Economics Review

Scarcity and Production Possibilities

Economic Systems and Trade

Supply and Demand

Cost of Production

100

Scarcity means that there is less of a good or resource available than people wish to have.

a.True

b.False

a.True

100

The freedom to start a business is:

a.markets and prices

b.competition

c.freedom of enterprise

d.central economic planning board

c.freedom of enterprise

100

Baseballs and baseball bats are substitute goods.

a.True

b.False

100

All of the following are corporations except:

a.Nike

b.Hersheys

c.Bagel Experience

d.Coca-Cola

c.Bagel Experience

200

Approximately what percentage of the world's economies experience scarcity?

a. 25%

b. 50%

c. 75%

d. 100%

200

Having the lower opportunity cost is associated with

a.Absolute Advantage

b.Comparative Advantage

200

The unique point at which the supply and demand curves intersect is called?

a.equilibrium.

b.cohesion.

c.coincidence.

d.market harmony.

a.equilibrium.

200

Two or more owners of a business describes a:

a.Sole Proprietorship

b.Partnership

c.Corporation

b.Partnership

300

Resources are

a. scarce for households but plentiful for economies.

b. plentiful for households but scarce for economies.

c. scarce for households and scarce for economies. d. plentiful for households and plentiful for economies.

c. scarce for households and scarce for economies.

300

Who buys in the resource/factors of production market?

a.Households

b.Firms

300

If, at the current price, there is a shortage of a good,

a.quantity demanded equals quantity supplied.

b.the market must be in equilibrium.

c.sellers are producing more than buyers wish to buy.

d.the price is below the equilibrium price.

300

Doctors and Lawyers are most likely what type of business?

a.Sole Proprietorship

b.Partnership

c.Corporation

b.Partnership

400

Guns and butter are used to represent the classic societal tradeoff between spending on

a. durable and nondurable goods.

b. imports and exports.

c. national defense and consumer goods.

d. law enforcement and agriculture.

c. national defense and consumer goods.

400

For two individuals who engage in the same two productive activities, it is impossible for one of the two individuals to

a. have a comparative advantage in both activities. b. have an absolute advantage in both activities.

c. be more productive per unit of time in both activities.

d. All of the above are correct.

a. have a comparative advantage in both activities.

400

Why is the supply curve upward sloping?

a.Substitution effect

b.Income Effect

c.Inverse relationship between price and quantity

d.Higher prices encourage suppliers to produce more quantity to bring to market

400

__________________________have the advantage of limited liability.

a.Sole Proprietorships

b.Partnerships

c.Corporations

500

Which of the following is the most accurate statement about production possibilities?

a. An economy can produce only on the production possibilities frontier.

b. An economy can produce at any point inside or outside a production possibilities frontier.

c. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.

d. An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.

c. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.

500

What characteristic of capitalism brings buyers and sellers together?

a.Private Property

b.Limited Government

c.Markets and Prices

d.Freedom of Enterprise

c.Markets and Prices

500

The law of demand states that if price rises

a.demand falls

b.supply falls

c.quantity demanded falls

d.quantity supplied falls

e.demand increases

f.supply increases

g.quantity demanded increases

h.quantity supplied increases

c.quantity demanded falls

500

All of the following are reasons why businesses fail except:

a.Lack of demand

b.Lack of capital

c.Lack of business knowledge

d.High profits

e.Poor location

f.Changes in resource prices

g.Natural or physical disasters

d.High profits