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Econ Final
Which term best describes rent control?
What do low prices signal buyers to do?
Econ Final
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Final Exam Prep
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Answers
1
What do low prices signal buyers to do?
nothing
buy more
buy less
substitute
2
Which term best describes rent control?
price floor
equilibrium price
price ceiling
subsidy
3
principle that more will be offered for sale at higher prices than at lower prices
Law of Prices
Law of Externalities
Law of Demand
Law of Supply
4
Which of these can be added to determine total costs?
marginal costs and overhead
fixed costs and marginal costs
fixed costs and overhead
fixed costs and variable costs
5
The economic system of the United States is considered a
socialist economy
free market capitalistic economy
command economy
traditional economy
6
What do most economists believe is the most efficient way to allocate resources?
rationing
distorted incentives
government action
competitive markets
7
Which of these economic systems have the least in common?
command economy and socialism
free-enterprise economy and market economy
market economy and capitalism
command economy and capitalism
8
What do price ceilings and price floors prevent?
prices reaching equilibrium
surpluses
benefits to consumers
shortages
9
The most comprehensive measure of a nation's wealth is provided by its
TINSTAAFL rating
gross domestic product
product possibilities curve
capital goods
10
In the economic term
oligopoly
, the word part
oli-
probably means
"single"
"all"
"one"
"few"
11
Local government increasing property taxes to improve the school system is an example of
subsidizing a positive externality
an example of collusion
laissez-faire in action
a cease and desist order
12
What effect would a bumper crop most likely have on the price of that crop?
equilibrium
increase
decrease
no effect
13
Which would an economist consider a likely complement for coffee?
chicken
donuts
tea
water
14
When a nation's total output increases over time, the nation is experiencing
economic interdependence
a decrease in gross domestic product
an expansion of the possibilities curve
economic growth
15
To estimate elasticity, compare ___ of a price change to the ___ of the change in total revenue
direction, amount
amount, amount
amount, direction
direction, direction
16
Which would an economist consider a likely substitute for coffee?
water
tea
donuts
chicken
17
What are the characteristics of demand?
the willingness and desire to buy a product
the ability and willingness to buy a product
the desire and ability to buy a product
the desire, ability, and willingness to buy a product
18
system of allocating goods and services without prices
surplus
rationing
equilibrium
shortage
19
the highest legal price that can be charged for a product
price ceiling
price rationing
price exchange
price floor
20
Which type of economy is most prevalent in the world today?
mixed
command
traditional
market
21
situation where quantity supplied is greater than quantity demanded at a given price
shortage
surplus
peak
equilibrium
22
products related in such a way that increase in the price of one reduces demand for the other
complements
externalities
variable costs
substitutes
23
Which of these best describes the influence of high prices on the behavior of producers?
high prices influence producers to use less materials/labor
high prices are an incentive for producers to produce more
high prices have no influence on the behavior of producers
high prices are an incentive for producers to produce less
24
How did business cycles change after World War II?
Recessions occurred more frequently
Recessions became shorter; periods of expansion longer
Business cycles became much more extreme
There were no external shocks
25
How are economic transactions shaped in a traditional economy?
Individuals form networks; they buy, sell, trade within them
Elders/ancestors make certain things done in specific ways
3 questions of production don't arise in this economy
Community decides as a group for whom the group will produce
26
Which of these statements describes a disadvantage of a traditional economy?
Difficult economic decisions are made by the state
New ways of doing things are encouraged
New ways of doing things are discouraged
Everyone knows his or her role
27
the extent to which a change in price causes a change in the quantity demanded
demand curve
surplus
demand elasticity
Law of Demand
28
What is the opposite of a surplus?
inelastic
shortage
equilibrium
floor
29
When a factory pollutes a river, the resulting water pollution is an example of a
technological monopoly
negative externality
public good
neutral spillover effect
30
Under perfect competition, what sets the equilibrium price in the market?
supply and demand
the government
a monopoly
nonprice competition
31
Paradox of Value refers to the
contradiction of what consumers want and what they need
high value of nonessential item; low value of essential item
contradiction between GDP and market value
high value of essential item; low value of nonessential item
32
a fundamental problem in every society
demand
scarcity
supply
price
33
The four factors of production are land, labor, capital, and
the government
inflation
franchises
entrepreneurs
34
point in time when GDP stops expanding and begins to decline
recession
equilibrium
trough
peak
35
economic side effects that affect an uninvolved third party
rationing
laissez-faire
surplus
externalities
36
Equilibrium is reached when what occurs?
there is no change in the quantity supplied
prices are inelastic
quantity supplied equals quantity demanded
price increases
37
system in which economic activity is driven by supply, demand, and the price system
traditional economy
mixed economy
command economy
market economy
38
What would an item's producer be most likely to do if total revenue on that item began to drop?
lower the price of that item
produce less of that item
raise the price of that item
produce more of that item
39
production expenses that do not change when output changes
variable costs
fixed costs
total costs
marginal costs
40
Which statement best describes the purpose of the production possibilities curve?
identifies combinations of goods/svcs economy can produce
predicts the future production of a nation
shows which products are most profitable
identifies trends in production
41
What does a trough indicate?
The GDP has stopped increasing and has begun to decline
There is GDP gap
The GDP has stopped declining and has begun to increase
The GDP is stagnant
42
Which of these statements is descriptive of a market economy?
Most media is state-owned and operated
The government determines what is produced and by whom
Economic decisions are made by individuals, not for them
Economic decisions are made for individuals, not by them
43
Pure competition and monopoly
are opposites
are almost the same
should not be compared
are the same
44
In a competitive market economy, prices are considered
uncompromising
favorable
neutral
dictated
45
Which explains why products made under a command economy are more likely to be low quality?
The workers are not given quality-control guidelines
Workers have little incentive to make them well
Workers are forced by tradition to use old-fashioned methods
Workers left to manage production facilities on their own
46
According to the Law of Supply, which of these would happen to an item as its price rose?
producers would lower the price on similar items
producers would make less of it
producers would make more of it
producers would increase the price even more
47
Which product most likely has a demand that is inelastic?
a vacation
a meal at a restaurant
a vital medicine
green beans
48
economic action done or brought about by free choice
rationing
scarcity
voluntary exchange
laissez-faire
49
Which two terms are the most similar in meaning?
variable costs and overhead
marginal costs and fixed costs
marginal costs and variable costs
fixed costs and overhead
50
The study of economics involves
studying how things are made, bought, sold, and used
explaining how people deal with scarcity
all of these
explaining how incomes are earned and how jobs are created
