Benchmark Test Dates
Odd- Thurs 9/27, Even- Fri 9/28
Benchmark Study Guide
Economics
Name: ____________________
Period: _____________
SSEF1b: Define and give examples of productive resources (FOPs); land, labor, capital, entrepreneurship
Many electronic machines use copper wiring because copper is one of the most electrically conductive metals on earth. The copper used to make the wiring would be classified as which factor of production? a.
Land
Which best describes an increase in human capital? a.
b.
John hires 4 workers for his plumbing business
RCHS buys 100 new iPads to be used in classrooms b.
Labor c.
A business owner trains his employees to c.
Capital use a new computer system to keep d.
Entrepreneurship d.
company records
A candy factory doubles it’s stock of sugar
SSEF2a: Illustrate by means of a production possibilities curve the trade-offs between two options
If the Farm decides to produce at Point C instead of Point A, how many Bushels of Wheat are being traded-off? a.
90 Bushels of Wheat b.
70 Bushels of Wheat c.
50 Bushels of Wheat d.
40 Bushels of Wheat
What would be the opportunity cost of shifting production from 70 bushels of wheat to 90 Bushels of Wheat? a.
20 Bushels of Wheat b.
25 Pounds of Beef c.
50 Pounds of Beef d.
75 Pounds of Beef
If production is at point B, a prolonged drought would
MOST LIKELY move farm production to which point? a.
Point A b.
Point C c.
Point D d.
Point E
E
A
B
D
C
Even though there is demand for both Wheat and Beef, the farmer can sell Beef for twice as much as he can sell
Wheat. Which point on the graph represents the most efficient use of available resources? a.
Point A b.
Point B c.
Point C d.
Point D
SSEF4b: Evaluate how well each type of system answers the three economic questions and meets the broad social and economic goals of freedom, security, equity, growth, efficiency, and security
Which of the following is a problem MOST often associated with command/centrally-planned economies? a.
There are huge income disparities between the richest and poorest citizens b.
Government does not provide any basic needs for citizens c.
Goods and services are not produced according to the needs and wants of consumers d.
There is very little economic equity

Benchmark Study Guide
Economics
In market based economies, the fundamental question
“how will it be produced?” is answered by a.
The government b.
Private firms seeking the lowest cost production method c.
Public firms owned and operated by the government d.
Consumers’ level of demand
The fundamental economic questions that all economies must answer are a.
Who will rule, who will vote, and who will pay taxes? b.
What will be produced, how will it be produced, and for whom will it be produced?
The following headline appears in a local paper: “Ford
Motors Builds Company’s First Fully Automated Plant”.
Which of the following economic questions does this headline answer? a.
What should be produced? b.
How will it be produced? c.
When will it be produced? c.
d.
Who determines the costs, who will set the prices, and who determines how much is made?
How much will be produced, of what quality will it be, and who will pay for it? d.
For whom will it be produced?
SSEF5a: Explain why government provides public goods and services, redistributes income, protects property rights, and resolves market failures.
Which of the following is a typical role of government in In the United States economy, how are public goods, a Market-based, mixed economy (such as the US)? a.
It owns a majority of land and capital b.
Controls production of goods and services c.
Sets prices for goods and services d.
Provider of public goods and services
Which is one likely result of the competition in a market safety net programs, and other government programs paid for? a.
b.
c.
Corporations contribute portions of their profits from selling goods and services
The government accepts donations from US citizens throughout the year
The government charges the price of these economy? a.
The availability of goods is restricted b.
The quality of available goods in improved c.
The prices of available goods will increase d.
The variety of goods will decrease d.
goods and services to only those that use them
The government collects tax revenues from individuals and businesses
SSEF5b: Give examples of government regulation and deregulation and their effects on consumers and producers
Senator Roberts from California is concerned about the plight of the aerospace industry. She is afraid that jet manufacturers will go out of business because profits are too low. This would mean a loss of jobs for many of her voters. As a solution, Jenkins proposes a price floor to increase the price of jets and the profits of the producers. What would be the LIKELY result of such an action? a.
A shortage of planes b.
The problems will be solved without adverse effects c.
An increase in the quality of planes d.
A surplus of planes
Which BEST describes the effects of the government installing safety regulations on automobiles? a.
Makes cars safer for consumers, and has no effects on producers b.
Makes cars cheaper and easier to produce c.
Makes cars safer for consumer and causes prices to decrease d.
Makes cars safer for consumers, but causes producers to experience increased costs

Benchmark Study Guide
Economics
In an attempt to decrease the negative health consequences of second hand smoke, the federal government increases taxes on all tobacco products. Which best describes the intended side effect of these taxes? a.
Government regulation b.
Monopoly c.
Externality d.
Market system
SSEF6a: Define productivity as the relationship of inputs to outputs
Which of the following would MOST LIKELY lead to increased productivity in an economy? a.
Redistribution of wealth b.
Restriction of trade c.
Limiting incentives to invent new technologies d.
Increased investments in capital goods and
Which of the following BEST describes why economic growth is linked to investments in new technology and education of workers? a.
b.
Quality products can only be made with intelligent workers using advanced technology
Technology and educated workers lead to greater productivity of inputs education c.
d.
Goods and services cannot be made efficiently without complex machinery
Employees who have not gotten higher degrees are not as effective as those who have
SSEF6b: Give illustrations of investment in equipment and technology and explain their relationship to economic growth
Mark’s company produces lawn mowers. In order to increase production and profits, Mark invests thousands of dollars in a new machine that assembles lawn mower engines much more efficiently than any previous system his company has used. The machine which Mark has purchased is an example of what? a.
Improved training b.
Diminishing returns c.
Input over output d.
Investing in a capital good
Canada is investing heavily in automated machines that can do many of the jobs that have used manual labor in the past. Which of the following is NOT a probable result of these investments? a.
Economic growth and development b.
Increased efficiency in production of goods c.
An increase of jobs that require manual labor d.
An increase of workers being trained in how to use advanced technology
These production possibilities curves show how an economy’s production changed over the course of a year. More than likely, what happened during that year to cause the change? a.
b.
c.
d.
The country went through a recession
Resources became scarce
Many companies have increased their production levels by increasing efficiency
The government has passed laws to limit free competition between producers

Benchmark Study Guide
Economics
SSEMI1a: Illustrate by means of a circular flow diagram, the Product market; the Resource (factor) market; the real flow of goods and services between and among businesses, households, and government; and the flow of money
Businesses that take natural resources and create usable resources (lumber mills, steel mills, etc) would fit
In a circular flow model, in what sector would you enter a person who buys goods and services to satisfy their into which part of the circular flow chart of an economy? a.
Households wants and needs? a.
b.
Household sector
Business sector c.
Government sector d.
Foreign sector b.
Factor market c.
Firms d.
Product market
Which of the following statements is true regarding households, businesses, and government in the US economic system? a.
Households pay taxes to the government, but businesses don’t b.
Households act as consumers, while government and businesses act only as producers c.
The three are economically interdependent of each other, acting as consumer and producers d.
Government controls what businesses can produce, and what consumers can buy
The arrow going from the Households to the Businesses
(4) represents the flow of a.
Goods and services b.
c.
Money
Factors of Production d.
Taxes
SSEMI2a: Define the Law of Supply and Law of Demand
In the study of economics, what is the basic principle of the law of demand? a.
The higher the price of a good or service, the better the quality b.
The higher the quality of the good, the greater the demand for the good c.
When the price of a good or services decreases, people are willing to buy more of it d.
When the price of a good or service increases, people are willing to buy more if it
Price
Market Schedule of Shirts
Quantity Demanded Quantity Supplied
$12.00
$14.00
300
400
700
600
500
600
700
$16.00
$18.00
$20.00
Based on the information shown, what would happen if the price of shirts was set at $14? a.
There would be a shortage of shirts b.
There would be a surplus of shirts c.
All shirts would sell because it is the equilibrium price d.
The cost of making shirts would increase by 50%
500
400
300
Based on the information shown, what would happen if the manufacturer raised the price of each shirt to $18? a.
More people would buy the shirts b.
Fewer people would buy the shirts c.
The cost to manufacture each shirt would decrease d.
The manufacturer would increase production to meet the increased demand

Benchmark Study Guide
Economics
SSEMI2c: Illustrate on a graph how supply and demand determine equilibrium price and quantity
Which describes what has happened in the supply and demand graph? a.
The decrease in supply has caused a decrease in equilibrium quantity b.
An increase in demand has caused an increase in equilibrium price c.
Supply has increased , causing a decrease in equilibrium price
According to the supply and demand graph, what is the equilibrium price? a.
$4 b.
$3 c.
$2 d.
$1 d.
Demand has increased, causing an increase in equilibrium quantity
SSEMI2d: Explain how prices serve as incentives in a market economy
The equilibrium price of baseball bats is $36.75. What would cause this equilibrium price to decrease? a.
An increase in consumer demand b.
An increase in the number of baseball bats produced c.
An decrease in available resources d.
A hiring freeze and mass lay-offs at the factory
Because of a down economy, a furniture company begins to offer furniture for sale with no down payments and initial interest rates of 0%. What would be the most likely result of this offer? a.
The prices of furniture will increase b.
The amount of furniture produced will decrease c.
The number of consumers buying furniture will increase d.
Less people will purchase new furniture
SSEMI3a: Identify and illustrate on a graph factors that cause changes in market supply and demand
What would have caused the change seen in this graph? a.
b.
An advancement in production technology
An increase in the number of consumers c.
A decrease in the price of resources d.
An increase in income taxes
Yoshimoto Industries, the company that produces the processor chip for Apple’s iPhones, has found a way to increase their productivity and produce the chip at a lower cost. How will this affect the market for iPhones? a.
Demand will increase and shift to the right b.
Demand will decrease and shift to the left c.
Supply will increase and shift to the right d.
Supply will decrease and shift to the left

Benchmark Study Guide
Economics
SSEMI3b: Explain and illustrate on a graph how prices floors create surpluses and price ceilings create shortages
A legal minimum wage is established above the equilibrium wage in the labor market. More than likely, what will be the result? a.
People currently employed will be paid less money b.
The quantity of labor demanded by firms will decrease c.
The quantity of available workers will decrease d.
The quality of labor will decrease
To protect US peanut farmers, the federal government sets a price floor above the equilibrium price. It also passes a number of subsidies (government money) to help farmers recover from economic hardship. Although farmers are glad to get the relief, these actions will likely result in a.
The US becoming a command economy b.
Lowe safety standards for peanuts c.
A surplus of peanuts
In the graph above, a price of $2 represents which situation? a.
A surplus because the price is below equilibrium b.
A surplus because price is above equilibrium c.
A shortage because price is below equilibrium d.
A shortage because price is above equilibrium d.
A shortage of peanuts
SSEMI3c: Define price elasticity of demand and supply
Which contributes least to price elasticity of demand? a.
Price b.
Necessity c.
Substitutes d.
# of consumers
Which best explains why demand for Can’t-cer, a revolutionary cancer cure that is the only one of its kind, is said to be fairly inelastic? a.
Can’t-cer has many substitutes b.
Prescription medicines are difficult to make cheaply c.
Can’t-cer has few substitutes and can cure those dying of cancer d.
Other medications can work just as effectively
A hurricane hits South Florida and severely damages several of the region’s major orange groves. Because of a shortage of oranges, prices rise. A Florida orange farmer, whose grove was not affected, would like to produce more oranges this season in order to take advantage of the higher prices. Unfortunately, because it is so late in the season, he does not have the time to increase his crop. This is an example of a.
Demand elasticity b.
Demand inelasticity c.
Supply elasticity d.
Supply Inelasticity
SSEMI4c: Identify the basic characteristics of monopoly, oligopoly, monopolistic competition, and pure competition
An industry dominated by a few firms is known as a.
Pure Competition
A market where many sellers produce similar but different products and compete by advertising their b.
Monopolistic Competition c.
An Oligopoly d.
A Monopoly differences is known as a.
b.
Perfect competition
Monopolistic competition c.
An oligopoly d.
A monopoly