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Economics Exam Review
Economics Exam Review
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1
Which one of the following defines a free good?
it gives consumers no satisfaction
it is always provided by the government
it has zero price
its production involves no opportunity cost
2
What are Microeconomics?
Study behavior choices of a small group
Value of the trade off
Anything that forces us to choose
Study behavior or choices that relate to the entire economy
3
What is the formula for Price Elasticity of Demand
%change in quality demanded / %change in price
%change in quantity demanded / %change in profit
%change in quantity demanded x %change in income
%change in quantity demanded / %change in price
4
how does supply and demand determine equilibrium price and quantity
price makes quantity demanded equal to quantity supplied
The price makes the quantity demanded impossible to reach
The price doesn't determine equilibrium
The price is unrelated to the good in question
5
In Economics a producer is...
A person who buys goods and services
A person in charge of making a movie
Someone who creates somethins
A company or person who creates goods and services to sell
6
A price of $2 would a cause a
shortage of 300
surplus of 200
shortage of 400
surplus of 400
7
Supply and demand are:
fundamental forces in a free market economy
in a never changing equilibrium
a straight line with constant gradient
are factors of production
8
The point where demand and supply cross is called
Equilibrium
Equilibrium
It's Equilibrium isn't it?
Equilibrium
9
Economics, as a social science, works upon the assumption that the basic economic problem exists because of:
social costs
unpredictable human behaviour
scarce resources
profit maximization
10
Find the income elasticity:
-2; normal good
2; inferior good
2; normal good
-2; inferior good
11
Which of these is not regarded as a factor of production?
Labour
Capital
Land
Money
12
Find the elasticity coefficient and elasticity:
0; inelastic
0; elastic
0; unit elastic
1; unit elastic
13
A Production Possibility Frontier does not illustrate:
attainable and unattainable points
monetary exchange
scarcity
opportunity cost
14
The opportunity cost to society of constructing a new airport would be:
the cost of government borrowing the money to build the airport
the increased taxes to pay for the airport
the goods and services that could have otherwise been produced
the money spent on the airport
15
Economics is the study of how individuals and society deal with ____
choices
scarcity
trade-offs
comparative advantage
16
Which of the following factors will cause the price of cotton to rise without a shift in the demand curve?
An increase in the productivity of cotton workers
An increase in real incomes of consumers
An increase in the total population buying cotton
An increase in the wage rates of cotton workers
17
In microeconomics, we define a "market" as
Organized exchange where trades are conducted and recorded
Stores or markets where goods are physically exchanged.
When buyers and sellers meet + determine the price of goods
Firms that sell the same or closely related products
18
A mixed economy may be defined as one in which resources are allocated:
by the spending decisions of consumers
partly by market forces and partly by government
to meet the needs of consumers and producers
producing both capital and consumer goods
19
When supply increases, demand also increases
True
False
20
What is price elasticity of demand?
The effect of a subsidy
The measure between demand and change in price
The effect of an indirect tax
The measure between surplus and shortage
21
Which system of resource allocation dominates in North America and Europe today?
Planning
Traditional
Modern
Market
22
Which of the following would be most likely to cause the demand curve for cars to shift to the right?
A rise in the price of gas
A decrease in credit availability
An increase in public transit prices
A fall in the price of cars
23
Given the assumption of ceteris paribus, a law in economics may be described as:
a positive statement about production
a constant behavioural relationship
a generalization of economic agent behaviour
a mathematical forecast
24
How would you define economics?
Study of how people like certain foods
The study of types of cars on roads
Study of how goods are produced, consumed, and transfered
Study of types of schools in Texas
25
Unlike land, capital is:
Man-made
a factor of production
scarce
a non-human resource
26
What is supply?
how many items the buyer can purchase
total amount of products that the buyer and seller have combined
how much of a product the market has to offer
the amount of money the buyer has
27
Which of the following would not be an accurate description of the economic system of the United States?
Mixed
Market
Capitalist
Planned
28
Choice is a central feature of economic behavior because:
it is the main determinant of price
consumers find it difficult to choose between various alternatives
people will always make rational choices
resources are scarce relative to human wants
29
What is a resource in economics?
Land, Labour, Capital, Enterprise
Land, Firms, Households, Labour
Land, Supply, Demand, GDP
Land, Demand, Government, Firms
30
Economics is primarily concerned with the question of how:
unlimited resources can be best allocated for different uses
limited government funds used to achieve social and political goals
unlimited human wants satisfied by limited resources
limited human wants satisfied by limited resources
31
In which of the following statements is market failure least likely to be found? A situation where:
externalities exist
there is a very uneven distribution of income and wealth
many producers compete in a market
there is a sole producer in the market
32
What happens when the supply is high and the demand is low?
The Prices tend to increase
Prices go crazy and have a party
You have the equlibram
The Prices tend to fall
33
The price elasticity of demand for luxiouros goods is
Inelastic
Perfectly inelastic
Infinitely elastic
Elastic
34
What is price elasticity?
when the government stretches price margins
a price falls below the price floor
change in quantity equals change of supply
change in quantity relative to change in price
35
The demand line slopes
upwards right to left
upwards left to right
straight across
downwards left to right
36
Economics is only about business and government policies
True
False
37
At the year 2000, which of the following nations made the least use of market mechanisms?
Poland
North Korea
China
South Korea
38
The study of microeconomics includes the study of
firms + consumers interact and make decisions in the market.
Business investment and gov. spending in the marketplace.
Output, employment growth and price level in the market
number of new jobs and income in a growing economy
39
The essential defining characteristic of an entrepreneur is that she:
manages the other factors of production
is paid a high salary
takes risk
is the CEO
40
The price elasticity of demand measures how much
demand responds to a change in supply
price responds to a change in demand.
quantity demanded responds to a change in price.
quantity demanded responds to a change in income.
41
In economics, needs and wants are
exchanged
limited
unlimited
never-ending
42
A normative statement in economics:
is based on facts
is based on things that are normal
is open-ended
is dependent on value judgements
43
Economics is also known as
my best subject
the dismal science
abstract theory
pure fun
44
In economics, a market includes
eBay
a supermarket
a Sunday market with stalls
all of the above
45
Assume you bought a phone for $300 last year. You could sell your phone for $150, so the opportunity cost is:
$300
$150
$200
$250
46
Which of the following would shift the demand curve for alcohol to the left?
A health scare linking alcohol with heart disease
An increase in real income
An increase in indirect tax on alcohol
A successful alcohol advertising campaign
47
The statement that "all economic goods are scarce" implies that these goods have:
opportunity costs
a high price
a limited demand
a low price
48
The equilibrium price and quantity would be...
P = $5, Q= 4
P=$5, Q=6
P= $5, Q=5
P= $6, Q= 5
49
Given the assumption of ceteris paribus, a law in economics may be described as:
a mathematical forecast
a positive statement about production
a generalization of economic agent behaviour
a constant behavioural relationship
50
Law of demand
P up, Qd up
P up, Qd down
51
An assumption used in economics meaning "all else equal"
ceteris paribus
e pluribus unum
veni vidi vici
carpe diem
52
In drawing a demand curve for bananas, the assumption of ceteris paribus means that:
the price of bananas is constant
the supply of bananas is constant
tastes, incomes and price of bananas are constant
factors that influence the demand of bananas, except price, are constant
53
Which of the following statements is true about externalities?
The price system over produces merit goods
When externalities exist, resources are allocated efficiently
It is best to tax positive externalities
The output of goods with positive externality is too low
54
What are the variable(s) in Law of Supply and Demand?
Price
Quantity and Price
No variables
Quantity
55
Law of supply
P up, Qs down
P up, Qs up
56
In microeconomics, the equilibrium price is defined as the price at which
Firms sell most of the quantity they produce at that price.
market clearing price => Q demanded = Q supplied
Firms selling at profit => no surplus of goods unsold.
Production costs are at a minimum.
