Practice Quiz (Chapters 1, 2 & 3)
1.
The primary focus of the study of economics is with:
A. expanding the production of goods and services.
B. equalizing the distribution of consumer income and wealth.
C. making the most efficient use of scarce productive resources.
D. reallocating resources from consumption to production in the economy
2.
The key economic concept that serves as the basis for the study of economics is:
A. inflation.
B. unemployment.
C. money.
D. scarcity.
3.
One major feature of the economic perspective is:
A. that scarcity is more important than choice.
C. the assumption of purposeful behavior by individuals.
B. that costs are more important than benefits.
D. the recognition of economic resources in the economy.
4.
Are the goods that businesses offer for "free" to consumers also free to society?
A. Yes, because the individual consumer does not have to pay for them.
B. Yes, because the marginal benefit is greater than the marginal cost.
C. No, because scarce resources were used to produce the free goods.
D. No, because society does not assign a value to free goods.
5.
The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of:
A. a command system.
B. a market system.
C. communism.
D. socialism.
6.
A basic characteristic of a command system is that:
A. wages paid to labor are higher.
B. government owns most economic resources.
C. free markets are never permitted in a command economy.
D. government planners play a limited role in deciding what goods will be produced.
7.
The economy of New Zealand most closely approximates:
A. socialism.
B. a command economy.
C. pure capitalism.
D. a market economy.
8.
The law of demand states that:
A. price and quantity demanded are inversely related.
B. the larger the number of buyers in a market, the lower will be product price.
C. price and quantity demanded are directly related.
D. consumers will buy more of a product at high prices than at low prices.
9.
Graphically, the market demand curve is:
A. steeper than any individual demand curve that is part of it.
B. greater than the sum of the individual demand curves.
C. the horizontal sum of individual demand curves.
D. the vertical sum of individual demand curves.
10. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is
____.
A. direct, inverse
B. inverse, direct
C. inverse, inverse
D. direct, direct
Answers: 1. C 2.D 3.C 4. C 5. B 6.B 7.D 8.A 9.C 10.A