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Economics Review Quiz
Economics Review Quiz
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Economics Review Quiz
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1
Which of the following is an example of a variable cost?
rent
equipment
raw materials
machinery repair
2
Which of the following is NOT a factor of production?
a woman who makes a quilt
the cotton cloth and thread used in the quilt
the wood frame on which the quilt is sewn
the children whom the woman supports with her labor
3
15. Which of the following is an example of a good with inelastic demand?
television sets
a particular brand of chewing gum
computers
life-saving medicine
4
What is your opportunity cost?
scarcity
resources
a production possibility curve
your 2nd best choice
5
Total revenue is defined as the amount of
profit a company makes.
profit a company makes after paying taxes.
money a company receives by selling its goods.
money affected by price elasticity.
6
Scarcity always exists because
machines and people are inefficient.
there are more poor people than rich people.
changes have occurred in global weather patterns.
needs & wants are not limited but our resources are limited.
7
All the goods and services we produce are
expensive
recyclable.
scarce
efficiently produced.
8
Which is NOT capital?
the state house where state government is conducted
the computer used by an accountant
the paint used by a housepainter
the person whose photo is snapped by a candid photographer
9
Giving up one alternative for another is called
human capital.
efficiency
underutilization.
a trade-off.
10
If you keep buying despite a price increase, your demand is
elastic.
normal
inelastic
strong.
11
A subsidy is
a form of government regulation.
a tax on the production or sale of a good.
a government payment to support a business or market.
illustrated by the market supply curve.
12
Which of the following describes the substitution effect?
As demand falls, people will substitute other products.
As the price of a good rises people will sub other products.
As demand rises, people will substitute other products.
As the price of a good falls people will sub other products.
13
Which of the following is NOT a fixed cost?
building construction costs
rent
property taxes
electricity
14
The skills and knowledge gained by a worker through education and experience are
entrepreneurial.
human capital.
physical capital.
production possibilities.
15
The law of demand says
the lower the price, the more consumers will buy.
the higher the price, the more consumers will buy.
the lower the price, the more consumers will substitute.
the lower the price, the less consumers will buy.
16
Which is NOT an example of capital at a book printing company?
the men and women who work in the accounting office
the paper on which books are printed
the office building where the printing company is located
the oil used to heat the factory
17
Markets allow us to
exchange things we have for things we want or need.
get the highest prices for what we sell.
sell the most goods we possibly can.
get the lowest prices for what we buy.
18
Which statement applies to all centrally-planned economies?
The government builds every house in every village.
The government makes all important economic decisions.
The govt. emphasizes making consumer goods
The government encourages workers to innovate.
19
The law of supply describes the relationship between
price and quantity supplied.
demand and supply schedule.
price and demand.
market supply schedule and demand.
20
The circular flow model shows
what inputs are required for what outputs.
how profits are made.
interactions between firms and households in free market
how many firms can support the needs of how many households.
21
According to the law of supply,
if the price of a good rises, some firms will produce less.
the higher the price, the greater the quantity produced.
the lower the price, the greater the quantity consumed.
if the price of a good falls new firms may enter the market.
22
Which is a key economic question faced by all countries?
How much money should be raised in taxes?
How many schools should be built?
What goods and services should be produced?
How big should the army be?
23
In an economy in transition from central planning to free enterprise, you might expect to see
increased job security.
private firms sold to the government.
increased govt presence in the factor and product markets.
state firms sold to private individuals or entities.
24
Economics is the study of how people
choose from limited resources to meet their needs.
gain knowledge and skills from study and experience.
respond to war and drought.
calculate their income tax.
25
In a traditional economy, economic decisions are based largely on
technology
socialism.
custom
science.
26
Which economic goals are difficult to achieve in a pure market system?
efficiency and freedom
freedom and equity
innovation and security
equity and security
27
Elastic demand comes from all of the following EXCEPT
immediate need of product.
availability of substitute goods.
a limited budget that does not allow price changes.
the perception of the item as a luxury item.
28
How does specialization affect an economy?
It results in more innovation.
It makes the economy less efficient.
It discourages entrepreneurs.
It prevents duplication of effort.
29
A country's production possibilities will grow if it
produces more guns than butter.
makes more trade-offs.
lowers its opportunity costs.
increases its resources.
30
In return for supplying the factors of production—land, labor, or capital—people receive
social security.
factor payments.
salaries.
workers' compensation.
31
The change in output from adding one more worker is called
diminishing marginal returns.
the marginal product of labor.
negative marginal returns.
increasing marginal returns.
32
Entrepreneurs are people who
produce all of a country's guns and butter.
work on the floor of the stock exchange.
put together land, labor, and capital to create new biz.
help settle labor disputes.
33
A demand curve illustrates the
differences in price charged by different stores.
quantities demanded at each price by consumers.
differences in demand for different products.
products that are most in demand.
34
For most goods, a rise in people's income means that there will be a(n)
decrease in demand.
substitution effect.
rise in prices.
increase in demand.
35
The government decides which goods and services will be produced in a
mixed economy.
command economy.
fluctuating economy.
market economy.
36
Substitutes are goods
that cannot be replaced.
that cause a shift in the demand curve.
that are bought and used together.
used in place of one another.
37
Which of the following is an example of an inferior good?
generic cereal
lobster
laptop computer
new car
38
Which of the following is NOT an example of complements?
pens and pencils
shoes and socks
peanut butter and jelly
cars and gasoline
39
Which of the following leads to an increase in supply?
an increase in the cost of raw materials
a change in the law of supply
diminishing marginal returns
a decrease in the cost of raw materials
40
choosing between producing military or consumer goods, a trade-off economists call
export or import.
farm goods or factory goods.
a free market economy.
guns and butter.
41
The self-regulating nature of the marketplace is called
the invisible hand.
equity
the safety net.
self-interest.
42
The free market economist Adam Smith is NOT known for
the concept of the invisible hand.
The Wealth of Nations.
the circular flow model of a mixed economy.
the concept of the invisible hand.
43
Competition and self-interest are two important forces in
centrally-planned economies.
traditional economies.
communist economies.
free market economies.
44
Socialists believe economic equality is only possible if
medical care is free.
everyone makes the same amount of money.
the public controls the economy.
no one has to pay taxes.
45
A drop in price will
increase the quantity demanded of goods.
not affect the quantity demanded of goods.
decrease the quantity demanded of goods.
change the law of demand.
46
The key factor that determines whether the supply of a good will be elastic or inelastic is
output level.
consumption.
time
price
47
A market supply curve shows
the quantity supplied by producers at different prices.
how the supply of goods is kept in balance.
supply for any set of conditions.
how prices affect the cost of raw materials.
48
What factor would NOT cause the demand curve to change?
consumer tastes and advertising
price
income
population
49
The free enterprise system of the United States is best described as a
traditional economy.
mixed economy with a great deal of economic equity
mixed economy with limited govt. intervention
free market economy.
50
The doctrine that government should not intervene in the marketplace is called
the invisible hand.
the trade-off doctrine.
socialism.
laissez faire.
51
____________ is a measure of the way suppliers respond to a change in price.
Ceteris paribus
The marginal product of labor
Elasticity of supply
The market supply curve
52
The resources used to make goods and services are called
opportunity costs.
factors of production.
the production possibilities frontier.
the gross national product.
53
The former Soviet Union was an example of a communist country where
free enterprise was encouraged.
most economic and political power was controlled by the govt
consumers had many choices.
individual freedom was allowed.
54
The supply curve
is always a horizontal line.
is always a vertical line.
always rises from left to right.
always rises from right to left.
55
Advances in technology usually
lower costs and increase supply at higher price levels.
lower costs and increase supply at all price levels.
increase cost and decrease supply at all price levels.
increase cost and increase supply at lower price levels.
56
Using resources in such a way as to maximize the production of goods and services is called
efficiency
underutilization.
thinking at the margins.
growth
57
If sellers expect the price of a good to rise in the future, they are likely to
raise their prices now.
put more goods on the market immediately.
set prices according to the law of demand.
store goods now and sell more in the future.
58
When factors other than price cause demand to fall, the demand curve
shifts upward.
shifts to the left.
does not shift.
shifts to the right.
59
When a business is calculating its operating costs, it must include
the rent for the building.
total costs.
variable costs.
fixed costs.
60
A measure of how consumers react to a change in price is known as the
income effect.
demand curve.
law of demand.
elasticity of demand.
61
Which of the following is NOT an example of a land resource?
water
oil
forests
highways
62
Each point on a production possibilities curve shows
underutilization of resources.
the potential for future growth.
the relationship of shortage to scarcity.
efficient utilization of resources.
63
The purpose of a production possibilities graph is to
show alternative ways to use an economy's resources.
show how a factory can use its workers in different ways.
help determine the total revenue of a business
tell farmers how many watermelons to plant.
64
Shortages occur when
many people are unemployed.
people cant supply enough goods & services at current prices
interest rates go up.
the United States imports more than it exports.
65
Which of the following countries is the most extreme example of a centrally-planned economy?
Hong Kong
North Korea
China
Great Britain
