A student buys a sweatshirt on sale for 20% off at a store. In this exchange,

the student and the store benefit.

German exchange rates change from $1 = 1.50 euros to $1 - 1.25 euros. This change means that

German goods will be more expensive for Americans.

Which is a basic economic question that must be answered by all economic systems?

How will goods and services be produced?

What is meant by the statement that every economic system faces the problem of scarcity?

There's never enough prod. resources to satisfy all wants.

In mark. economies, public interest is served even when indiv. pursue their pers. goals because

the operation of competitive markets.

If Nation A adopts policies restricting imports from a major trading partner, then in Nation A

consumers will pay higher prices for products.

When there is a shortage of a product in a competitive market, it is usually the case that the

market price of the product will eventually increase.

The essential difference between a command and a market economy is that in a market economy

buyers and sellers determine resource allocation.

Which characteristic gives people an incentive to produce/exchange a good/service in a market?

The right to own private property.

In a competitive market, the price of wheat is likely to be increased by

a decrease in the supply of wheat.

Specialization, division of labor, and increasing international trade probably would

increase total world production of goods and services.

"COFFEE GROWERS' MONOPOLY BROKEN INTO MANY COMPETING FIRMS." If true, the coffee industry would

increase output and decrease prices.

From an economic point of view, which approach to controlling pollution is most efficient?

Reduce pollution as along as the benefits outweigh costs.

If Britain has a comparative advantage over France in the production of cars, then

the opp. cost of prod. cars in Britain is less than France.

Which would most likely increase the quantity of gasoline sold in a competitive market?

A decrease in the price of automobiles.

The opportunity cost of a new public high school is the

other goods & services that must be given up.

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ECONOMIC LITERACY!!! Form A (Part 1)

23 termsStudBud Administration376 plays

Test of economic literacy questions.

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Questions 23

Answers

1
A student buys a sweatshirt on sale for 20% off at a store. In this exchange,
neither the student nor the store benefits.
the student benefits, but the store does not.
the store benefits, but the student does not.
the student and the store benefit.
2
German exchange rates change from $1 = 1.50 euros to $1 - 1.25 euros. This change means that
German goods will be more expensive for Americans.
there will be an increase in U.S. imports from Germany.
U.S. goods will be more expensive for Germans.
there will be a decrease in German imports from the U.S.
3
Which is a basic economic question that must be answered by all economic systems?
How will goods and services be produced?
What will be a share of profits that go to businesses?
What will be the amount of the minimum wage for workers?
How will government collect income taxes?
4
What is meant by the statement that every economic system faces the problem of scarcity?
All economies have recessions during which scarcities exist.
The add'l benefits are greater than add'l costs.
Some products can be purchased only at high prices.
There's never enough prod. resources to satisfy all wants.
5
In mark. economies, public interest is served even when indiv. pursue their pers. goals because
the social responsibility of business leaders.
central planning and coordination of market activity.
individuals' understanding what is in the public interest.
the operation of competitive markets.
6
Producers want high prices, consumers want low prices. This conflict of interest is resolved by
gov't regulation.
Rock, paper, scissors.
competition.
kissing.
7
If Nation A adopts policies restricting imports from a major trading partner, then in Nation A
consumers will pay higher prices for products.
job opportunites in export industries will increase.
saving and investment will increase.
the cost of producing products will decrease.
8
When there is a shortage of a product in a competitive market, it is usually the case that the
quantity exchanged will not change, but demand increases.
market price of the product will eventually increase.
quantity of the product exchanged will eventually decrease
market price of the product will eventually decrease.
9
The essential difference between a command and a market economy is that in a market economy
central planning creates an effective incentive system.
buyers and sellers determine resource allocation.
the prices are largely determined by gov. regulation.
shortages occcur more often than surpluses.
10
Profits are equal to total
assets minus total liabilities.
revenue minus total cost.
sales minus taxes and depreciation.
sales minus wages and salaries.
11
Which characteristic gives people an incentive to produce/exchange a good/service in a market?
The right to own private property.
An equal distribution of income.
Restrictions on consumer choice.
Controls on the supply of gold.
12
In a competitive market, the price of wheat is likely to be increased by
new machines reducing the cost of producing wheat.
a decrease in the demand for wheat.
a decrease in the supply of wheat.
more capital investment in wheat farms.
13
Common stocks, limited liability, and unlimited life are basic characteristics of
cartels
proprietorships.
partnerships.
corporations.
14
Which one of the following do economists consider to be an example of capital goods?
Money in the bank.
Corporate bonds of an oil company.
Common stocks in a computer business.
Machines in an auto plant.
15
Specialization, division of labor, and increasing international trade probably would
lower living standards in the poor nations of the world.
eliminate differences in standards of living among nations.
increase the level of worldwide unemployment.
increase total world production of goods and services.
16
"COFFEE GROWERS' MONOPOLY BROKEN INTO MANY COMPETING FIRMS." If true, the coffee industry would
decrease output and increase prices.
increase output and increase prices.
increase output and decrease prices.
decrease uptput and decrease prices.
17
From an economic point of view, which approach to controlling pollution is most efficient?
Use economic resources to eliminate all pollution.
Reduce pollution as along as the benefits outweigh costs.
Adopt laws & reg's prohibiting pollution causing activities.
Abolish the use of toxic chemicals in all production.
18
If Britain has a comparative advantage over France in the production of cars, then
only Britain gains from special/trade in cars between B & F.
the opp. cost of prod. cars in Britain is higher than France
the opp. cost of prod. cars in Britain is less than France.
there are no gains from special/trade in cars between B & F.
19
What primary function is money serving when it is used to buy a ticket to a movie?
Unit of account.
Store of value.
Flow of funds.
Medium of exchange.
20
If payroll taxes are reduced on wages and salaries of workers, then there will most likely be
an increase in consumption.
an increase in unemployment.
a decrease in investment.
a decrease in saving.
21
Which would most likely increase the quantity of gasoline sold in a competitive market?
An increase in the price of crude oil.
A decrease in the price of automobiles.
A decrease in the income of consumers.
An increase in taxes on gasoline products.
22
The opportunity cost of a new public high school is the
money cost of hiring teachers for thenew school.
change in the annual tax rate to pay for the new school.
cost of constructing the new school later.
other goods & services that must be given up.
23
The price of a product is $5. If the gov't sets a min. price of $6, this change results in a
surplus of the product.
an increase in the demand for the product.
a shortage of the product.
a decrease in the supply of the product.

ECONOMIC LITERACY!!! Form A (Part 1) Flashcards | StudBud