What kind of changes would be expected in the demand of a country that has a growing population?

a rise in the demand for shelter

How could the Chinese economy be characterized?

mixed, but on the side of centrally planned

What can a decision-making grid do?

help you determine the opportunity cost of your decision

What is the purpose of competition?

to act as a regulating force in the marketplace

Human capital includes

a taxi driver's knowledge of the city streets

What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future?

store the goods until the price rises

If the supply of a good is inelastic,

producers will not change their quantity supplied by much if the market pr-

What does it mean when the demand for a product is inelastic?

A price increase does not have a significant impact on buying habits.

Which of the following is an example of scarcity, rather than shortage?

a person wants an endless supply of everything but cannot have it

An efficient economy is one that

uses its resources to make the most goods and services.

What determines the price and the quantity produced of most goods?

the interaction of supply and demand

What does a production possibilities frontier show?

the maximum amount that an economy can produce

What is a basic principle of the law of demand?

When a good’s price is lower, people will buy more of it.

What is the function of an economic system?

to produce and distribute goods and services

Which of the following is an example of lower production costs brought about by the use of technology?

the use of e-mail to replace slower surface mail

Which of the following is characteristic of a traditional economy.

children tend to have the same jobs as their parents did

Which of the following is the best example of the law of supply?

A sandwich shop increases the number if sandwiches they supply every day-

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Economics Test Prep

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Questions 60

Answers

1
What is one of the most important advantages of free market?
it is easy to regulate
it encourages growth
it protects the less fortunate
it can change rapidly
2
What kind of changes would be expected in the demand of a country that has a growing population?
a rise in the demand for shelter
a decrease in the demand for recreation
a decrease in the demand for automobiles
a rise in the supply of gasoline
3
As the price of an item decreases the demand for that item tends to increase. This is known as:
Law of Supply
Newman's Law
Law of Variables
Law of Demand
4
What is an example of a variable cost in a major league baseball franchise?
manager’s salary
stadium maintenance
stadium rent
ticket-takers' wages
5
Which of the following is an example of government influence on supply?
law of supply
market supply curve
subsidies
marginal costs
6
How could the Chinese economy be characterized?
mixed, but on the side of centrally planned
free market
centrally planned
mixed, but on the side of free market
7
What can a decision-making grid do?
show you every possible consequence of your decision
help you determine the opportunity cost of your decision
show you every possible benefit of your decision
tell you the right course of action
8
Which of the following is NOT characteristic of a centrally planned economy?
consumers' needs are generally not met
most workers lack job security
individual freedoms are sacrificed for societal goals
consumers' needs are generally not met
9
What is the purpose of competition?
to cause buyers to have to be careful about spending their money
to encourage buyers to spend more on goods
to act as a regulating force in the marketplace
to cause producers to attempt to put each other out of business
10
A country's production possibilities increase because the available workers become more skilled at using a computer.
time
production opportunity.
global resources.
technology.
11
Which of the following is an example of government influence on supply?
subsidies
law of supply
market supply curve
marginal costs
12
Which of the following might shift the demand curve for beef to the left?
farmers have found a cheaper way to feed cows
a breakout of mad cow disease
a special is presented on the nightly news about the health benefits of...
none of these will shift the demand curve to the left
13
Generic cereal, hotdogs, and ramen noodles are all examples of _____ goods.
inelastic
superior
inferior
normal
14
Human capital includes
the machinery used to weave cloth
a taxi driver's knowledge of the city streets
the equipment used by a doctor to cure a patient
the salary paid to an accountant
15
Ice cream is [ Select ] in demand due to the availability of [ Select ]
elastic, substitutes
elastic, shortages
inelastic, substitutes
inelastic, shortages
16
What is a factory building an example of?
human capital
physical capital
an economic trade-off
technology
17
What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future?
sell the goods now and try to invest the money instead of resupplying
sell the goods now but try to get the higher price for them
store the goods until the price rises
store the goods indefinitely regardless of when the price rises
18
What is the effect of import restrictions on prices?
They cause prices to rise.
They often cause prices to rise steeply and then drop.
They usually do not have any lasting effects.
They cause prices to drop.
19
If the supply of a good is inelastic,
producers will increase their quantity supplied in response to sharp drops
producers will not change their quantity supplied by much if the market pr-
producers have diminishing marginal returns of labor.
a small increase in price will lead producers to sharply increase their-
20
What does it mean when the demand for a product is inelastic?
People will not buy any of the product when the price goes up.
A price increase does not have a significant impact on buying habits.
There are very few satisfactory substitutes for the product.
Customers are sensitive to the price of the product.
21
Which of the following is a condition that most people would NOT expect the safety net of the government to provide for?
injuries
joblessness
natural disasters
low income
22
Which of the following is the kind of decision that can be made at the margin?
whether to go on a vacation
whether to build an extra room on a home
whether to hire new workers
whether to have a dog or a cat as a pet
23
Any sources that are made by humans and used to create other goods and services are called
production.
capital.
services.
labor.
24
The resources used to make all goods and services are the
production possibilities.
production trade-offs.
opportunity costs.
factors of production.
25
the tendency of suppliers to offer more of a good at a higher price
increasing marginal returns
law of supply
market supply schedule
excise tax
26
What determines how a change in prices will affect total revenue for a company?
values of elasticity
elasticity of demand
the consumer's incomes
the company's pricing policy
27
In what kind of an economy does the government make all the decisions?
free enterprise
centrally planned
laissez fair
socialist
28
Which of the following is an example of scarcity, rather than shortage?
gasoline was rationed in America during World War II
a person wants an endless supply of everything but cannot have it
you have spent your last penny and payday is a week away
a popular toy is sold out during the busy holiday season
29
When prices rise, which of the following happens to income?
It is used to buy different things.
It goes down.
It buys less.
It rises to meet prices.
30
What is the struggle among various producers for the consumer's business called?
incentive
self-regulation
socialism
competition
31
An efficient economy is one that
uses its resources to make the most goods and services.
has very few people who do not work for a living.
requires government involvement.
makes the least costly use of its resources.
32
How would you describe an economy that uses its resources to make the greatest possible number of goods and services?
efficient
scarce
wealthy
costly
33
What determines the price and the quantity produced of most goods?
the interaction of supply and demand
the quality of the goods that are produced
the consumer’s perception of necessity
the availability of substitutes for the goods
34
In order to lower the supply of undesirable products, the government will often impose an _____ tax on these goods.
Excise
Capital Gains
Income
Elastic
35
What does the process of specialization do for an economy?
it makes it easier to control
it makes it more efficient
it fosters competition
it eliminates unemployment
36
According to the Law of Supply, if you're offered a siginificant raise to babysit your little brother you will likely...
fewer hours.
more hours.
not at all.
about the same.
37
Which of the following is a fixed cost for a store?
rent
short-term workers
inventory
advertising
38
You are an entrepreneur with an innovative idea for a new business. In which kind of economy would you have the most....
market economy
economy of scale
traditional economy
command economy
39
Which of the following was a free market philosopher?
Karl Marx
Vladimir Lenin
Friedrich Engels
Adam Smith
40
What does a production possibilities frontier show?
scarce and less scarce resources
global trade-offs and cost of doing business
the maximum amount that an economy can produce
an economy that is producing but not at the maximum
41
What is a basic principle of the law of demand?
Services are of interest in the same way that goods are.
Everyone has a limited income that they will spend.
When a good’s price is lower, people will buy more of it.
The higher the price, the more people will want the good.
42
What incentive motivates a manufacturer to sell a product?
making profits on sales
putting others ot of business
popularity of the product
pleasing the customer
43
the additional income from selling one more unit of a good
subsidy
elasticity of supply
marginal cost
marginal revenue
44
A measure of how consumers react to a change in the price of a good
income effect
elasticity of demand
demand curve
inferior good
45
What is the function of an economic system?
to produce and distribute goods and services
to make sure all people have equal access to goods
to make sure people are paid for their labor
to give all producers the same access to consumers
46
Which of the following is an example of lower production costs brought about by the use of technology?
the use of e-mail to replace slower surface mail
the delivery costs of gasoline to the consumer by diesel trucks
the importing of fresh vegetables from South America rather than using-
the making of breads and pastries in local shops rather than large bakeries
47
Which of the following is characteristic of a traditional economy.
children tend to have the same jobs as their parents did
communities tend to be fast-growing
they have a high standard of living
they are usually based on light industrial production
48
What determines how a change in prices will affect total revenue for a company?
the consumers’ incomes
the company’s pricing policy
elasticity of demand
values of elasticity
49
When prices rise, which of the following happens to income?
It is used to buy different things.
It buys less.
It goes down.
It rises to meet prices.
50
Which of the following is the best example of the law of supply?
A sandwich shop increases the number if sandwiches they supply every day-
A catering company buys a new dishwasher to make their work easier.
A milling company builds a new factory to process flour to export.
A food producer increases the number of acres of wheat he grows to supply a
51
Why are all goods and services scarce?
some goods cost more than others
some things are needs and others are wants
all resources are scarce
some people want to have more goods than other
52
What can cause a production possibilities curve to move to the right?
thousands of people move out of the country
a new invention lowers the cost of production
an epidemic kills thousands of young men and women
the population is growing increasingly old
53
A company that make baseball caps is underutilizing its resources. What does this mean?
the company is making caps when it could be making t-shirts instead
the company is running more efficiently than its competitors
the company is producing fewer caps than it could be
the company is paying its employees less than it should be
54
The government decides to give farmers a subsidy to produce additional units of corn. This will likely result in…
a rise in the price of corn.
a decrease in corn production
a rise in the supply of corn.
no change in supply.
55
What determines the price and the quantity produced of most goods?
the availability of substitutes for the goods
the consumer’s perception of necessity
the interaction of supply and demand
the quality of the goods that are produced
56
What kind of system is the United States economy based on?
market
cause and effect
production
centralized
57
An example of a shortage is limited amounts of
water available for irrigating a crop because it is used for other crops.
food available because the trucks carrying it are on strike.
food available because few people want to buy it.
labor available because the workers have other jobs.
58
The price of movie tickets in a town has risen from $7 to $9. What is the most likely effect of the change in price?
The quantity demanded of movie tickets will decrease.
The demand curve for movie tickets will move right.
The demand curve for movie tickets will remain the same.
The quantity demanded of movie tickets will increase.
59
What does a production possibilities frontier show?
the maximum amount that an economy can produce
an economy that is producing but not at the maximum
scarce and less scarce resources
global trade-offs and cost of doing business
60
The government of a country must make a decision between increasing military spending and subsidizing wheat farmers
basic economic decision.
global trade-off.
decision at the margin.
guns or butter issue.

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