What is one way prices allocate resources between markets?

Higher/lower prices shift materials & workers to where rewards are higher

One opportunity cost or trade-off of increasing the minimum wage may be

higher unemployment and higher prices.

Which is an unfortunate consequence of growth under free enterprise capitalism?

A widening gap between the rich and poor

Whenever the government is involved in making economic decisions,

some economic freedom is being traded for someother benefit.

Which of the statements best describes the communist ideal?

a classless society in which everyone works forthe common good

Which is an example of scarcity?

A fan cannot go to a concert because there arenot enough tickets.

For workers, "going on strike" means

refusing to work until certain demands are met.

Why might someone want to purchase a franchise?

have opportunity to sell established product with national reputation

According to the income effect,

a lower price for something leaves consumerswith some extra money to spend.

Inflation causes people to _______ .

work more to pay for basic necessities

How could the paradox of value explain the price of gold?

Many people think that the price of gold is notrelated to its usefulness.

According to market theory of wage determination, under what circumstances will wages for a particular group be highest?

When demand is high and supply is low

In what does microeconomics specialize?

deals with economic behavior & choices of small units, people & firms.

How is the principle of “There’s No Such Thing As A Free Lunch” illustrated in a socialist economy?

Socialist economies offer extensive govt services but have high tax rates

Why do countries have to produce on or inside the production possibilities curve?

They lack the available resources to go beyondthe curve.

What is a production function?

shows total output changes while all variable inputs kept constant except 1

What's a main disadvantage of a traditional economy?

Individuals act differently, break rules, or try something new are punished

The market is flooded with rice because of weather conditions during the growing season. What is the result?

A drastically lower price for rice

A group of firms designed to restrictcompetition or to control prices

Collective bargaining occurs when

labor union negotiates with management about pay & job related issues

Who makes the decisions in a command economy?

A king or ruler with absolute power

Which of these is an advantage of a sole proprietorship?

owner does not have to share the profits of the business with anyone else.

How was commodity money different from fiat money?

Commodity had an alternative use as an economic good, fiat money did not.

Which answer explains the phrase "There Is No Such Thing As A Free Lunch"?

A business that offers a deal will pass on thecost in other ways.

What happens when a business prices a product too low?

The business has a shortage of the product.

Which of the following describes an example of privatization?

Formerly state-owned companies are sold or givento citizens.

What is a price ceiling, and what is its result?

A price set below equilibrium price; result is ashortage

It is the supply side of the market.

Not all monopolies are bad. Sometimes it is better to regulate a monopoly rather than break it up if

it can be demonstrated that a monopoly can benefitfrom economies of scale.

When is a firm’s rate of hiring likely to be highest?

during a phase of increasing marginal returns

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Econ Semester Exam Review

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1
What is one way prices allocate resources between markets?
Higher prices draw more consumers, and lowerprices draw more producers.
Producers keep producing the same amount of agood.
Higher/lower prices shift materials & workers to where rewards are higher
Markets always stay the same regardless ofprice.
2
One opportunity cost or trade-off of increasing the minimum wage may be
more goods exported to other countries.
fewer immigrants coming to the United States.
increased economic freedom for employers.
higher unemployment and higher prices.
3
What two economic factors determine the value of something?
Durability and service
Capital and scarcity
Need and want
Scarcity and utility
4
The dollar value of all final goods, services, and structures produced in a country in a year is known as _______ .
Gross Domestic Product
franchise
Gross National Product
profit motive
5
Zoning is an example of
state government regulation.
local government regulation.
federal government regulation.
individual regulation.
6
Which is an unfortunate consequence of growth under free enterprise capitalism?
The loss of individual economic freedom
A decrease in the number of new productsreaching the marketplace
A gradual reduction of individual wealth
A widening gap between the rich and poor
7
Which of these is the price that an individual or a corporation pays for the use of another's money?
Principal
Dividends
Interest
Capital
8
Prices are the result of competition between whom?
Consumers and buyers
Government and buyers
Producers and consumers
Producers and sellers
9
Whenever the government is involved in making economic decisions,
inflation always occurs.
some economic freedom is being traded for someother benefit.
supply and demand are the only drivers ofprices.
the market is at a peak of economic efficiency.
10
Which of the statements best describes the communist ideal?
a classless society in which workers aremotivated by financial incentives
a classless society in which everyone works forthe common good
society in which working class is motivated by incentives to produce goods
society in which a small ruling class administers resources for common good
11
Which is an example of scarcity?
A fan cannot go to a concert because he has todo homework instead.
A fan goes to a concert because there are enoughtickets for everyone.
A fan cannot go to a concert because there arenot enough tickets.
A fan goes to a concert instead of doinghomework.
12
For workers, "going on strike" means
refusing to work until certain demands are met.
boycotting products from targeted employers orcompanies.
filing a lawsuit against employers.
staging public protests of a company's actions.
13
Why might someone want to purchase a franchise?
The start-up costs are relatively low.
The franchisee will own the business at the endof the lease term.
face minimal costs if you back out of lease agreement after 2 or 3 years.
have opportunity to sell established product with national reputation
14
What are the causes of price changes most of the time?
government policy
change in demand only
changes in supply and demand
changes in supply only
15
The only thing that can cause a change in quantity demanded is a
change in the demand curve.
change in price.
change in the quantity supplied.
change in the supply curve.
16
According to the income effect,
as workers move up within a company, they spendmore.
a lower price for something leaves consumerswith some extra money to spend.
demand is only created on paydays.
when supplier is selling many goods/services, they feel safe cutting prices
17
The federal minimum wage is an example of what?
A price relief
A price floor
A price target
A price ceiling
18
Inflation causes people to _______ .
work more to pay for basic necessities
work the same hours for the same pay
spend less for the same amount of goods and services
take more time off work
19
How could the paradox of value explain the price of gold?
Many people think that the price of gold is notrelated to its usefulness.
Many people think that food is more necessarythan gold.
Many people think that gold is not useful.
Many people think water is more necessary thangold.
20
Which change would you see in the supply curve if there were a change in supply?
A flattened line
A shift to the left or right
A sharper curve
A downward shifting curve
21
According to market theory of wage determination, under what circumstances will wages for a particular group be highest?
When supply is high and demand is low
When there is no demand for this type of labor
When supply and demand for this type of laborare equal
When demand is high and supply is low
22
In what does microeconomics specialize?
deals with whole economic systems of a country, such as its output/income.
deals with factors involved with price & demand, perceived value & desire
deals with economic behavior & choices of small units, people & firms.
examination of production, consumption, & distribution of goods/services
23
How is the principle of “There’s No Such Thing As A Free Lunch” illustrated in a socialist economy?
The marketplaces in a socialist economy are freefor anyone to enter.
Socialist economies tend to collapse when theybecome too large.
Socialist policies offer advantages to wealthy at expense of less well-off
Socialist economies offer extensive govt services but have high tax rates
24
A decrease in _______ tends to reduce the efficient use of ______ resources.
competition; plentiful
competition; scarce
information; plentiful
public goods; scarce
25
Why do countries have to produce on or inside the production possibilities curve?
They lack the available resources to go beyondthe curve.
They choose to produce at less than maximumproduction.
They use their abundant resources inunproductive ways.
They fully employ all of their resources forproduction.
26
What is a production function?
shows total output changes while all variable inputs kept constant except 1
shows total input changes while all variable outputs kept constant except 1
shows total output changes while amounts of all variable inputs are changed
shows total input changes while amounts of all variable outputs are changed
27
What's a main disadvantage of a traditional economy?
Sharing is a valued practice in a traditionaleconomy
Everyone knows their role to play in theeconomy.
Traditional economies have a higher standard of living than other economies
Individuals act differently, break rules, or try something new are punished
28
This form of business provides limited liability for the owners.
Proprietorship
General partnership
Corporation
Sole proprietorship
29
The market is flooded with rice because of weather conditions during the growing season. What is the result?
A drastically higher price for rice
A drastic increase in demand
A drastic decrease in demand
A drastically lower price for rice
30
Societies are faced with which three basic questions about production of goods?
when, where, and for whom
what, where, and when
what, how, and for whom
what, how, and why
31
What is a trust?
A single firm that controls the vast majority ofa single market
A group of individuals who attempt to influencegovernment policies
A group of firms designed to restrictcompetition or to control prices
A government agency that regulates a market
32
Which terms describe costs that are incurred regardless of a firm’s rate of production?
variable costs and total costs
fixed costs and total costs
variable costs and overhead
fixed costs and overhead
33
Collective bargaining occurs when
a group agrees to work together to improve thecommunity.
labor union negotiates with management about pay & job related issues
corporation's management & board of directors agree on how to run business
members work together to make goods available toeach other at lower prices.
34
Labor and raw materials are usually associated with
Fixed costs
Overhead
Variable costs
Profit-maximizing quantity of output
35
Who makes the decisions in a command economy?
Consumers
Individuals
Elders and tradition
A king or ruler with absolute power
36
What do prices signal to consumers?
How much to make
For whom to buy products
What to produce
How much to buy
37
Which of these is an advantage of a sole proprietorship?
It is recognized as a separate legal entity.
The proprietor does not have to pay income taxesfor the business.
It is easy to attract qualified employees.
owner does not have to share the profits of the business with anyone else.
38
Programs that provide services for the public using taxpayer dollars are often considered
free market.
mixed market.
communist.
socialist.
39
How was commodity money different from fiat money?
Commodity had an alternative use as an economic good, fiat money did not.
Fiat used only to settle debts, commodity used only to make purchases.
Commodity used only to settle debts, fiat money used only to make purchases
Fiat had an alternative use as an economic good, commodity money did not.
40
Which answer explains the phrase "There Is No Such Thing As A Free Lunch"?
Businesses often ask customers to pay forothers' lunches.
Businesses rarely offer free items to customers.
A business that offers a deal will pass on thecost in other ways.
A business always expects its customers to payfor products and services.
41
What happens when a business prices a product too low?
The business has a shortage of the product.
The business establishes the equilibrium price.
The business has a surplus of the product.
The business reaches the equilibrium quantity.
42
Which of the following describes an example of privatization?
Formerly state-owned companies are sold or givento citizens.
Companies are prevented from accessing citizens'personal information.
Certain industries are operated by the govt to try to benefit all citizens
The government is prevented from accessingcitizens' personal information.
43
What is a price ceiling, and what is its result?
A price set above equilibrium price; result is ashortage
A price set above equilibrium price; result is asurplus
A price set below equilibrium price; result is ashortage
A price set below equilibrium price; result is asurplus
44
What is industry?
It is the supply side of the market.
It is the competitive side of the market.
It is the demand side of the market.
It is the theoretical side of the market.
45
A group of companies controlled together by a board of directors in order to regulate competition is referred to as
perestroika.
keiretsu.
a black market.
a capital-intensive method.
46
What is an example of a trade, or craft, union?
Steel Industry Union
Textile Industry Union
Cigar Makers' Union
Automakers' Union
47
The risk of ending up with the equivalent of a never-ending loan is one of the disadvantages of using
savings accounts.
debit cards.
checking accounts.
credit cards.
48
Businesses and individuals interact economically through the
specialization.
human capital.
market.
division of labor.
49
Not all monopolies are bad. Sometimes it is better to regulate a monopoly rather than break it up if
a cease-and-desist order is not sufficientlyeffective.
it can be demonstrated that a monopoly can benefitfrom economies of scale.
it can be demonstrated that monopoly is not practicing price discrimination
public disclosure is not a sufficient way topromote transparency.
50
When is a firm’s rate of hiring likely to be highest?
during a phase of increasing marginal returns
during a phase of negative marginal returns
during a phase of decreasing marginal returns
during a phase of uncertain marginal returns
51
What is an example of a way to deal with spillovers?
Taxing harmful spillovers
Taxing public goods
Subsidizing harmful spillovers
Taxing helpful spillovers
52
If it is relatively easy to delay the purchase of a product, that product's demand elasticity is likely to be
unit elastic.
inelastic.
fixed.
elastic.
53
In this economic system, private citizens own all of the factors of production to make products and create profits.
Socialist economy
Capitalist economy
Command economy
Mixed socialist economy
54
How does economic interdependence affect international relations?
Countries self-sufficient tend to get along better politically with others
Countries that depend on others for food cause hostility among others
Countries that work together politically tend to have strong economic ties
Countries that cooperate economically tend toget along better politically.
55
What type of economy is most common worldwide?
Communist
Traditional
Command
Mixed
56
Why does the Law of Demand state that the relationship between price and the quantity demanded is inverse?
Because when one goes up, the other goes up more
Because when one goes up, the other goes down
Because when one goes up, the other stays thesame
Because when one goes up, the other goes up
57
What is the profit motive, and what is its result?
The loss of profit by successful businesses; areduction of free enterprise
The incentive to improve material well-being;growth of free enterprise
The ownership of profit by the state; increasedcompetition
The requirement to share profits equally; thegrowth of socialism
58
When merging firms strive to take advantage of the best characteristics of each to create a stronger, better company
synergy.
diversification.
conglomeration.
economies of scale.
59
If investors want to know about the financial health of a firm, what is one of the first things they look at?
The firm's president
The firm's taxes
The firm's cash flow
The amount of a firm's depreciation
60
Which method of resolving labor disputes features a third party whose decision is binding?
Fact finding
Arbitration
Mediation
Injunction
61
What is the "glass ceiling"?
It is a way of making sure that wage policiesfor women are transparent.
act of not allowing a woman to get a promotion or a raise because of gender
It is the act of lowering wages for women.
It is a way of keeping women out of education.
62
What is the main purpose of the FDIC?
To function as a central bank
To combat counterfeiting
To insure bank deposits
To control the money supply
63
In economics, the term utility refers to what?
The production cost of a product
The price of a product
The usefulness of a product
The re-sale value of a product
64
A market economy allows buyers and sellers to do what?
Follow consumer traditions
Interact with government officials to demandproduction
Make their own decisions regarding what to buyor what to sell
Commonly own all resources in the economy
65
Why does an increase in gas prices lead to less consumer spending on other items?
The demand for gas is largely inelastic.
The price of gas is largely elastic.
The price of gas is largely inelastic.
The demand for gas is largely elastic.
66
Which is the only factor that would cause a change in quantity supplied?
Change in cost of technology
Change in government regulations
Change in cost of resources
Change in price
67
How does productivity increase?
More resources are added to an economy.
More specialization increases the number ofworkers.
More capital and labor are added to production.
More can be made using the same resources.
68
Which is the best paraphrase of the Law of Supply?
Supply is affected only by demand.
quantity offered at all possible prices in a market changes frequently
More will be offered for sale at high pricesthan at lower prices.
More will be offered for sale at lower pricesthan at higher prices.
69
Why did the federal government begin printing greenbacks in 1861?
To ruin the Confederate economy
To revive the Continental dollar
To compete with state banks
To help pay for the Civil War
70
Which activity is illegal in a state with a right-to-work law?
denying any qualified worker a job
requiring union membership as a condition ofemployment
joining a union
requiring a higher hourly rate for overtime hours
71
Why is marginal revenue the most important type of revenue?
needed to find profit-maximizing quantity of output, or MR=MC.
It helps the firm find the break-even level ofproduction.
Marginal revenue is needed to find the maximumamount of sales.
determines the total amount earned by a firm from the sale of its products.
72
How does competition benefit consumers?
More expensive products will dominate themarket.
Unpopular products will remain in the market.
Consumers will have fewer choices.
Newer and cheaper products will reach themarket.
73
In 1933, President Roosevelt issued a series of orders that effectively _____ the gold standard to the American people.
explained
promised
guaranteed
denied
74
Today most of our money is issued by
Congress.
individual states.
the U.S. president.
the Federal Reserve System.
75
In what stage do most firms operate?
Stage II
Stage I
Stage III
Stage IV
76
A vertical merger combines firms that
produce the same kinds of products.
produce complementary products.
are involved with different stages ofmanufacturing, marketing, or sales.
want to keep their own identities intact.
77
A lawyer does work that could be classified as
a service.
a consumer good.
a basic need.
a transferable good.
78
What is the Sherman Act?
One of the first monopolies in the United States
A law created to outlaw Standard Oil
The law that allowed the creation of StandardOil
America's first significant law againstmonopolies
79
How does e-commerce differ from brick-and-mortar stores regarding costs?
The break-even point of sales for e-commerce islower.
fixed cost are significantly higher in e-commerce than typical retail store
The fixed costs of operation on the Internet arehigh.
An e-commerce firm needs twice as muchinventory.
80
According to signaling theory, why is a college degree important?
It gives the holder a better position entering anegotiation situation.
Employers believe that it shows superiorknowledge or ability.
It places the holder in the professional classof labor.
There is higher demand for people with collegedegrees.
81
What must two people who want to trade with each other have in a barter economy?
Mutual coincidence of wants
Federal Reserve notes
Fiat money
Pesos
82
Which of the following replaces a costly item with a less costly one?
consumer taste
change in demand
the substitution effect
the income effect
83
One way government helps farmers achieve target prices is with the use of
efficient prices.
price ceilings.
rationing.
nonrecourse loans.
84
What is one method companies use to reduce union salary scales?
They instigate a glass ceiling.
They encourage more people to join a union.
They instigate a two-tier wage system.
They refuse to hire union employees.
85
Consumer demand for utilities such as electricity is generally
variable.
elastic.
unit elastic.
inelastic.
86
A company with four or more businesses that make unrelated products is called a ______ .
multinational
horizontal merger
vertical merger
conglomerate
87
What is pure competition?
theoretical market with identical products, and freedom of entry and exit
very large #, identical products, freedom entry/exit, & perfect knowledge
theoretical market structure with very large numbers and identical products
theoretical with identical products, very large #, & freedom of entry/exit
88
Why do consumers experience diminishing marginal utility?
Because they no longer like what they have purchasedafter a period of time
Because they are forced to spend more money tobuy additional products
it usually seems as if 2nd item never gives as much satisfaction as the 1st
they need more of a product after they make their first purchase of it
89
Who can call for a lockout?
Employers
Union leaders
Union members
employees
90
Specie was money in the form of
paper currency.
silver or gold coins.
Continental dollars.
commodities such as corn, hemp, gunpowder, andmusket balls.
91
Which of the following were a direct result of union activity?
the adoption of immigration quotas
consumer boycotts
a higher rate of pay for overtime hours worked
an increase in jobs for migrant workers
92
What are the two variables needed to calculate demand?
the price of a product and quantity that would be purchased at that price
Previous number of purchases and the likelihoodof future purchases
# of people willing to buy a product & number & type of competing products
The desire and ability to buy a product
93
Why do state and local governments pay for the cost of primary and secondary public education?
The federal government refuses to do it.
There isn't enough competition from privatelyowned, for-profit schools.
Teachers and school administrators are resourcesthat can't or won't move.
Primary and secondary education has so manypositive spillover effects.
94
Which of the following is a role an entrepreneur might play?
Relying on government to make economic decisions
Organizing and managing resources to try to gainprofits
Countering the role of the consumer indetermining what is produced
Seeking employment in a factory
95
What are the four characteristics of money?
Immobility, weakness, divisibility, abundance
Portability, durability, divisibility, scarcity
Portability, value, divisibility, storage
Exchange, value, storage, scarcity
96
In which way do consumers determine the WHAT to PRODUCE question?
purchasing desirable products, consumers reward some producers with profits
limiting amount of producers, govt help weed out ineffective suppliers
By pursuing employment by entrepreneurs,consumers seek out good wages.
By asking for new laws, consumers limit what canbe made legally.
97
How do monopolistic competitors try to make their products stand out?
They maximize profits.
They use nonprice competition such asadvertising.
They lower their prices.
They raise their prices.
98
Which of the following is one of the three functions of money?
store of value
portability
scarcity
divisibility
99
A difference between a professional association and a labor union is that
labor unions serve the entire community.
labor unions primarily focus on publicperception of their members.
professional associations lead strikes.
prof. associations concerned about standards of conduct & legal issues
100
Who did Karl Marx believe would be the beneficiaries of socialism?
capitalists
workers
property owners
the government

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