Chapter 2 Economics Test!

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Economics Quizzes & Trivia

It is true that no one finds it super exciting for a test unless they feel a hundred percent sure of their understanding capabilities. Are you an NCA student? With the economics test just around the corner it is important to get adequate revision before you take it. Take up the quiz below on chapter two and see if you understood it.


Questions and Answers
  • 1. 

    If people expect the price of antique furniture to fall in the near future, what will probably happen to the demand curve for antique furniture?

    • A.

      It will shift to the right

    • B.

      It will remain unchanged

    • C.

      It will shift to the left

    • D.

      It will shift to the right and then to the left

    Correct Answer
    C. It will shift to the left
    Explanation
    When people expect the price of antique furniture to fall in the near future, it is likely that the demand for antique furniture will decrease. This can be explained by the law of demand, which states that as the price of a good decreases, the quantity demanded increases. Therefore, if the price of antique furniture is expected to decrease, people will likely wait to purchase it at a lower price, leading to a decrease in demand. As a result, the demand curve for antique furniture will shift to the left.

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  • 2. 

    What is not a fad item?

    • A.

      Flattop haircut

    • B.

      Gourmet ice cube

    • C.

      Peanut bitter and jelly sandwich

    • D.

      Pet rock

    Correct Answer
    C. Peanut bitter and jelly sandwich
    Explanation
    A fad item refers to something that becomes extremely popular for a short period of time and then fades away. The flattop haircut, gourmet ice cube, and pet rock have all been considered fad items at some point. However, the peanut butter and jelly sandwich is not a fad item as it has been a popular and timeless food choice for many years, without any sudden rise and fall in popularity.

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  • 3. 

    What is the typical description of a fad item's demand curve?

    • A.

      Shift left, then shift right

    • B.

      Shift right, then shift left

    • C.

      Shift back and forth

    • D.

      Remain stable

    Correct Answer
    B. Shift right, then shift left
    Explanation
    A fad item typically experiences a shift in demand curve from left to right initially, indicating a sudden increase in demand as it becomes popular. However, as the fad fades away over time, the demand curve shifts back from right to left, indicating a decrease in demand as the item loses its popularity. This pattern of demand shifting right and then left is commonly observed for fad items.

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  • 4. 

    What would be the most likely explanation for a drop in the demand for stainless steel skillets?

    • A.

      A rise in people's income

    • B.

      A rise in the cost of serving spoons

    • C.

      A rise in preference for microwave cookware

    • D.

      The expectation of a rise in the future price of stainless steel

    Correct Answer
    C. A rise in preference for microwave cookware
    Explanation
    A rise in preference for microwave cookware would likely lead to a drop in the demand for stainless steel skillets. This is because people who prefer microwave cookware may not have a need for stainless steel skillets, as they may not use them for cooking purposes. Therefore, the increased preference for microwave cookware would result in a decrease in demand for stainless steel skillets.

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  • 5. 

    Which of the following circumstances will cause a decrease in the demand for a normal good?

    • A.

      The incomes of consumers rise

    • B.

      The price of complementary goods rises

    • C.

      The good becomes more popular

    • D.

      The customers expect the good's price to decrease in the future

    Correct Answer
    B. The price of complementary goods rises
    Explanation
    When the price of complementary goods rises, it will cause a decrease in the demand for a normal good. Complementary goods are products that are typically used together, such as hot dogs and hot dog buns. When the price of hot dog buns increases, consumers may be less likely to purchase hot dogs as they would need to spend more money on the buns. This decrease in demand for hot dogs is a result of the increased price of the complementary good, indicating an inverse relationship between the price of complementary goods and the demand for a normal good.

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  • 6. 

    What is a "substitute good" for an expensive brand of butter?

    • A.

      Jelly

    • B.

      An inexpensive brand of butter

    • C.

      Margarine

    • D.

      Milk

    Correct Answer
    C. Margarine
    Explanation
    A "substitute good" refers to a product that can be used as an alternative to another product. In this case, margarine can be considered a substitute good for an expensive brand of butter. Margarine is a cheaper alternative to butter and can be used in similar ways in cooking and baking. Therefore, if someone cannot afford or does not want to purchase the expensive brand of butter, they can opt for margarine as a substitute.

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  • 7. 

    Goods that expierence an increase in demand as a result of increase in buyers incomes are known as

    • A.

      Complementary goods

    • B.

      Inferior goods

    • C.

      Normal goods

    • D.

      Substitute goods

    Correct Answer
    C. Normal goods
    Explanation
    Normal goods are goods that experience an increase in demand as a result of an increase in buyers' incomes. This means that as people's incomes rise, they are willing and able to purchase more of these goods. This is because normal goods are considered to be of higher quality or luxury items that people desire when they have more disposable income. As a result, the demand for normal goods increases with an increase in buyers' incomes.

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  • 8. 

    If a group of retired rich people move to a poor town, what will probaly happen to the demand curve for jewelry store?

    • A.

      It will shift to the right

    • B.

      It will remain unchanged

    • C.

      It will shift to the left

    • D.

      It will shift to the right and then to the left

    Correct Answer
    A. It will shift to the right
    Explanation
    When a group of retired rich people move to a poor town, their increased wealth and purchasing power will likely lead to an increase in demand for luxury goods such as jewelry. This increase in demand will cause the demand curve for jewelry stores to shift to the right, indicating a higher quantity of jewelry demanded at each price level.

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  • 9. 

    If the price of fresh beans increases, what will probably happen to the demand curve for fresh corn (a substitue good)

    • A.

      It will shift to the right

    • B.

      It will remain unchanged

    • C.

      It will shift to the left

    • D.

      It will shitf to the right and then to the left

    Correct Answer
    A. It will shift to the right
    Explanation
    When the price of fresh beans increases, it becomes relatively more expensive compared to fresh corn, which is a substitute good. As a result, consumers are likely to switch to fresh corn as a cheaper alternative, leading to an increase in the demand for fresh corn. This increase in demand will cause the demand curve for fresh corn to shift to the right.

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  • 10. 

    When many people lose their jobs during a depression, what usually happens to the demand curver for normal goods?

    • A.

      They weill shift to the right

    • B.

      They will remain unchanged

    • C.

      They will shift to the left

    • D.

      They will shift to the right and then to the left

    Correct Answer
    C. They will shift to the left
    Explanation
    During a depression, when many people lose their jobs, their income decreases. As a result, they have less money to spend on goods and services. This leads to a decrease in demand for normal goods. The demand curve for normal goods will shift to the left, indicating a decrease in quantity demanded at each price level.

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  • 11. 

    If the major business in a small town gives all of its workers a raise, what will probably happen to the demand curves for normal goods in that town?

    • A.

      They weill shift to the right

    • B.

      They will remain unchanged

    • C.

      They will shift to the left

    • D.

      They will shift to the right and then to the left

    Correct Answer
    A. They weill shift to the right
    Explanation
    When the major business in a small town gives all of its workers a raise, it means that the workers will have more disposable income to spend. This increase in income will likely lead to an increase in consumer spending, causing the demand for normal goods in the town to increase. As a result, the demand curves for these goods will shift to the right, indicating a higher quantity demanded at each price level.

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  • 12. 

    How does a decreaes in dmeand affect the demand curve?

    • A.

      It shifts right

    • B.

      It shifts left

    • C.

      It shifts up.

    • D.

      It sifts down.

    Correct Answer
    D. It sifts down.
    Explanation
    A decrease in demand means that consumers are buying less of a particular good or service. This leads to a decrease in the quantity demanded at each price level, causing the demand curve to shift down. The downward shift indicates that consumers are willing to buy less of the product at any given price, reflecting a decrease in overall demand for the product.

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  • 13. 

    Why is a demand curve preferable to a demand schedule?

    • A.

      It is easier to read.

    • B.

      It is more accurate

    • C.

      It displays more information

    • D.

      It is more scientific

    Correct Answer
    C. It displays more information
    Explanation
    A demand curve is preferable to a demand schedule because it displays more information. A demand schedule only presents the quantity demanded at different price levels, while a demand curve also shows the relationship between price and quantity demanded graphically. This allows for a better understanding of how changes in price affect demand and provides a visual representation of the demand relationship. By including both price and quantity information, a demand curve provides a more comprehensive view of the demand behavior.

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  • 14. 

    How does an increase in demand affect the demand curve?

    • A.

      It shifts right

    • B.

      It shifts left

    • C.

      It shifts up.

    • D.

      It shifts down.

    Correct Answer
    A. It shifts right
    Explanation
    When there is an increase in demand, it means that consumers are willing to buy more of a particular product at each price level. This leads to a shift in the demand curve to the right. This shift indicates that at each price, the quantity demanded is higher than before. In other words, there is a higher demand for the product at all price levels, resulting in the need for a new demand curve that is shifted to the right.

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  • 15. 

    The law of demand describes teh effects of____on demand.

    • A.

      Supply

    • B.

      Quality

    • C.

      Advertisement

    • D.

      Price

    Correct Answer
    D. Price
    Explanation
    The law of demand describes the effects of price on demand. According to this law, as the price of a product increases, the quantity demanded decreases, and vice versa. This is because consumers tend to buy less of a product when it becomes more expensive, and are more likely to purchase more of it when the price is lower. Therefore, price is a crucial factor in determining the level of demand for a product.

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  • 16. 

    What is a dairy farmer's primary source of information about purchasing more cows?

    • A.

      Price of milk

    • B.

      Price of grain

    • C.

      Price of land

    • D.

      Interest rate on bank loans

    Correct Answer
    A. Price of milk
    Explanation
    A dairy farmer's primary source of information about purchasing more cows would be the price of milk. This is because the price of milk directly affects the profitability of the dairy farm. If the price of milk is high, it indicates a strong demand for dairy products, which can be an incentive for the farmer to invest in more cows. Conversely, if the price of milk is low, it may not be financially viable for the farmer to purchase more cows. Therefore, monitoring the price of milk is crucial for a dairy farmer to make informed decisions about expanding their herd.

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  • 17. 

    Which of the following usually comes first?

    • A.

      Increased production of cocoa

    • B.

      Increased manifacture of chocolate

    • C.

      Increased orders for chocolate

    • D.

      Increased purchases of chocolate

    Correct Answer
    B. Increased manifacture of chocolate
    Explanation
    Increased manufacture of chocolate usually comes first because it is the process of converting cocoa into chocolate. Once the chocolate is manufactured, it can then be distributed and sold, leading to increased orders and purchases of chocolate. However, without the initial step of manufacturing the chocolate, there would be no product to order or purchase. Therefore, increased manufacture of chocolate is the logical first step in the sequence.

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  • 18. 

    What is an oil producer's bst sourcer of information about changes in demand for oil?

    • A.

      Common sense

    • B.

      The government

    • C.

      Prices

    • D.

      Supply level

    Correct Answer
    C. Prices
    Explanation
    Oil producers rely on prices as the best source of information about changes in demand for oil. Prices directly reflect the demand and supply dynamics in the market. When the demand for oil increases, prices tend to rise, indicating a higher demand. Conversely, when the demand decreases, prices tend to fall, signaling a lower demand. Oil producers closely monitor price fluctuations to gauge changes in demand and adjust their production levels accordingly. Therefore, prices serve as a reliable indicator for oil producers to understand and respond to shifts in demand for oil.

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  • 19. 

    Prices serve all of teh following purposes except

    • A.

      Transmitting information

    • B.

      Providing incentives

    • C.

      Increasing utility

    • D.

      Redistibuting income

    Correct Answer
    C. Increasing utility
    Explanation
    Prices serve several purposes, including transmitting information about the value and scarcity of goods and services, providing incentives for producers to supply more of what is in demand, and redistributing income by determining who can afford certain goods and services. However, increasing utility is not one of the purposes of prices. Utility refers to the satisfaction or benefit that individuals derive from consuming goods and services, and while prices can influence the choices individuals make in order to maximize their utility, the primary purpose of prices is not to directly increase utility.

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  • 20. 

    If a customer's forst new car gives him a marginal utility of 25 utils, what is the most likely marginal utility that a second identical car would give him?

    • A.

      15 utils

    • B.

      25utils

    • C.

      40utils

    • D.

      50utils

    Correct Answer
    A. 15 utils
    Explanation
    The marginal utility of a product typically decreases as more of the same product is consumed. In this case, the customer's first new car gives him a marginal utility of 25 utils. This suggests that the customer derives a certain level of satisfaction from owning the car. However, the marginal utility of a second identical car is likely to be lower because the customer already has one car and the additional car may not provide the same level of satisfaction. Therefore, the most likely marginal utility for the second identical car would be 15 utils, indicating a decrease in satisfaction compared to the first car.

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  • 21. 

    What was William Stanley Javons's major contribution to economics?

    • A.

      Father of the Austrin school of economics

    • B.

      Champion of the market price system

    • C.

      Principle of diminishing marginal utility

    • D.

      Law of demand

    Correct Answer
    C. Principle of diminishing marginal utility
    Explanation
    William Stanley Jevons's major contribution to economics was the principle of diminishing marginal utility. This principle states that as an individual consumes more units of a good or service, the additional satisfaction or utility derived from each additional unit decreases. Jevons's work on this concept helped to shape the understanding of consumer behavior and the concept of utility in economics.

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  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Mar 22, 2009
    Quiz Created by
    Taliiaxo22
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