Which type of economic system would Adam
Smith support if he could choose any system?
a)
b)
c)
d)
e)
Command
Mixed
Traditional
Totalitarian
Market
Which type of economic system would Adam
Smith support if he could choose any system?
a)
b)
c)
d)
e)
Command
Mixed
Traditional
Totalitarian
Market
At halftime at a Cardinals game, your friend Pierre goes to a
concession stand and buys a bag of nachos, his ninth of the game.
Assuming that Pierre is acting rationally, it MUST be true that:
A) to Pierre, the marginal benefit of the ninth bag of nachos is greater
than the marginal cost
B) to Pierre, the total cost of nine bags of nachos is greater than the
total benefit
C) to Pierre, the marginal cost of the ninth bag of nachos is greater
than the marginal benefit
D) to Pierre, the marginal benefit of the ninth bag of nachos is greater
than the total cost
At halftime at a Cardinals game, your friend Pierre goes to a
concession stand and buys a bag of nachos, his ninth of the game.
Assuming that Pierre is acting rationally, it MUST be true that:
A) to Pierre, the marginal benefit of the ninth bag of nachos is
greater than the marginal cost
B) to Pierre, the total cost of nine bags of nachos is greater than the
total benefit
C) to Pierre, the marginal cost of the ninth bag of nachos is greater
than the marginal benefit
D) to Pierre, the marginal benefit of the ninth bag of nachos is greater
than the total cost
Which of the following statements about a price ceiling is
accurate?
a) An effective price ceiling must be priced above the equilibrium
price
b) An effective price ceiling must be priced below the equilibrium
price
c) A price ceiling will increase the quantity of the good supplied
d) A price ceiling will cause a shift in the demand curve for the
good
e) A price ceiling will have no effect on the quantity of the good
supplied
Which of the following statements about a price ceiling is
accurate?
a) An effective price ceiling must be priced above the equilibrium
price
b) An effective price ceiling must be priced below the
equilibrium price
c) A price ceiling will increase the quantity of the good supplied
d) A price ceiling will cause a shift in the demand curve for the
good
e) A price ceiling will have no effect on the quantity of the good
supplied
Which of the following would be considered an
implicit cost of attending college?
a)
b)
c)
d)
e)
Money spent on housing while in college
Wages the student gave up to attend college
Money spent on tuition and fees for college
Money spent on food while in college
Money spent on books required for college
Which of the following would be considered an
implicit cost of attending college?
a) Money spent on housing while in college
b) Wages the student gave up to attend
college
c) Money spent on tuition and fees for college
d) Money spent on food while in college
e) Money spent on books required for college
Why does scarcity exist?
a) Each year workers tend to produce less than in
previous years.
b) Machines wear out with time.
c) There are not sufficient resources to produce all
the products people want.
d) There is a limit to people’s wants
e) The washing machine eats socks causing
people to continually buy socks
Why does scarcity exist?
a) Each year workers tend to produce less than in
previous years.
b) Machines wear out with time.
c) There are not sufficient resources to
produce all the products people want.
d) There is a limit to people’s wants
e) The washing machine eats socks causing
people to continually buy socks
What are the two assumptions that economists make
regarding consumers?
A) People are irrational and love money
B) People love money and presents
C) People are rational and use money to maximize their
total satisfaction
D) People are irrational and use money to maximize
their total satisfaction
E) People use their money in the least costly way and
act irrationally
What are the two assumptions that economists make
regarding consumers?
A) People are irrational and love money
B) People love money and presents
C) People are rational and use money to maximize
their total satisfaction
D) People are irrational and use money to maximize
their total satisfaction
E) People use their money in the least costly way and
act irrationally
A decrease in the price of melons will cause
a)
b)
c)
d)
e)
The quantity demanded of melons to increase
The supply of melons to increase
The demand of melons to decrease
The quantity supplied of melons to increase
The supply of melons to decrease
A decrease in the price of melons will cause
a) The quantity demanded of melons to
increase
b) The supply of melons to increase
c) The demand of melons to decrease
d) The quantity supplied of melons to increase
e) The supply of melons to decrease
An automobile lift used by a mechanic is an
example of
a)
b)
c)
d)
e)
Productivity
Physical capital
Human Capital
Entrepreneurship
The fact that machines will take over the world
An automobile lift used by a mechanic is an
example of
a)
b)
c)
d)
e)
Productivity
Physical capital
Human Capital
Entrepreneurship
The fact that machines will take over the world
Which of the following would be considered a
service?
a)
b)
c)
d)
e)
Chalkboard
Vampire
Earbuds
Ruler
A massage
Which of the following would be considered a
service?
a)
b)
c)
d)
e)
Chalkboard
Vampire
Earbuds
Ruler
A massage
Consumer surplus is the
a) Area under the supply curve to the left of the amount
sold
b) Area under the supply curve to the right of the
amount sold
c) Amount the buyer pays plus the cost of production
d) Amount the seller is paid less the cost of production
e) Difference between what a consumer would be willing
to pay for a good or service minus the price s/he
actually has to pay for it
Consumer surplus is the
a) Area under the supply curve to the left of the amount
sold
b) Area under the supply curve to the right of the
amount sold
c) Amount the buyer pays plus the cost of production
d) Amount the seller is paid less the cost of production
e) Difference between what a consumer would be
willing to pay for a good or service minus the
price s/he actually has to pay for it
What is the opportunity
cost of shifting production
from combination A to
combination E?
A)
B)
C)
D)
8 capital goods
14 consumer goods
8 consumer goods
14 capital goods
What is the opportunity
cost of shifting production
from combination A to
combination E?
A)
B)
C)
D)
8 capital goods
14 consumer goods
8 consumer goods
14 capital goods
What is the opportunity
cost of shifting production
from combination F to
combination C?
A) 2 capital goods
B) 3 consumer goods
C) 2 consumer good
D) 3 capital goods
E) There is no opportunity
cost
What is the opportunity
cost of shifting production
from combination F to
combination C?
A) 2 capital goods
B) 3 consumer goods
C) 2 consumer good
D) 3 capital goods
E) There is no
opportunity cost
The machinery and equipment used to
produce goods and service fall under
which of the four factors of production?
A)
B)
C)
D)
Land
Labor
Capital
Entrepreneurship
The machinery and equipment used to
produce goods and service fall under
which of the four factors of production?
A)
B)
C)
D)
Land
Labor
Capital
Entrepreneurship
If supply of a good increases while demand
remains unchanged, the equilibrium price will
_________ and equilibrium quantity will
___________.
A) increase; decrease
B) increase; increase
C) decrease; decrease
D) decrease; increase
If supply of a good increases while demand
remains unchanged, the equilibrium price will
_________ and equilibrium quantity will
___________.
A) increase; decrease
B) increase; increase
C) decrease; decrease
D) decrease; increase
If demand for a good decreases while supply
remains unchanged, the equilibrium price will
_________ and equilibrium quantity will
___________.
A)
B)
C)
D)
increase; decrease
increase; increase
decrease; decrease
decrease; increase
If demand for a good decreases while supply
remains unchanged, the equilibrium price will
_________ and equilibrium quantity will
___________.
A)
B)
C)
D)
increase; decrease
increase; increase
decrease; decrease
decrease; increase
A point inside a nation’s production
possibilities curve can represent:
A) A recession causing many workers to
be unemployed
B) An increase in population size
C) Economic growth
D) A technological advancement
E) An improvement in living standards
A point inside a nation’s production
possibilities curve can represent:
A)
to
B)
C)
D)
E)
A recession causing many workers
be unemployed
An increase in population size
Economic growth
A technological advancement
An improvement in living standards
Which of the following will result in an outward
shift of the production possibilities curve?
A)
B)
C)
D)
E)
A decrease in the quantity of resources
An improvement in the quality of resources
A fall in education standards
A unsustainable growth in population
An increase in unemployment rate
Which of the following will result in an outward
shift of the production possibilities curve?
A) A decrease in the quantity of resources
B) An improvement in the quality of
resources
C) A fall in education standards
D) A unsustainable growth in population
E) An increase in unemployment rate
In economics, the concept of opportunity cost is:
A)
B)
C)
D)
E)
Negated by ensuring that the government has a role in a
capitalist society
Best illustrated by knowing why consumers choose one good
over another
Quantifiable only if you know the real dollar prices of the
goods and services you are giving up to consume something
The methodology that government economists use to determine
the total amount of the national debt
Defined as the highest-valued alternative that must be forgone
when a choice is made
In economics, the concept of opportunity cost is:
A)
B)
C)
D)
E)
Negated by ensuring that the government has a role in a
capitalist society
Best illustrated by knowing why consumers choose one good
over another
Quantifiable only if you know the real dollar prices of the
goods and services you are giving up to consume something
The methodology that government economists use to determine
the total amount of the national debt
Defined as the highest-valued alternative that must be
forgone when a choice is made
Nicky makes $25,000 a year as a sales clerk. He then decides
to quit his job to enter an MBA program full-time (assume Nicky
doesn’t work in the summer or hold any part-time jobs). His
tuition, books, and fees total $15,000 a year. Given this
information, the annual total economic cost of Nicky's MBA
studies is:
A)
B)
C)
D)
E)
$10,000
$30,000
$40,000
$15,000
$25,000
Nicky makes $25,000 a year as a sales clerk. He then decides
to quit his job to enter an MBA program full-time (assume Nicky
doesn’t work in the summer or hold any part-time jobs). His
tuition, books, and fees total $15,000 a year. Given this
information, the annual total economic cost of Nicky's MBA
studies is:
A)
B)
$10,000
$30,000
C) $40,000
D)
E)
$15,000
$25,000
Which of the following would cause a rightward
shift in the demand curve for golf balls?
a) An increase in the price of golf clubs
b) A decrease in the popularity of golf
c) An increase in the number of people who
play golf
d) A decrease in the price of golf balls
e) An increase in the golf club membership
fee
Which of the following would cause a rightward
shift in the demand curve for golf balls?
a) An increase in the price of golf clubs
b) A decrease in the popularity of golf
c) An increase in the number of people
who play golf
d) A decrease in the price of golf balls
e) An increase in the golf club membership
fee
Due to a beef shortage, the price of hamburgers rises.
As consumers adjust their buying habits in response to
the new price of hamburgers, the equilibrium price of
ketchup (a consumer complement to hamburgers) will
______________ and the equilibrium quantity of
ketchup sold will _______________.
A)
B)
C)
D)
increase; increase
decrease; decrease
decrease; increase
increase; decrease
Due to a beef shortage, the price of hamburgers rises.
As consumers adjust their buying habits in response to
the new price of hamburgers, the equilibrium price of
ketchup (a consumer complement to hamburgers) will
______________ and the equilibrium quantity of
ketchup sold will _______________.
A)
B)
C)
D)
increase; increase
decrease; decrease
decrease; increase
increase; decrease
Which of the following characteristics of a
good would tend to make the demand for the
good more inelastic?
A) it is a luxury
B) it has many substitutes
C) consumers need it to survive
D) it is a large portion of income
Which of the following characteristics of a
good would tend to make the demand for the
good more inelastic?
A) it is a luxury
B) it has many substitutes
C) consumers need it to survive
D) it is a large portion of income
If a price floor was set in the
submarine market at
$700,000 what would be the
quantity supplied and quantity
demanded?
a) Qs = 100
Qd = 0
b) Qs = 100 Qd = 100
c) Qs = 50
Qd = 150
d) Qs = 150
Qd = 50
e) Not enough Information to
determine
If a price floor was set in the
submarine market at
$700,000 what would be the
quantity supplied and quantity
demanded?
a) Qs = 100
b) Qs = 100
c) Qs = 50
Qd = 0
Qd = 100
Qd = 150
d) Qs = 150 Qd = 50
e) Not enough Information to
determine
If a price ceiling was set in the
submarine market at
$700,000 what would be the
quantity supplied and quantity
demanded?
a) Qs = 100
Qd = 0
b) Qs = 100 Qd = 100
c) Qs = 50
Qd = 150
d) Qs = 150
Qd = 50
e) Not enough Information to
determine
If a price ceiling was set in the
submarine market at
$700,000 what would be the
quantity supplied and quantity
demanded?
a) Qs = 100
Qd = 0
b) Qs = 100 Qd = 100
c) Qs = 50
Qd = 150
d) Qs = 150
Qd = 50
e) Not enough Information to
determine
Which of the following would we
expect in the submarine market if a
price ceiling was set at $300,000?
a) Producers would be building too
many submarines
b) Consumers of submarines are
much better off than before
c) There would be a persistent
shortage of submarines available
d) The submarines would be an
inefficiently high quality
e) The price floor will cause an
increase in demand for
submarines
Which of the following would we
expect in the submarine market if a
price ceiling was set at $300,000?
a) Producers would be building too
many submarines
b) Consumers of submarines are
much better off than before
c) There would be a persistent
shortage of submarines
available
d) The submarines would be an
inefficiently high quality
e) The price floor will cause an
increase in demand for
submarines
If the submarine market was
left to market forces and there
was no price restriction, then
what would the quantity
supplied and demanded be?
a)
b)
c)
d)
e)
Qs = 100
Qs = 0
Qs = 50
Qs = 150
Qs = 100
Qd = 0
Qd = 100
Qd = 150
Qd = 50
Qd = 100
If the submarine market was
left to market forces and there
was no price restriction, then
what would the quantity
supplied and demanded be?
a)
b)
c)
d)
e)
Qs = 100
Qs = 0
Qs = 50
Qs = 150
Qs = 100
Qd = 0
Qd = 100
Qd = 150
Qd = 50
Qd = 100
When someone has an increase in disposable income
what are the only two options for what they can do
with the change in disposable income?
a)
b)
c)
d)
e)
Consumption and savings
Consumption and disjunction
Savings and investments
Investments and Lending
Borrow or save
When someone has an increase in disposable income
what are the only two options for what they can do
with the change in disposable income?
a)
b)
c)
d)
e)
Consumption and savings
Consumption and disjunction
Savings and investments
Investments and Lending
Borrow or save
Calculating Elasticity
Elasticity
Coefficient
(E)
% Change in Quantity
(Demanded or Supplied)
= _____________
% Change in Price
Percent Change
-
Old
Number
OLD NUMBER
_________
_________
% change
between two =
numbers
New
Number
x 100
If the price elasticity of demand is equal to 4, a
1 percent increase in price will cause the
quantity demanded to _____ by _____
percent.
a)
b)
c)
d)
e)
Increase; 0.25
Decrease; 0.25
Increase; 4
Decrease; 25
Decrease; 4
If the price elasticity of demand is equal to 4, a
1 percent increase in price will cause the
quantity demanded to _____ by _____
percent.
a)
b)
c)
d)
e)
Increase; 0.25
Decrease; 0.25
Increase; 4
Decrease; 25
Decrease; 4
If the price elasticity of supply is equal to 1, a
4 percent increase in price will cause the
quantity supplied to _____ by _____ percent.
a)
b)
c)
d)
e)
Increase; 0.25
Decrease; 0.25
Increase; 4
Decrease; 25
Decrease; 4
If the price elasticity of supply is equal to 1, a
4 percent increase in price will cause the
quantity supplied to _____ by _____ percent.
a)
b)
c)
d)
e)
Increase; 0.25
Decrease; 0.25
Increase; 4
Decrease; 25
Decrease; 4
When the supply elasticity of a product is 2.5,
a 10 percent decrease in price will _____ the
quantity supplied of the product by _____
percent.
a)
b)
c)
d)
e)
Increase; 25
Decrease; 25
Increase; 2.5
Decrease; 2.5
Decrease; 4
When the supply elasticity of a product is 2.5,
a 10 percent decrease in price will _____ the
quantity supplied of the product by _____
percent.
a)
b)
c)
d)
e)
Increase; 25
Decrease; 25
Increase; 2.5
Decrease; 2.5
Decrease; 4
Suppose 500 loaves of bread are demanded at a
particular price. If that price rises by 20 percent, the
quantity demanded decreases to 495 loaves of
bread. This implies:
a) Demand is elastic
b) Demand is unit-elastic
c) The price elasticity of demand is equal to 4
d) Demand is inelastic
e) Consumers are very responsive to a price
change
Suppose 500 loaves of bread are demanded at a
particular price. If that price rises by 20 percent, the
quantity demanded decreases to 495 loaves of
bread. This implies:
a) Demand is elastic
b) Demand is unit-elastic
c) The price elasticity of demand is equal to 4
d) Demand is inelastic
e) Consumers are very responsive to a price
change
If the demand for muffins produced by a bakery is
perfectly elastic, then what will be the shape of the
demand curve faced by the bakery for muffins?
a)
b)
c)
d)
e)
The demand curve will be vertical
The demand curve will be horizontal
The demand curve will be upward sloping
The demand curve will be downward sloping
The demand curve will be concave
If the demand for muffins produced by a bakery is
perfectly elastic, then what will be the shape of the
demand curve faced by the bakery for muffins?
a)
b)
c)
d)
e)
The demand curve will be vertical
The demand curve will be horizontal
The demand curve will be upward sloping
The demand curve will be downward sloping
The demand curve will be concave
6 Shifters (Determinants) of Supply
1. Subsidies and Taxes
2. Technology
3. Opportunity Cost of
Producing Other Goods
4. Number of Sellers
5. Expectations About Future
Prices and Profits
6. Resource Prices
67
5 Shifters (Determinants) of Demand:
1. Buyers (Number of)
2. Incomes
3. Tastes and preferences
4. Expectations about future
prices
5. Related goods (prices of)
68
Last year a firm made 1,000 units of its product
available at a price of $5 per unit. This year the firm
will still make 1,000 units available, but only if the
price is $7 per unit. What is most likely to have
happened?
a)
b)
c)
d)
e)
Supply has increased
Supply has decreased
Demand has decreased
Demand has increased
Quantity supplied has increased
Last year a firm made 1,000 units of its product
available at a price of $5 per unit. This year the firm
will still make 1,000 units available, but only if the
price is $7 per unit. What is most likely to have
happened?
a)
b)
c)
d)
e)
Supply has increased
Supply has decreased
Demand has decreased
Demand has increased
Quantity supplied has increased
Which of the following would lead to an increase in the
equilibrium price of product X?
a) An increase in consumer incomes if product X is an
inferior good
b) Increase in the price of machinery used to produce
product X
c) Technological advance in the production of good X
d) Decrease in the price of good Y which is a substitute
for good X
e) Expectation by consumers that the price of good X is
going to fall
Which of the following would lead to an increase in the
equilibrium price of product X?
a) An increase in consumer incomes if product X is an
inferior good
b) Increase in the price of machinery used to produce
product X
c) Technological advance in the production of good X
d) Decrease in the price of good Y which is a substitute
for good X
e) Expectation by consumers that the price of good X is
going to fall
A rightward shift of a market supply curve might be
caused by:
a)
b)
c)
d)
e)
An increase in the wages of labor employed in
the industry
An increase in the price of the final product
A decrease in the income of consumers
An increase in the price of a substitute good
The entry of new firms in the industry
A rightward shift of a market supply curve might be
caused by:
a)
b)
c)
d)
e)
An increase in the wages of labor employed in
the industry
An increase in the price of the final product
A decrease in the income of consumers
An increase in the price of a substitute good
The entry of new firms in the industry
If the demand for mangoes increases and the supply
decreases:
a) Equilibrium price will decrease, but equilibrium quantity
will be unknown
b) Equilibrium price will increase and equilibrium quantity
will increase
c) Demand will decrease and supply will increase
d) Equilibrium price will increase, and equilibrium quantity
will be unknown
e) Both equilibrium price and equilibrium quantity will
decrease
If the demand for mangoes increases and the supply
decreases:
a) Equilibrium price will decrease, but equilibrium quantity
will be unknown
b) Equilibrium price will increase and equilibrium quantity
will increase
c) Demand will decrease and supply will increase
d) Equilibrium price will increase, and equilibrium
quantity will be unknown
e) Both equilibrium price and equilibrium quantity will
decrease
If both supply and demand for a good
increase, which of the following will definitely
happen?
a)
b)
c)
d)
e)
Equilibrium price will remain the same
Equilibrium price will increase
Equilibrium price will decrease
Equilibrium quantity will increase
Equilibrium quantity will decrease
If both supply and demand for a good
increase, which of the following will definitely
happen?
a)
b)
c)
d)
e)
Equilibrium price will remain the same
Equilibrium price will increase
Equilibrium price will decrease
Equilibrium quantity will increase
Equilibrium quantity will decrease
Based on Figure 1, which refers to the market for coffee, which of the
following conditions would most likely move the point of equilibrium
from A to B?
A) An increase in the income of a coffee
buyer
B) A decrease in the price of coffee
C) A drought in Colombia, a major
coffee producer, that affects the
coffee harvest
D) A decrease in the price of non-dairy
creamers that are consumed along
with coffee
E) An increase in the price of tea,
assumed to be a substitute for coffee
Based on Figure 1, which refers to the market for coffee, which of the
following conditions would most likely move the point of equilibrium
from A to B?
A) An increase in the income of a coffee
buyer
B) A decrease in the price of coffee
C) A drought in Colombia, a major
coffee producer, that affects the
coffee harvest
D) A decrease in the price of non-dairy
creamers that are consumed along
with coffee
E) An increase in the price of tea,
assumed to be a substitute for coffee
When will a shortage occur in a market?
A) When the actual price is lower than the equilibrium
price
B) When quantity supplied is greater than the equilibrium
quantity
C)When the quantity that consumers are willing and
able to purchase decreases
D)When the quantity available at zero price is
insufficient to meet demand
E) When a price floor is set in the market
When will a shortage occur in a market?
A)When the actual price is lower than the
equilibrium price
B) When quantity supplied is greater than the equilibrium
quantity
C)When the quantity that consumers are willing and
able to purchase decreases
D)When the quantity available at zero price is
insufficient to meet demand
E) When a price floor is set in the market
Assume that at the current market price of $4 per unit of
a good, consumers are willing and able to buy 20 million
units. Last year at a price of $4 per unit, consumers
were willing and able to buy 30 million units. What is
most likely to have happened over the last year?
a)
b)
c)
d)
e)
Demand has increased
Demand has decreased
Supply has increased
Supply has decreased
Quantity supplied has decreased
Assume that at the current market price of $4 per unit of
a good, consumers are willing and able to buy 20 million
units. Last year at a price of $4 per unit, consumers
were willing and able to buy 30 million units. What is
most likely to have happened over the last year?
a)
b)
c)
d)
e)
Demand has increased
Demand has decreased
Supply has increased
Supply has decreased
Quantity supplied has decreased
The table shows the output per hour of cookies
and mangoes in Arizona and Iowa. What is the
opportunity cost of producing a cookie in
Arizona?
Output per Hour
a) 2 cookies
b) 12 mangoes
c) 15 cookies
d) 3 mangoes
e) 2 mangoes
Cookies Mangoes
Arizona
Iowa
6
5
12
15
The table shows the output per hour of cookies
and mangoes in Arizona and Iowa. What is the
opportunity cost of producing a cookie in
Arizona?
Output per Hour
a) 2 cookies
b) 12 mangoes
c) 15 cookies
d) 3 mangoes
e) 2 mangoes
Cookies Mangoes
Arizona
Iowa
6
5
12
15
The table shows the output per hour of cookies
and mangoes in Arizona and Iowa. What is the
opportunity cost of producing a mango in
Iowa?
Output per Hour
a)
b)
c)
d)
e)
5 cookies
1/3 cookie
½ cookie
12 mangoes
1 mango
Cookies Mangoes
Arizona
Iowa
6
5
12
15
The table shows the output per hour of cookies
and mangoes in Arizona and Iowa. What is the
opportunity cost of producing a mango in
Iowa?
Output per Hour
a)
b)
c)
d)
e)
5 cookies
1/3 cookie
½ cookie
12 mangoes
1 mango
Cookies Mangoes
Arizona
Iowa
6
5
12
15
Which state has the comparative advantage in producing
mangoes and which has the absolute advantage in
producing cookies?
Output per Hour
Arizona
Iowa
a)
b)
c)
d)
e)
Cookies Mangoes
6
12
5
15
Mangoes: Iowa, Cookies: Arizona
Mangoes: Iowa, Cookies: Iowa
Mangoes: Arizona, Cookies: Iowa
Mangoes: Arizona, Cookies: Arizona
No state has a clear advantage over the other
Which state has the comparative advantage in producing
mangoes and which has the absolute advantage in
producing cookies?
Output per Hour
Arizona
Iowa
a)
b)
c)
d)
e)
Cookies Mangoes
6
12
5
15
Mangoes: Iowa, Cookies: Arizona
Mangoes: Iowa, Cookies: Iowa
Mangoes: Arizona, Cookies: Iowa
Mangoes: Arizona, Cookies: Arizona
No state has a clear advantage over the other
Margarine and butter can both be used as a
spread on toast (but typically not together). This
means that they are:
a)
b)
c)
d)
e)
Independent goods
Complements in consumption
Substitutes in consumption
Giffen goods
Inferior goods
Margarine and butter can both be used as a
spread on toast (but typically not together). This
means that they are:
a)
b)
c)
d)
e)
Independent goods
Complements in consumption
Substitutes in consumption
Giffen goods
Inferior goods
If the general education level within a country rises significantly
over time, it is likely that:
a) The country will move to a different point along its current
production possibilities curve.
b) The country’s production possibilities curve will not change
in any way.
c) The country’s production possibilities curve will shift in.
d) The country’s production possibilities curve will shift out.
e) The country’s production possibilities curve will become
convex to the origin.
If the general education level within a country rises significantly
over time, it is likely that:
a) The country will move to a different point along its current
production possibilities curve.
b) The country’s production possibilities curve will not change
in any way.
c) The country’s production possibilities curve will shift in.
d) The country’s production possibilities curve will shift
out.
e) The country’s production possibilities curve will become
convex to the origin.
When attempting to explain why a consumer purchases a Kia automobile
instead of a Honda automobile or a PC computer instead of an Apple
computer, an economist would assert:
A) That the consumer is making a decision based on what gives him
maximum utility.
B) That everyone knows Kias are superior to Hondas; the consumer cannot
possibly be maximizing his utility.
C) Everyone knows PC computers are superior to Apple computers; the
consumer may be maximizing his utility at the margin, but isn’t maximizing
total utility.
D) That there is no standard explanation for consumer choices because
consumers have varied tastes and preferences.
E) That since rationality is bounded by lack of information, a consumer
purchases goods based on convenience than on utility maximization.
When attempting to explain why a consumer purchases a Kia automobile
instead of a Honda automobile or a PC computer instead of an Apple
computer, an economist would assert:
A) That the consumer is making a decision based on what gives him
maximum utility.
B) That everyone knows Kias are superior to Hondas; the consumer cannot
possibly be maximizing his utility.
C) Everyone knows PC computers are superior to Apple computers; the
consumer may be maximizing his utility at the margin, but isn’t maximizing
total utility.
D) That there is no standard explanation for consumer choices because
consumers have varied tastes and preferences.
E) That since rationality is bounded by lack of information, a consumer
purchases goods based on convenience than on utility maximization.
Due to the law of diminishing marginal utility, _____.
a) The marginal utility curve is upward sloping
b) When marginal utility becomes negative, total utility
increases
c) The first unit of a product offers more satisfaction
than the last unit of the same product
d) There is more satisfaction with each unit of good
consumed
e) When marginal utility becomes positive, total utility
declines
Due to the law of diminishing marginal utility, _____.
a) The marginal utility curve is upward sloping
b) When marginal utility becomes negative, total utility
increases
c) The first unit of a product offers more satisfaction
than the last unit of the same product
d) There is more satisfaction with each unit of good
consumed
e) When marginal utility becomes positive, total utility
declines
A technological advance in textbook production
will lead to which of the following?
a)
b)
c)
d)
A decrease in textbook supply
An increase in textbook demand
An increase in textbook supply
A movement along the supply curve for
textbooks
e) An increase in textbook prices
A technological advance in textbook production
will lead to which of the following?
a)
b)
c)
d)
A decrease in textbook supply
An increase in textbook demand
An increase in textbook supply
A movement along the supply curve for
textbooks
e) An increase in textbook prices
A budget can be used to increase efficiency, by
which of the following entities?
a)
b)
c)
d)
e)
Families
Businesses
The federal government
The state government
All of the above
A budget can be used to increase efficiency, by
which of the following entities?
a)
b)
c)
d)
e)
Families
Businesses
The federal government
The state government
All of the above
Other things remaining unchanged, which of the
following is most likely to cause an increase in the
demand for personal computers?
a)
b)
c)
d)
e)
A reduction in the price of personal computers.
An increase in the supply of personal computers.
An increase in the cost of computer printing ink.
An increase in the number of computer
manufacturers.
A requirement by universities that all students buy
personal computers
Other things remaining unchanged, which of the
following is most likely to cause an increase in the
demand for personal computers?
a)
b)
c)
d)
e)
A reduction in the price of personal computers.
An increase in the supply of personal computers.
An increase in the cost of computer printing ink.
An increase in the number of computer
manufacturers.
A requirement by universities that all students
buy personal computers
Which of the following statements about price controls (price
floors and ceilings) is true?
a) A price ceiling causes a shortage if the ceiling price is above
equilibrium price
b) A price floor causes a surplus if the price floor is below the
equilibrium price
c) Price ceilings and price floors result in an inefficient
allocation of resources
d) Price ceilings will always result in a surplus
e) Price floors always result in producers exiting the industry
because of mayhem
Which of the following statements about price controls (price
floors and ceilings) is true?
a) A price ceiling causes a shortage if the ceiling price is above
equilibrium price
b) A price floor causes a surplus if the price floor is below the
equilibrium price
c) Price ceilings and price floors result in an inefficient
allocation of resources
d) Price ceilings will always result in a surplus
e) Price floors always result in producers exiting the industry
because of mayhem
Suppose that aluminum is a key production input
for bicycles. If the price of aluminum decreases,
and all other variables are held constant, we
should expect
a)
b)
c)
d)
e)
The demand for aluminum to decrease
The supply of bicycles to increase
The supply of bicycles to decrease
The demand for bicycles to increase
No change should occur
Suppose that aluminum is a key production input
for bicycles. If the price of aluminum decreases,
and all other variables are held constant, we
should expect
a)
b)
c)
d)
e)
The demand for aluminum to decrease
The supply of bicycles to increase
The supply of bicycles to decrease
The demand for bicycles to increase
No change should occur
Labor, human capital, natural resources, and
physical capital are all examples of which of the
following?
a)
b)
c)
d)
e)
Public goods
Substitutes in production
Factors of production
The five resources to world domination
Factors that determine price elasticity of
demand
Labor, human capital, natural resources, and
physical capital are all examples of which of the
following?
a)
b)
c)
d)
e)
Public goods
Substitutes in production
Factors of production
The five resources to world domination
Factors that determine price elasticity of
demand
Which of the following statements about a price ceiling is
accurate?
a) Price ceilings only restrict the number of products in a
market.
b) An effective price ceiling must be at a price below the
equilibrium price
c) A price ceiling will increase the quantity of the good supplied
d) A price ceiling will cause a shift in the demand curve for the
good
e) A price ceiling will have no effect on the quantity of the good
supplied
Which of the following statements about a price ceiling is
accurate?
a) Price ceilings only restrict the number of products in a
market.
b) An effective price ceiling must be at a price below the
equilibrium price
c) A price ceiling will increase the quantity of the good supplied
d) A price ceiling will cause a shift in the demand curve for the
good
e) A price ceiling will have no effect on the quantity of the good
supplied
In the graph below, consumer surplus is
represented by the area
a) OACE
b) BCD
c) ACD
d) ABC
e) BCEO
In the graph below, consumer surplus is
represented by the area
a) OACE
b) BCD
c) ACD
d) ABC
e) BCEO
Economics is best described as
A) The study of how scarce material wants are allocated
between unlimited resources
B) The study of how scarce labor can be replaced by unlimited
capital
C) The study of how people can best satisfy their unlimited
wants with a scarce number of resources
D) The study of how capitalism is superior to any other
economic system
E) The analysis of people older than yourself which has no
overall relevancy
Economics is best described as
A) The study of how scarce material wants are allocated
between unlimited resources
B) The study of how scarce labor can be replaced by unlimited
capital
C) The study of how people can best satisfy their unlimited
wants with a scarce number of resources
D) The study of how capitalism is superior to any other
economic system
E) The analysis of people older than yourself which has no
overall relevancy
Which of the following is certainly true if demand
and supply increase at the same time?
A)The equilibrium price will increase
B)The equilibrium price decrease
C)The equilibrium quantity will increase
D)The equilibrium quantity will decrease
E)The equilibrium quantity may increase,
decrease, or stay the same
Which of the following is certainly true if demand
and supply increase at the same time?
A)The equilibrium price will increase
B)The equilibrium price decrease
C)The equilibrium quantity will increase
D)The equilibrium quantity will decrease
E)The equilibrium quantity may increase,
decrease, or stay the same