Econ 122 Exam 1

21 Questions

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Economy Quizzes & Trivia

Questions and Answers
  • 1. 
    The three fundamental questions that nay economy must address are:
    • A. 

      What will be the prices of goods and services; how will these goods and services be produced and who will receive them?

    • B. 

      How much will be saved; what will be produced; and how can these goods and services be fairly distributed?

    • C. 

      Who gets jobs; what wages do workers earn; and who owns what property?

    • D. 

      What goods and services to produce; how will these goods and services be produced; and who receives them?

  • 2. 
    Technology is defined as
    • A. 

      The processes used to produce goods and services

    • B. 

      New innovations and creations

    • C. 

      The process of developing and revising models

    • D. 

      The process of recycling products

  • 3. 
    • A. 

      Scarcity is not a problem for the wealthy

    • B. 

      Scarcity is only a problem when a country has too large a population

    • C. 

      Scarcity refers to the situation in which unlimited wants exceed limited resources

    • D. 

      Scarcity arises when there is a wide disparity in income distribution

  • 4. 
    The production possibilities frontier model shows that
    • A. 

      If all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good

    • B. 

      If consumers decide to buy more of a product its price will increase

    • C. 

      Economic growth can only be achieved by free market economies

    • D. 

      A market economy is more efficient in producing goods and services than is a centrally planned economy.

  • 5. 
    • A. 

      Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible

    • B. 

      Competition forces firms to add only low profit margins to their costs of production

    • C. 

      Competition forces firms to outsource the production of their labor-intensive products

    • D. 

      Competition forces firms to produce and sell products as long as the marginal benefits to consumers exceeds the marginal costs of production.

  • 6. 
    • A. 

      The united network for organ sharing advocates a system of rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs

    • B. 

      Following the implementation of subsidies for energy conservation, household demand for rooftop solar panels increased quite significantly in California

    • C. 

      The united states offers patent protection to pharmaceutical manufactures to prevent others from duplicating their products

    • D. 

      Some states have transferred funds to food bank programs in order to increase benefits to lower-income families

  • 7. 
    Deshawns detailing is a service that details cars at the customers home or places of work. deshawns cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, deshawn will also detail the cars engine, a service that adds an additional $20 to the total cost of the package. Should deshawn continue to offer the engine detailing service?
    • A. 

      Yes, he still makes a profit by selling the engine detailing service with the basic detailing package

    • B. 

      More information is needed for deshawn to make this decision

    • C. 

      No, his marginal benefit is less than his marginal cost

    • D. 

      Yes, but only if he raises the price of the basic detailing

  • 8. 
    Adam smiths inivisible hand refers to
    • A. 

      The governments unobtrusive role in ensuring that economy functions efficiently

    • B. 

      The laws of nature that influence economic decisions

    • C. 

      The process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole

    • D. 

      Property ownership laws and the rule of the court system

  • 9. 
    A successful market economy requires
    • A. 

      Well-defined property rights and an independent court system to adjudicate disputes based on the law

    • B. 

      Generous unemployment benefits and paid medical leave for everyone in the labor force

    • C. 

      An equitable distribution of income and limits on immigration

    • D. 

      A government-controlled banking system and government price controls

  • 10. 
    A movement along the demand curve for toothpaste would be caused by
    • A. 

      A change in the price of toothpaste

    • B. 

      A change in population

    • C. 

      A change in consumer income

    • D. 

      A change in the price of toothbrushes

  • 11. 
    A market for tablet computers has grown rapidly over the past few years, due in part to the overwhelming success of the Apple Ipad. Followign the successful launch of the ipad in 2010, companies such a Toshiba, Samsung, dell, amazon have all introduced products to compete with the ipad. the tablet computers introduced to compete with the ipad would be considered
    • A. 

      Substitute for the ipad

    • B. 

      Inferior goods compared to the ipad

    • C. 

      Complements to the ipad

    • D. 

      Normal goods compared to the ipad

  • 12. 
    If the apple ipad and the Samsung galaxy tab are considered substitutes, then, other things equal, an increase in the price of the ipad will
    • A. 

      Increase the quantity demanded for the ipad

    • B. 

      Increase the quantity demanded for the ipad

    • C. 

      Decrease the demand for the ipad

    • D. 

      Increase the demand for the galaxy tab

  • 13. 
    When the price of a good falls, consumers buy a larger quantity because of the(      ) effect and the (    ) effect
    • A. 

      Substitute; complement

    • B. 

      Supply; demand

    • C. 

      Substitution; income

    • D. 

      Normal; inferior

  • 14. 
    The income effect of a price change refers to the impact of a change in
    • A. 

      The quantity demanded when income changes

    • B. 

      Income on the price of a good

    • C. 

      The price of a good on a consumers purchasing power

    • D. 

      Demand when income changes

  • 15. 
    • A. 

      An increase in the price of the good

    • B. 

      A decrease in the price of a complementary good

    • C. 

      A change in the technology used to produce the good

    • D. 

      A decrease in the price of the good

  • 16. 
    The supply curve for watches
    • A. 

      Shows the relationship between the price of the watches and the quantity of watches supplied

    • B. 

      Shows the relationship between the quantity of watches firms are willing able to supply and the quantity of watches consumers are wiling and able to purchase

    • C. 

      Shows the supply of watches consumers are willing and able to buy at any given price

    • D. 

      Is downward sloping

  • 17. 
    A decrease in the equilibrium price for a product will result
    • A. 

      When there is a decrease in demand and a decrease in the number of firms producing the product

    • B. 

      When there is an increase in supply and a decrease in demand for the product

    • C. 

      When there is a decrease in supply and a decrease in demand for the product

    • D. 

      When the quantity demanded for the product exceeds the quantity supplied

  • 18. 
    The following appeared in a florida newspaper a week after a hurricane hit the state. "Floridians are relieved that the storm produced no fatalities but homeowners face weeks, if not months, of rebuilding.  Matters are made worse by the soaring prices of plywoods and other building materials that always follow in a hurricanes path. complaints of profiteering and a price gouging have not deterred firms from raising their prices by over 100 percent". which of the following offers the best explanation for the price increases referred to in the article?
    • A. 

      The hurricane caused an increase in the demand for building materials

    • B. 

      There was a reduction in supply as firms shipped plywood and other materials to locations not affected by the storm

    • C. 

      The hurricane created an artificial shortage of building materials

    • D. 

      The hurricane reduced the number of suppliers of building materials

  • 19. 
    • A. 

      An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply

    • B. 

      If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater

    • C. 

      A decrease in supply cause equilibrium price to rise; the increase in price then results in a decrease in demand

    • D. 

      If both demand and supply increases there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease

  • 20. 
    • A. 

      The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players

    • B. 

      The demand for Blu-ray players would decrease and the equilibrium price of Blu-ray players would increase

    • C. 

      The supply of Blu-ray players would increase and the quilibrium price of Blu-ray players would decrease

    • D. 

      The demand for Blu-ray players would increase and the equilibrium price of blue-ray players would decrease.

  • 21. 
    Assume that both demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the curve supply.   as a result
    • A. 

      The equilibrium price of MP3 players will increase; the equilibrium quantity may increase or decrease

    • B. 

      The equilibrium price of MP3 players will decrease; the equilibrium quantity may increase or decrease

    • C. 

      The equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will increase

    • D. 

      Both the equilibrium price and quantity of MP3 players will increase