Top of FormThe basic reason we study economics is because materi.docx

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The basic reason we study economics is because material wants
and needs are:
A.
limited but resources are not.
B.
unlimited and so are resources.
C.
unlimited but resources are not.
D.
limited and so are resources.
1 points
Question 2
Economics is concerned with:
A.
limiting individuals' wants so that our scarce resources will not
be used up.
B.
using scarce resources to satisfy virtually limitless material
wants and needs.
C.
earning as much money as possible.
D.
using as many workers as possible to produce any given level of
output.
1 points

Question 3
The cost of a purchase or decision measured by what is given up
to make the purchase or carry out the decision is its:
A.
overhead cost.
B.
opportunity cost.
C.
hidden cost.
D.
sunk cost.
1 points
Question 4
The factor of production that organizes economic activity and
bears the risk of success or failure in a business venture is:
A.
labor.
B.
capital.
C.
entrepreneurship.
D.
all of the above.
1 points
Question 5
The incomes received by the four factors of production are:
A.

rents, profit sharing, dividends, and net income.
B.
rents, salaries, dividends, and net income.
C.
capital gains, wages, dividends, and net income.
D.
rents, wages, interest, and profits.
1 points
Question 6
Wages are earned by:
A.
entrepreneurs.
B.
suppliers of labor.
C.
owners of capital.
D.
owners of land.
1 points
Question 7
Interest is earned by:
A.
owners of land.
B.
suppliers of labor.
C.

entrepreneurs.
D.
owners of capital.
1 points
Question 8
Rents are earned by:
A.
owners of capital.
B.
suppliers of labor.
C.
entrepreneurs.
D.
owners of land.
1 points
Question 9
Profits are earned by:
A.
entrepreneurs.
B.
owners of capital.
C.
owners of land.
D.
suppliers of labor.
1 points
Question 10

Economic theories are:
A.
always expressed in terms of mathematical equations.
B.
actions, such as tax cuts, to change economic conditions.
C.
formal explanations of the relationships between economic
variables.
D.
all of the above.
1 points
Question 11
Economic policies:
A.
are guides to change economic conditions.
B.
have consequences that vary from policy to policy.
C.
are based on the value judgments of the persons forming the
policies.
D.
all of the above.
1 points
Question 12
Which of the following can be used to express economic
theories?
A.

Words.
B.
Graphs.
C.
Mathematical equations.
D.
All of the above.
1 points
Question 13
A line that slopes upward on a graph indicates that the variables
measured on the graph are:
A.
always increasing but never decreasing.
B.
directly related.
C.
inversely related.
D.
unrelated.
1 points
Question 14
A line that slopes downward on a graph indicates that the
variables measured on the graph are:
A.
unrelated.
B.
inversely related.

C.
always decreasing but never increasing.
D.
directly related.
1 points
Question 15
Two variables are directly related when:
A.
one variable decreases as the other decreases.
B.
neither variable increases nor decreases.
C.
one variable increases as the other decreases.
D.
one variable does not change as the other decreases.
1 points
Question 16
Two variables are inversely related when:
A.
one variable increases as the other increases.
B.
one variable does not change as the other increases.
C.
neither variable decreases nor increases.
D.
one variable decreases as the other increases.

1 points
Question 17
Conditions held to be true in developing an economic model
are:
A.
economic theories.
B.
variables of the model.
C.
conclusions of the model.
D.
assumptions.
1 points
Question 18
Which of the following can lead to economic growth?
A.
Improved technology.
B.
An increase in the supply of labor.
C.
An increase in the amount of available capital.
D.
All of the above.
1 points
Question 19
Goods, such as corn chips, that are produced for final buyers
are:

A.
consumer goods.
B.
expenditure goods.
C.
capital goods.
D.
credit goods.
1 points
Question 20
An increase in production costs at a Ford automobile plant, and
an increase in the general level of prices in the U.S. economy
are examples of:
A.
a macroeconomic problem and a microeconomic problem,
respectively.
B.
a microeconomic problem and a macroeconomic problem,
respectively.
C.
macroeconomic problems.
D.
microeconomic problems.
1 points
Question 21
The following points showing different price-quantity
combinations are plotted on a graph: ($1.00 and 40 units),
($2.00 and 30 units), ($4.00 and 20 units). A line connecting
these points would be:

A.
upward sloping.
B.
perfectly vertical.
C.
perfectly horizontal.
D.
downward sloping.
1 points
Question 22
Which of the following statements is FALSE?
A.
The study of economics is simplified because value judgments
have no effect on the choices people make because of scarcity.
B.
Scarcity is the basic reason for studying economics.
C.
People must make tradeoffs, or give up one thing to get
something else, because of scarcity.
D.
Scarcity forces people to make decisions about how to best
satisfy their material wants and needs.
1 points
Question 23
The opportunity cost of an item purchased is:
A.
the alternative purchase that is forgone to acquire the item.

B.
the time required to make a decision about the purchase.
C.
the dissatisfaction experienced by the buyer when the item is no
longer desired.
D.
the tax paid on the item.
1 points
Question 24
Which of the following is an example of a capital good?
A.
Food donated to flood victims.
B.
Frozen yogurt.
C.
A cash register.
D.
In-line skates.
1 points
Question 25
The study of the U.S. economy as a whole, and how all
households in the economy interact with all businesses and the
government is:
A.
macroeconomics.
B.
microeconomics.

C.
megaeconomics.
D.
metaoeconomics.
1 points
Question 26
Which of the following is NOT a basic economic decision that
must be made by every society?
A.
What goods and services will be produced.
B.
Who will receive the goods and services that are produced.
C.
What goods and services consumers will need most.
D.
What factors of production and methods will be used in
producing goods and services.
1 points
Question 27
The way a society is organized to make the basic economic
decisions is referred to as its:
A.
production network.
B.
social-economic structure.
C.
output strategy.

D.
economic system.
1 points
Question 28
The way in which a country makes the basic economic decisions
depends on:
A.
which basic economic decisions it must make.
B.
whether or not it has solved the scarcity problem.
C.
how the economic relationships among its households,
businesses, and government are organized.
D.
all of the above.
1 points
Question 29
The economic systems of people such as some early Native
American tribes that were small, focused on agriculture, and
operated with production methods not changed for generations
are best characterized as:
A.
command economies.
B.
traditional or agrarian economies.
C.
market economies.

D.
mixed economies
1 points
Question 30
Which of the following statements describing a market economy
is FALSE?
A.
The basic economic decisions are made by households and
businesses.
B.
Households and businesses interact in markets to make
economic decisions.
C.
Households only buy and businesses only sell.
D.
Price is the language through which buyers and sellers
communicate.
1 points
Question 31
A "price system" is most closely associated with:
A.
socialism.
B.
a market economy.
C.
a command economy.
D.
all of the above.

1 points
Question 32
According to the circular flow model, money flows from
households to businesses in:
A.
output markets.
B.
neither input nor output markets.
C.
input markets.
D.
both input and output markets.
1 points
Question 33
An example of a transaction in an output market is:
A.
the purchase of labor services by a business.
B.
the purchase of a new home by an individual.
C.
the purchase of a building by an auto dealership.
D.
all of the above.
1 points
Question 34
A good is produced efficiently when it is produced:
A.

at the lowest possible cost.
B.
with the smallest number of resources.
C.
with equal amounts of the four factors of production.
D.
at the lowest possible quality.
1 points
Question 35
In a pure market economy, who receives goods and services is
determined by the:
A.
value judgments of those administering each particular market.
B.
sellers who have produced those goods and services.
C.
availability of government income support payments.
D.
ability to pay for those goods and services from income earned
in resource markets.
1 points
Question 36
When a market system causes a problem or cannot achieve a
goal set by society there is:
A.
no alternative but to go to a purely planned economy.
B.

mercantilism.
C.
market socialism.
D.
market failure.
1 points
Question 37
Cost-minimizing efforts by businesses that lead to pollution or
inferior products are examples of:
A.
project risk.
B.
market failure.
C.
command breakdown.
D.
all of the above.
1 points
Question 38
The economic system in which the basic economic questions are
answered through markets with some government intervention is
a:
A.
mixed economy.
B.
market economy.
C.

planned economy.
D.
centralized economy.
1 points
Question 39
An example of government intervention in output markets
would be:
A.
antidiscrimination laws.
B.
consumer protection laws.
C.
corporate income taxation.
D.
none of the above.
1 points
Question 40
In a planned economy:
A.
how goods and services are produced is determined by what
resources planners make available to producers.
B.
value judgments of individual buyers and sellers are more
important than value judgments of planners.
C.
free enterprise is the prevailing philosophy.
D.

goods and services are usually produced more efficiently than in
a market system.
1 points
Question 41
An economic system where many of the factors of production
are collectively owned and there is an attempt to equalize
incomes is:
A.
absolutism.
B.
capitalism.
C.
mixed capitalism.
D.
socialism.
1 points
Question 42
Which of the following countries would rely most on a market
based decision-making process?
A.
Cuba.
B.
United States.
C.
China.
D.
England.
1 points

Question 43
Beginning in the mid-1980s, the Soviet Union, China, and other
planned economies:
A.
increased their dependence on centralized decision making.
B.
turned their decision-making authority over to public officials
in successful western economies.
C.
formed into a single super-economy to reduce the scarcity
problem.
D.
moved toward greater use of free markets and individual
decision making.
1 points
Question 44
The idea of individual decision making popularized by Adam
Smith in the late 1700s provided the foundation for:
A.
Chinese socialism.
B.
the economy of the former Soviet Union.
C.
U.S. capitalism.
D.
mercantilism.
1 points
Question 45

The economic system where the interests of the state are placed
ahead of the interests of individual is:
A.
mercantilism.
B.
mixed capitalism.
C.
radical individualism.
D.
pure capitalism.
1 points
Question 46
Laissez-faire capitalism:
A.
is concerned with placing the interests of the state above the
interests of individuals.
B.
holds that, for the sake of fairness, the state should decide how
much income people will receive.
C.
holds that individual decision making with minimal government
intervention will maximize the interests of society.
D.
all of the above.
1 points
Question 47
Adam Smith, in his book, The Wealth of Nations, advocated:

A.
mercantilism.
B.
socialism.
C.
government intervention into the economy to control people's
self-interest.
D.
laissez-faire capitalism.
1 points
Question 48
The invisible hand doctrine is most closely associated with:
A.
laissez-faire capitalism.
B.
managed capitalism.
C.
socialism.
D.
mercantilism.
1 points
Question 49
Which of the following developments brought about by the
industrial boom in the U.S. led to calls for greater government
intervention in the marketplace?
A.
the advent of large, powerful monopolies.

B.
low wages for workers and the use of child labor.
C.
long hours and poor working conditions for workers.
D.
all of the above.
1 points
Question 50
The government programs and legislative reforms initiated
during the 1930s to reduce the problems of the Great Depression
were termed:
A.
Reaganomics.
B.
the Employment Act proposals.
C.
laissez-faire intervention.
D.
the New Deal.
1 points
Question 51
A buyer's demand for a product refers to the amounts of the
product the buyer would purchase at different:
A.
prices.
B.
income levels.

C.
points in time.
D.
all of the above.
1 points
Question 52
The Law of Demand focuses on changes in the amount of a good
or service demanded that are caused by changes in:
A.
the price of the good or service.
B.
nonprice factors, such as buyer's income, or substitute products.
C.
the time period under consideration; for example, a week versus
a month.
D.
all of the above.
1 points
Question 53
One reason buyers demand less of a product as its price
increases is:
A.
sellers offer less of the product for sale as its price increases.
B.
substitute goods are usually available.
C.
buyers must save more of their incomes as prices increase.

D.
high-priced goods place buyers in higher tax brackets.
1 points
Question 54
The different amounts of a product that a seller would make
available at different prices in a defined time period when all
nonprice factors are held constant is:
A.
the Law of Demand.
B.
supply.
C.
demand.
D.
the Law of Supply.
1 points
Question 55
The Law of Supply states that as the price of a product
increases:
A.
sellers will offer less of the product for sale.
B.
consumers will buy less of the product.
C.
sellers will offer more of the product for sale.
D.
new buyers will enter the market because the product appears
popular.

1 points
Question 56
The reason sellers offer more goods or services for sale when
price increases is:
A.
greater ability to cover costs.
B.
greater ability to earn a profit.
C.
both of the above.
D.
none of the above.
1 points
Question 57
Because of the Law of Supply, supply curves:
A.
are perfectly vertical.
B.
slope downward.
C.
are perfectly horizontal.
D.
slope upward.
1 points
Question 58
A shortage occurs in a market when quantity demanded is:
A.

equal to quantity supplied.
B.
less than quantity supplied.
C.
more than quantity supplied.
D.
none of the above.
1 points
Question 59
A surplus occurs in a market when quantity demanded is:
A.
equal to quantity supplied.
B.
less than quantity supplied.
C.
more than quantity supplied.
D.
none of the above.
1 points
Question 60
Equilibrium price and equilibrium quantity are the price and
quantity:
A.
where demand equals supply in a market.
B.
toward which a free market automatically moves.

C.
both of the above.
D.
none of the above.
1 points
Question 61
A shortage will develop when a product's price is:
A.
equal to the equilibrium price.
B.
less than the equilibrium price.
C.
greater than the equilibrium price.
D.
none of the above.
1 points
Question 62
A surplus occurs when the price charged in a market is:
A.
the equilibrium price.
B.
above the equilibrium price.
C.
below the equilibrium price.
D.
zero.
1 points

Question 63
In the table, P = price, Qs = quantity supplied, and Qd equals
quantity demanded.
P
Qs
Qd
$9
10
4
8
9
5
7
8
6
6
7
7
5
6
8
4
5
9
Reference: Ref 3-1
A surplus will develop in this market when price is:
A.
$6.
B.
$5.
C.
$7.

D.
$4.
1 points
Question 64
In the table, P = price, Qs = quantity supplied, and Qd equals
quantity demanded.
P
Qs
Qd
$9
10
4
8
9
5
7
8
6
6
7
7
5
6
8
4
5
9
Reference: Ref 3-1
A shortage will develop in this market when price is:
A.
$8.
B.

$6.
C.
$5.
D.
$7.
1 points
Question 65
Changes in the quantity supplied of a good or service are caused
by changes in the:
A.
number of sellers in the market.
B.
price of the good or service.
C.
cost of inputs, i.e. wages, rents, and interest.
D.
time period under consideration, i.e. a week versus a month.
1 points
Question 66
A decrease in demand means that:
A.
buyers have moved upward along a stable demand curve.
B.
the demand curve for a product has shifted to the right.
C.
the demand curve for a product has shifted to the left.

D.
buyers have moved downward along a stable demand curve.
1 points
Question 67
The effect on sellers of a change in a product's price would be
shown by a movement from point A to point B in figure:
A.
B.
B.
D.
C.
A.
D.
C.
1 points
Question 68
A usury law on interest rates is an example of a:
A.
price floor.
B.
price ceiling.
C.
policy to allow the free market to determine the level of interest
rates.
D.
none of the above.
1 points
Question 69

The minimum wage law is an example of:
A.
a price ceiling.
B.
a price floor.
C.
a law that ensures there are no shortages or surpluses.
D.
economic decision making based solely on individualism.
1 points
Question 70
The supply of a product is price elastic if a 10 percent increase
in price leads to:
A.
a 4 percent increase in quantity supplied.
B.
no change in quantity supplied.
C.
D.
1 points
Question 71
The measure of a buyer's sensitivity to a change in the price of
a product is referred to as:
A.
the Law of Demand.

B.
elasticity of demand.
C.
demand reaction.
D.
the demand recovery index.
1 points
Question 72
The supply of a product is price elastic when:
A.
prices increase, but not when they decrease.
B.
a given percentage change in price leads to a larger percentage
change in quantity supplied.
C.
sellers produce goods that buyers see as luxuries, but not when
they produce goods that buyers see as necessities.
D.
none of the above.
1 points
Question 73
If a given percentage change in the price of a product is greater
than the resulting percentage change in quantity demanded, the
price elasticity of demand for the product is:
A.
less than 1.
B.

not enough information to answer the question.
C.
greater than 1.
D.
1.
1 points
Question 74
A change in the quantity supplied of a product:
A.
causes the product's supply curve to shift to the right or left.
B.
is caused by a change in the number of sellers in the market.
C.
means the entire supply schedule changes.
D.
is caused by a change in the price of the product.
1 points
Question 75
Good A is a luxury and Good B is a necessity. Good C competes
with many substitute products while Good D has few
substitutes. You would expect the demands for goods:
A.
A and B to be price elastic, and C and D to be price inelastic.
B.
A and C to be price elastic, and B and D to be price inelastic.
C.
B and D to be price elastic, and A and C to be price inelastic.

D.
C and D to be price elastic, and A and B to be price inelastic.
1 points
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