ECON 101 QUIZ #1
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) The most fundamental economic problem is
A) scarcity.
B) the fact that Turkey buys more goods from foreigners than we sell to foreigners.
C) health.
D) security.
Answer: A
Topic: Definition of Economics
2) Which of the following is a microeconomic topic?
A) the effect of the government budget deficit on inflation
B) the reasons for a decline in average prices
C) the cause of why total employment may decrease
D) the reasons why Kathy buys less orange juice
Answer: D
Topic: Microeconomics and Macroeconomics
3) A surplus occurs when the price is _____ the equilibrium price and it causes the price _____.
A)
higher than, to fall
B)
lower than, to fall
C)
higher than, to rise
D)
equal to, to stay constant
Answer: A
Topic:
4) If we observe a fall in the price of a desktop computer and a decrease in the quantity of desktop computers
purchased, we conclude that the law of demand must be wrong.
A)
True
B) False
Answer: B
Topic:
1
5) On Saturday morning, you rank your choices for activities in the following order: go to the library, work out at
the gym, have breakfast with friends, and sleep late. Suppose you decide to go to the library. Your opportunity
cost is
A) working out at the gym.
B) working out at the gym, having breakfast with friends, and sleeping late.
C) zero because you do not have to pay money to use the library.
D) not clear because not enough information is given.
Answer: A
Topic: Opportunity Cost
6) You decide to take a vacation and the trip costs you $2,000. While you are on vacation, you do not report to
work where you could have earned $750. The opportunity cost of the vacation is
A) $1,250
B) $750.
C) $2,000.
D) $2,750.
Answer: D
Topic: Opportunity Cost
7) The above figure illustrates that if this country wishes to move from its current production point (labeled
"Current") and have 10 more tons of food, it can do this by producing
A) 5 fewer tons of clothing.
B) 10 more tons of clothing.
C) 10 fewer tons of clothing.
D) 5 more tons of clothing.
Answer: A
Topic: Production Possibilities
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8) Refer to the production possibilities frontier in the figure above. Which point is unattainable?
A) point a
B) point b
C) point c
D) point e
Answer: D
Topic: Production Possibilities Frontier
9) If additional units of a good could be produced at a constant opportunity cost, the production possibilities
frontier would be
A) a straight line.
B) positively sloped.
C) bowed inward.
D) bowed outward.
Answer: A
Topic: Opportunity Cost
10) Suppose people buy more of good 1 when the price of good 2 falls. These goods are
A) substitutes.
B) normal.
C) complements.
D) inferior.
Answer: C
Topic: Change in Demand, Prices of Related Goods
11) In 2000 there were 200,000 gas grills demanded at a price of $500. In 2001 there were more than 200,000 gas
grills demanded at the same price. This increase could be the result any of the following EXCEPT
A) an increase in population.
B) an increase in the supply of gas grills.
C) a fall in the price of natural gas, a complement for a gas grill.
D) an increase in income if gas grills are a normal good.
Answer: B
Topic: A Change in Quantity Demanded Versus a Change in Demand
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12) The price of a gallon of milk falls. Which of the following is a possible cause of this change?
A) an increase in the income of the average household, with milk being a normal good
B) a discovery that milk cause diabetes
C) a drought that reduces supplies of feed grains fed to cows that produce milk
D) a decrease in the price of oatmeal, a complement to milk
Answer: B
Topic: Predicting Changes in Price and Quantity; Demand Changes
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