refusing”?
A. Opportunity cost
B. “Guns or butter”
C. Marginal cost
D. Thinking at the margin
A. Opportunity cost
In economics, the concept of demand is defined as the desire to own something
D. combined with the ability to pay for it.
If Capeland switches from producing 0 watermelons to producing 18 million tons of watermelons, what does it give up?
A. 9 million pairs of shoes
B. 6 million pairs of shoes
C. 3 million tons of watermelons
D. 14 million tons of watermelons
B. 6 million pairs of shoes
What are the three basic economic questions all societies must answer?
A. Who gets to produce goods and services, who gets to consume them, and who collects the profits?
B. Why should goods and services be produced, when should they be produced, and how should they be produced?
C. Where should goods and services be produced, who should sell them, and who should get the profits?
D. What goods and services should be produced, how should they be produced, and who will consume them?
D. What goods and services should be produced, how should they be produced, and who will consume them?
Ceteris paribus” means demand will change when price changes
A. no matter what other factors may influence the market.
B. if other market factors remain constant.
C. only if the supply also does not change.
D. only in the short-term.
Correct Answer: B
B. if other market factors remain constant.
Shana continues to buy a necessary medicine even though prices for the medicine rise sharply. Shana's behavior shows how
A. the passage of time affects elasticity.
B. the law of demand eliminates elasticity.
C. luxury goods are nut subject to elasticity.
D. demand for necessities is inelastic.
D. demand for necessities is inelastic.
The law of supply declares which of the following?
Which of the following describes the benefits of specialization in a free market?
A. Specialization leads to higher prices.
B. Specialization leads to decreased competition among producers.
C. Specialization leads to lower overall output.
D. Specialization leads to efficient use of capital, land, and labor
D. Specialization leads to efficient use of capital, land, and labor
Which of the following is a benefit that a business is likely to attain from purchasing new equipment?
A. Increased productivity
B. Better entrepreneurial knowledge
C. Fewer natural resources required
D. Lower costs
A. Increased productivity
Because of scarcity, every decision involves a
A. cost/benefit analysis.
B. trade-off.
C. marginal cost.
D. marginal benefit.
B. trade-off.
According to the law of demand, when the price of pizza goes up,
A. consumers will buy less pizza.
Point b on the graph above represents
A. production of the maximum amount of watermelons.
B. production of the minimum amount of shoes.
C. an underutilization of resources.
D. an efficient use of resources.
C. an underutilization of resources.
The distribution of income received in the form of rent, wages, or interest is the main factor that determines
A. how goods and services are produced.
B. where goods and services are consumed.
C. who produces goods and services.
D. who consumes goods and services
D. who consumes goods and services
In general, a decrease in consumer income will have what effect on demand for normal goods?
A. It will have no effect.
B. It will cause demand to rise.
C. It will cause demand to fall.
D. It will demand to fluctuate sharply.
C. It will cause demand to fall.
Suppose demand for a product is highly elastic. What will likely happen to a company's total revenue if it raises the price of that product?
What does a firm's supply schedule show?
How do self-interest and competition affect free markets?
A. They work together to keep prices high.
B. They work together to regulate supply, demand, and prices.
C. They represent the opposing interests of consumers and producers.
D. They help level the playing field between efficient and inefficient producers.
B. They work together to regulate supply, demand, and prices.
Read each question and choose the best answer.
Why are entrepreneurs important to the economy?
A. They desire profits.
B. They promote economic growth.
C. They have talent and imagination.
D. They are willing to take risks.
B. They promote economic growth.
A basketball coach is performing a cost/benefit analysis in order to determine if more
hours of practice would help the team score more points. The coach
’
s action is an
example of
A. individual trade-offs.
B. opportunity cost.
C. marginal thinking.
D. marginal benefit.
C. marginal thinking.
Juanita has noticed that the price of bagels has gone up. Because of this, she has decided to buy a less expensive yogurt every morning for her breakfast. This is an example of the
In 1991, for a short time, Iraq invaded Kuwait and seized its oil fields. During that time, what impact, if any, did the invasion have on Iraq’s production possibilities frontier?
A. The production possibilities frontier remained stable.
B. The production possibilities frontier reached its maximum.
C. The production possibilities frontier shifted to the left.
D. The production possibilities frontier shifted to the right.
D. The production possibilities frontier shifted to the right.
An economy that maximizes its scarce resources and can deliver the right goods in the right quantity to the right people at the right price has achieved which economic goal?
A. efficiency
B. freedom
C. security
D. equity
A. efficiency
The increasing age of the American population is an example of how
A. changing demographics can cause demand shifts.
B. the law of ceteris paribus works.
C. lack of substitutes can blunt demand shifts.
D. demand does not always change when prices change
A. changing demographics can cause demand shifts.
Suppose the price of a good rises. In general, how does the percentage of your budget you spend on that good affect the elasticity of your demand for goods overall?
Which of the following typically happens as prices for a good or service rises?
Which of the following is an explanation of what Adam Smith called the “invisible hand” of the marketplace?
A. Advertising causes consumers to desire products that they otherwise would not want.
B. Government regulations influence the decisions of consumers and producers in the market.
C. Self-interest, competition, and incentives promote smoothly running markets.
D. Unforeseen events disturb supplies of goods and services and affect prices in the marketplace.
C. Self-interest, competition, and incentives promote smoothly running markets.
A sales clerk represents which factor of production?
A. Entrepreneur
B. Capital
C. Labor
D. Land
C. Labor
The phrase “guns or butter” expresses the idea that
A. individuals, businesses, and governments all face trade-offs.
B. factor resources are limited.
C. government decisions involve opportunity cost.
D. government decisions involve trade-offs between military and domestic needs
D. government decisions involve trade-offs between military and domestic needs
Marty just finished creating a market demand schedule for his hardware store. Which of the following is he most likely trying to determine?
A. How many tools he sold last year to his customers.
B. Which contractors are the best customers of his products.
C. How many tools are sold to all consumers in the market at various prices.
D. Which of his competitors is the greatest threat to his business.
C. How many tools are sold to all consumers in the market at various prices.
A country has two main products: hats and grapes. The country decides to start making more and more hats and fewer and fewer grapes. Why does the opportunity cost of making hats increase as more and more hats are produced?
A. Grapes can be grown more efficiently than hats can be manufactured.
B. The best resources for producing grapes are least suited to making hats.
C. Increasing the country’s production of hats maximizes its output of goods and services.
D. Producing more hats and fewer grapes shifts the production possibilities frontier to the left.
B. The best resources for producing grapes are least suited to making hats.
How does innovation promote economic growth?
A. by reinforcing traditional values in a society
B. by introducing new goods and services that create new markets
C. by ensuring people’s freedom to make their own choices
D. by rewarding the development of efficient technology
B. by introducing new goods and services that create new markets
Which of the following is the best example of substitute for movie tickets?
A. Inferior goods
B. Jewelry
C. Takeout pizza
D. Rentals of on-demand programming
D. Rentals of on-demand programming
Why does demand generally become more elastic over time?
A.People don't change their shopping behavior over time.
B.Few substitutes become available.
C.People buy more products over time.
D.People have time to find substitutes and change behaviors.
D.People have time to find substitutes and change behaviors.
What does it mean to say that supply is unitary elastic?
Key advantages of free market economic systems include
A. rising prices, specialization, negative incentives, and multiple markets.
B. online markets, producer sovereignty, self-interested consumers, and low prices.
C. economic efficiency, economic freedom, economic growth, and variety of goods.
D. positive incentives, negative incentives, specialized consumers, and efficient labor.
C. economic efficiency, economic freedom, economic growth, and variety of goods
Why is there scarcity even in an affluent country like the United States?
A. Entrepreneurs are scarce and companies need leaders.
B. Resources are limited but wants are unlimited.
C. Some people are poor while others are wealthy.
D. Wants are limited but needs are unlimited.
B. Resources are limited but wants are unlimited.
An opportunity cost is
A. the best alternative that is given up when a decision is made.
B. the worst alternative that is given up when a decision is made.
C. a choice that is made when no alternative is very good.
D. the cost of making decisions related to producing goods.
A. the best alternative that is given up when a decision is made.
If Tino responds to a sharp increase in his transportation costs by buying fewer clothes, he is demonstrating
A. horizontal demand.
B. an individual demand schedule.
C. the income effect.
D. the substitution effect.
C. the income effect.
Which of the following courses of action makes the MOST sense in today’s world for manual laborers who have been replaced by robots?
A. Look for work in farming, fishing, or hunting.
B. Write to members of Congress to complain about their former employer.
C. Seek training in the latest technology related to a type of work they enjoy.
D. Open their own manufacturing plant that employs manual laborers, not robots.
C. Seek training in the latest technology related to a type of work they enjoy.
Which basic economic goal is most easily achieved in a traditional economy?
A. equity
B. innovation
C. growth
D. efficiency
A. equity
A change in demand for one good will have what effect on its complement?
A. No effect
B. Different effects at different times
C. The same effect
D. The opposite effec
C. The same effect
Do higher prices lead to increased revenues for a company?
Consider each of these business activities. For which do you think supply would be most elastic in the short term?
A. Producing feature movies
B. Building skyscrapers
C. Providing health care
D. Baking cupcakes
D. Baking cupcakes
In a free market system, the concept of consumer sovereignty means that
A. consumers have the power to decide through their actions what goods and services get produced.
B. producers are in an ongoing struggle with consumers over control of the marketplace.
C. government must intervene to ensure fair competition between consumers and producers.
D. consumers are not bound to accept the positive incentives offered by producers
A. consumers have the power to decide through their actions what goods and services get produced.