Econ 1
Quiz 1 Practice
True/False
Indicate whether the statement is true or false.
____
1. Economy is the social arrangements that determine what is produced, how it is produced, and for whom it is
produced
____
2. Economists often find it worthwhile to make assumptions that do not necessarily describe the real world.
____
4. The term specialization describes when workers or firms focus on particular tasks in the overall production
process for which they are well-suited.
____
5. Supply and demand together determine the price and quantity of a good sold in a market.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
TABLE C
Jars of peanut butter
$ / jar
Qty
1.50
50,000
1.75
40,000
2.00
30,000
2.25
20,000
____
1. Refer to Table C. What type of schedule is the table above, Table C?
a. a community supply schedule
b. a personal demand schedule
c. a market demand schedule
d. a market supply schedule
____
2. What name is given to dividing the work required to produce a good or service into tasks performed by different
workers?
A. Division of financial capital
B. Globalization
C. Division of labor
D. Microeconomics
____
3. Economists generally support
a. trade restrictions.
b. government management of trade.
c. export subsidies.
d. free international trade.
____
4. A group of buyers and sellers of a particular good or service is called a(n)
a. coalition.
b. economy.
c. market.
d. competition.
____
5. Which two groups of decision makers are included in the simple circular-flow diagram?
a. markets and government
b. households and government
c. firms and government
d. households and firms
____
6. A decrease in quantity supplied
a. results in a movement downward and to the left along a fixed supply curve.
b. results in a movement upward and to the right along a fixed supply curve.
c. shifts the supply curve to the left.
d. shifts the supply curve to the right.
____
7. An increase in the price of oranges would lead to
a. an increased supply of oranges.
b. a reduction in the prices of inputs used in orange production.
c. an increased demand for oranges.
d. a movement up and to the right along the supply curve for oranges.
Figure 6-6
20
price
18
16
S
14
12
10
8
6
D
4
2
10
20
30
40
50
60
70
80
quantity
____
8. Refer to Figure 6-6. If the market price is $6, then there will be
a. a shortage of 20 units.
b. a surplus of 20 units.
c. a surplus of 30 units.
d. a shortage of 40 units.
____
9. What is meant by globalization?
A. An economy in which most economic decisions are made by buyers and sellers, who may be individuals or firms.
B. The market in which households sell their labor as workers to businesses or other employers.
C. The trend in which buying and selling in markets have increasingly crossed national borders.
D. A market in which firms are sellers of what they produce and households are buyers.
____ 10. If macaroni and cheese is an inferior good, then an increase in
a. the price will cause the demand curve for macaroni and cheese to shift to the left.
b. the price will cause the demand curve for macaroni and cheese to shift to the right.
c. a consumer’s income will cause the demand curve for macaroni and cheese to shift to the
left.
d. a consumer’s income will cause the demand curve for macaroni and cheese to shift to the
right.
____ 11. Points on the production possibilities frontier curve indicate that:
a. the use of available resources is not efficient.
b. producing more of one good without giving up any production of the other good.
c. some of the available resources are not being used.
d. all the available resources are being utilized.
____ 12.
Figure 7-12
Price
Supply
P2
B
A
P1
C
G
D
Q1
____
Q2
Quantity
Refer to Figure 7-12. When the price rises from P1 to P2, which area represents the increase in producer
surplus?
a. A
b. A+B
c. A+B+C
d. G
____ 13. The circular flow diagram of economic activity is a model of the:
A. flow of goods, services, and payments between households and firms.
B. influence of government on business behavior.
C. role of unions and government in the economy.
D. interaction among taxes, prices, and profits.
____ 14.
Figure 2-7
nails
2800
2400
J
L
2000
1600
1200
M
800
400
K
400
____
800
1200
hammers
Refer to Figure 2-7. Point K represents an outcome in which
a. production is inefficient.
b. some of the economy’s resources are unemployed.
c. the economy is using all of its resources to produce hammers.
d. the economy is using all of its resources to produce nails.
____ 15. See the Chart above. What is A?
a. equilibrium demand.
b. equilibrium supply.
c. equilibrium price.
d. equilibrium quantity.
____ 16. If Erin’s income decreases and, as a result, she chooses to buy fewer milkshakes per month at each price, then
her demand curve will
a. shift to the right.
b. shift to the left.
c. not shift; instead, Erin will move along her demand curve downward and to the right.
d. not shift; instead, Erin will move along her demand curve upward and to the left.
____ 17. If a good is normal, then an increase in income will result in a(n)
a. increase in the demand for the good.
b. decrease in the demand for the good.
c. movement down and to the right along the demand curve for the good.
d. movement up and to the left along the demand curve for the good.
____ 18. If the number of sellers in a market increases, then the
a. demand in that market will increase.
b. supply in that market will increase.
c. supply in that market will decrease.
d. demand in that market will decrease.
Figure 4-17
50
price
45
40
35
30
S
25
20
15
10
5
D
100 200 300 400 500 600 700 800 900 quantity
____ 19. Refer to Figure 4-17. If the price is $25, then there would be an excess
a. supply of 100 units, and price would fall.
b. supply of 300 units, and price would fall.
c. demand of 100 units, and price would fall.
d. demand of 300 units, and price would fall.
____ 20. If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and
quantity of lattés if the price of cappuccinos falls?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
____ 21.
Figure 2-1
Refer to Figure 2-1. Which arrow represents the flow of income payments?
a. A
b. B
c. C
d. D
_____ 22. If the demand for a product decreases, then we would expect equilibrium price
a. to increase and equilibrium quantity to decrease.
b. to decrease and equilibrium quantity to increase.
c. and equilibrium quantity to both increase.
d. and equilibrium quantity to both decrease.
____ 23. Suppose that when income rises, the demand curve for doctor’s visits shifts to the right. In this case, we know
doctor’s visits are
a. inferior goods.
b. normal goods.
c. perfectly competitive goods.
d. durable goods.
___
24. You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider
iTunes music downloads to be a(n)
a. luxury good.
b. inferior good.
c. normal good.
d. complementary good.
Econ13 Quiz I
Answer Section
TRUE/FALSE
1.
2.
4.
5.
ANS:
ANS:
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T
T
T
T
MULTIPLE CHOICE
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ANS:
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C
C
D
C
D
A
D
D
C
C
D
B
A
C
C
B
A
B
B
B
D
D
B
C