Economics Chpt 5 Review
Selected Response
Directions: Circle the letter for each question. There will be only ONE answer per question.
The government of China tells factory managers to increase their use of computers in
manufacturing.
Use the excerpt above to answer question 1.
1. Using the excerpt above, what economic question is most affected by the government's actions?
A. what to produce
B. how to produce.
C. when to produce.
2. In a voluntary exchange between two people,
A. both people believe that they are benefiting.
B. one person’s gain is another person’s loss.
C. both people lose.
3. In a market economy, what organizes and coordinates the production of goods and services?
A. Voluntary exchange or market.
B. Scarcity.
C. Government.
4. Which of the following terms is the incentive for a business to make a product?
A. Wages.
B. Costs.
C. Profits.
5. Which one of these would be an example of land resources in the factors of production?
A. Money.
B. Fossil fuels.
C. Proprietor.
6. Opportunity cost is a term used by economists to indicate the cost of an item in which one of these?
A. Whether or not the items on sale.
B. What a person does not get because he bought a certain item.
C. The benefits a person may gain by making a choice.
7. Which groups of people compete in the market?
A. Buyers
B. Sellers
C. Both A and B
8. Which is NOT a function of money?
A. Medium of exchange.
B. Measure of value.
C. Measure of quality.
9. When all producers’ supplies are added together the result is
A. Market Demand
B. Market Supply
C. Market
10. Economists call the relationship between the price and the amount produced
A. Price effect
B. Incentives
C. Supply
11. If the price of a product falls, producers are likely to
A. continue production at current levels.
B. decrease production to its costs.
D. increase production to make up for lost profits.
R eq u es ted p ay ra
Supplying Your Labor
$9.00
$7.50
$6.00
$4.50
$3.00
$1.50
$0.00
1
2
3
4
5
H ours w or ked
Use the graph above to answer questions 12 and 13.
12. If you worked 4 hours, what is the pay rate requested?
A. $1.50
B. $3.00
C. $6.00
13. What effect does the pay you requested seem to have on the number of hours you are willing to
work?
A. The higher the pay rate the more time you are willing to work.
B. You are willing to work the same number of hours at all pay rates.
C. You are willing to work at any pay rate for only two hours.
14. What is a possible opportunity cost of supply your labor at an after school job?
A. not playing sports after school.
B. there is no opportunity cost of having a job.
C. Both A and B.
15. If you have two points on a line, point A (4, 6) and point B (5, 11). Which of the following would
you use to determine the slope of the supply line?
M=y2-y1
x2-x1
A. M= (3-2)
(6-4)
B. M=(4-2)
(6-3)
C. M=(6-3)
(4-2)
16. Which economics term best describes your supply of labor?
A. Price effect of supply.
B. Opportunity cost.
C. Incentives.
Jami's Demand for Tacos
$3.00
$2.50
o
c $2.00
ta
r
e $1.50
p
e
ci $1.00
r
P
$0.50
$0.00
2
4
7
9
15
Quantity per month
Use the graph above to answer questions 17 through 19.
17. Jami’s demand for tacos
A. is seven tacos per month.
B. is shown by the entire demand curve.
C. is 15 tacos per month, since this is the largest quantity he will buy.
18. If the price of tacos is $2.00, how many will Jami buy?
A. 2
B. 4
C. 7
19. What is the price of tacos if the quantity demanded is 2?
A. $1.00
B. $2.00
C. $2.50
20. Why does Jami demand fewer tacos at higher prices?
A. Higher prices discourage Jami from buying more tacos.
B. He can substitute burgers for tacos and still get something to eat.
C. Both A & B.
21. Which variable can lead to a shift in the demand curve?
A. Taste and preferences.
B. Price of substitutes.
C. All of the above.
22. Which of the following is a complementary product for peanut butter?
A. Milk.
B. Salt.
C. Jelly.
23. Demand is best defined as the measure of how much consumers are able and willing to buy
A. at one price in a given period of time.
B. at different possible prices in a given period of time.
D. according to their income and budget over time.
24. As the price increases for home heating oil, which of the following could be used as a substitute
for the current oil demand?
A. Decrease oil usage by turning down the thermostat from 70 degrees to 65 degrees.
B. Wearing a wool sweater and waiting until the end of November to turn the heat on.
C. Both A and B.
Read the information in the box to help you answer question 25.
25. Which of the following statements best explains the behavior described above?
A. Company A is reducing the level of competition for consumers of chocolate.
B. Company A is attempting to stimulate demand by offering positive incentives.
C. Company A is offering giving consumers a negative incentive to buy its product.
26. How is the market demand calculated?
A. Subtracting each individuals demand for the total demand in the market.
B. Adding together all individual’s demand.
C. All of the above.
27. Which question helps you define the meaning of “able” in the definition of demand: the various
amounts of something a person is willing and able to buy at different possible prices at a particular
time?
A. Do I like this?
B. Can I afford this?
C. Can I try this on?
Use the graph above to answer questions 28 through
28. What is the market clearing price or equilibrium price for blue jeans?
A. $60.00
B. $40.00
C. $20.00
29. How is the market clearing priced determined?
A. It is the price and quantity where buyers and sellers agree to trade.
B. It is the price and quantity where the buyers and the government agree to sell.
C. It is the price and quantity where government sets prices.
30. What is the shortage of jeans at $30.00?
A. 80 pairs.
B. $40.00.
C. 40 pairs.
31. What can producers do to eliminate the shortage?
A. Advertise their jeans more.
B. Supply more jeans.
C. Increase the price of jeans.
32. At what price is there are surplus of jeans?
A. At any price below the market clearing price.
B. At any price above the market clearing price.
C. Both A & B.
33. What best describes the forces that make a price move up or down to its market-clearing price?
A. Competition among buyers.
B. Competition among sellers.
D. Both A and B.
34. A higher price for a product
A. encourages sellers to sell less of a product.
B. causes shortages.
C. causes buyers to buy less of the product.
35. If the demand for a product increases faster than its supply, what probably would happen to the
product’s market clearing price?
A. It would fall.
B. It would rise.
C. It would remain unchanged.