Can You ACE This Economics Exam? Trivia Quiz

Scarcity refers to the situation in which unlimited wants exceed limited resources. This means that there is a limited availability of resources to satisfy the unlimited desires and needs of individuals or societies. It is not dependent on the wealth of individuals or the size of a population, but rather the fundamental concept that resources are finite while wants and needs are infinite. This concept applies to both wealthy and poor individuals, as everyone faces the challenge of allocating scarce resources to fulfill their needs and wants.

The correct answer explains that an "increase in supply" refers to a shift of the supply curve to the right, indicating that at every price level, the quantity supplied has increased. On the other hand, an "increase in quantity supplied" refers to a movement along a given supply curve, which occurs in response to an increase in price. This means that at a specific price level, the quantity supplied has increased.

The ban on the importation of beluga caviar from the Caspian Sea in October 2005 caused a decrease in the availability of this highly prized caviar in the U.S. market. As a result, the supply curve for caviar shifted to the left, indicating a decrease in the quantity supplied at each price level. This reduction in supply led to a higher equilibrium price and a lower equilibrium quantity of caviar in the U.S. market.

Economics is the study of the choices people make to attain their goals, given their scarce resources. This definition reflects the core concept of economics, which is the allocation of limited resources to meet unlimited wants and needs. It recognizes that individuals and societies must make decisions about how to best use their resources, such as time, money, and labor, to achieve their objectives. This definition also highlights the fundamental principle of scarcity, which implies that there are always trade-offs and choices to be made due to the limited availability of resources.

In a modern mixed economy, the decision of what goods and services will be produced with the scarce resources available is made collectively by the government, consumers, and producers. The government plays a role in setting regulations, policies, and providing incentives that influence production decisions. Consumers determine the demand for goods and services through their purchasing choices, which in turn affects what producers choose to produce. Producers respond to consumer demand and make decisions on what goods and services to produce based on market conditions and profitability. Therefore, the decision-making process involves all three economic agents.

The principle of opportunity cost states that the economic cost of using a factor of production is the alternative use of that factor that is given up. This means that when a factor of production, such as labor or capital, is used in one way, it cannot be used in another way. Therefore, the cost of using that factor is measured by the value of the alternative use that is foregone. This concept is important in decision-making as it helps to assess the trade-offs involved in choosing one option over another.

The answer states that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good. This is a fundamental concept in economics known as the principle of opportunity cost. It suggests that in order to produce more of a particular good, resources must be shifted away from producing another good, leading to a trade-off. This principle reflects the limited nature of resources and the need for societies to make choices about how to allocate them.

During the Great Depression, there was a high level of unemployment and many factories were shut down, resulting in a decrease in production capacity. This would be represented in a production possibilities frontier graph by a point inside the frontier. This indicates that the economy is not operating at its full potential and is producing below its maximum output due to the high level of unemployment and idle factories.

Marginal revenue is the correct answer. Marginal revenue refers to the money received from selling an additional unit of a product. In this case, it represents the money received from selling an additional bag of potatoes. It is an important concept in economics as it helps businesses determine the optimal level of production and pricing. By analyzing the marginal revenue, businesses can make decisions that maximize their profitability.

Increasing marginal opportunity cost implies that the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts. This means that as more resources are allocated to a particular activity, the additional benefit or payoff gained from allocating even more resources to that activity decreases. In other words, the cost of producing additional units of output increases as more resources are used, leading to diminishing returns. This concept highlights the trade-offs and limitations involved in resource allocation and the need to make efficient decisions.

The correct answer is "What goods and services to produce; how will these goods and services be produced; and who receives them?" This answer accurately reflects the three fundamental questions that any economy must address. It encompasses the allocation of resources, the methods of production, and the distribution of goods and services among individuals or groups.

In a market economy, the fundamental economic questions are answered through the interaction between households and firms in markets. This means that individuals and businesses make decisions based on their own self-interest, such as what to produce, how to produce it, and for whom to produce. The market forces of supply and demand determine prices and allocation of resources. The government does not have sole control over these decisions, as it is the collective actions of households and firms that shape the market economy.

An outward shift of a nation's production possibilities frontier represents economic growth. This means that the country is able to produce more goods and services with the same amount of resources. This can be due to factors such as technological advancements, increased productivity, or an expansion of the country's resources. As a result, the country can produce more of both goods and services, leading to economic growth.

The statement "a minimum wage law causes unemployment" is a positive statement because it can be tested and proven true or false based on empirical evidence. The statement "a minimum wage law benefits some groups and hurts others" is also a positive statement because it describes the actual consequences of a minimum wage law. On the other hand, the statement "in some cities such as San Francisco and New York, it would be impossible for low-skilled workers to live in the city without minimum wage laws" is a normative statement because it expresses an opinion about what should or should not be the case. Similarly, the statement "the gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses" is a normative statement because it expresses a value judgment.

The correct answer is "the processes used to produce goods and services." This is because technology refers to the application of scientific knowledge and tools to create, modify, and improve products and services. It involves the use of various processes, techniques, and methods to produce goods and deliver services efficiently and effectively. Technology encompasses a wide range of industries and sectors, including manufacturing, agriculture, healthcare, communication, transportation, and more.

According to economic reasoning, the lawyer should specialize in being a lawyer because its opportunity cost is lower. This means that the lawyer would have to give up fewer alternative activities or opportunities by focusing on being a lawyer. Specializing in being a word processor may require more time and effort, which would result in a higher opportunity cost. Therefore, it is more efficient for the lawyer to specialize in being a lawyer and allocate their resources accordingly.

The income effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power. When the price of a good increases, the consumer's purchasing power decreases, as they can buy fewer units of the good with their income. This change in purchasing power affects the consumer's demand for the good, as they may choose to buy less of it or switch to a cheaper alternative. Therefore, the income effect of a price change is related to how the price of a good affects the consumer's ability to purchase it.

Voluntary exchange increases economic efficiency because both the buyer and the seller only engage in a trade if they both benefit from it. This ensures that resources are allocated efficiently and that mutually beneficial transactions take place. If one party did not perceive any benefit, they would not agree to the trade, resulting in a more efficient allocation of resources.

The phrase "demanded has increased" indicates that the quantity demanded of a product or service has gone up. When demand increases, it means that consumers are willing and able to purchase more of the product at each price level. This leads to a rightward shift of the demand curve, as the entire curve moves to the right to reflect the higher quantity demanded at each price. Therefore, the correct answer is that a demand curve has shifted to the right.

The evidence provided states that Tecumseh Corporation supplied the same quantity of binders this month at a lower price compared to last month. This indicates that the company has increased its supply of binders. The decrease in price suggests that Tecumseh is able to produce and offer more binders at a lower cost, which is indicative of an increase in supply.

The given answer is correct because all three statements demonstrate that economic agents respond to incentives. In statement A, car owners respond to the incentive of lower prices by purchasing more gasoline from a gas station. In statement B, banks respond to the incentive of cost by choosing not to increase security measures. In statement C, firms respond to the incentive of higher selling prices by producing more of a particular DVD. These examples show that economic agents make decisions based on the incentives they face.

The correct answer is that the green tea demand curve shifts to the right because of a change in tastes in favor of green tea. This means that as more studies show the potential cancer-preventing benefits of green tea, people's preferences and tastes shift towards consuming more green tea. This increased demand leads to a shift in the demand curve to the right, indicating that consumers are willing to purchase more green tea at each price level. As a result, the market for green tea expands, and the price of green tea may increase due to the increased demand.

When the quantity demanded exceeds the quantity supplied, it creates a shortage in the market. This shortage leads to an increase in demand, which in turn drives up the market price. As the price rises, it discourages some consumers from purchasing the product, reducing the quantity demanded. At the same time, the higher price incentivizes producers to increase their supply. Eventually, the market reaches a point where the quantity demanded equals the quantity supplied, known as the equilibrium point. At this equilibrium, the market price stabilizes and remains equal to the equilibrium price.

The correct answer is that an "increase in demand" is represented by a rightward shift of the demand curve, while an "increase in quantity demanded" is represented by a movement along a given demand curve. This means that an increase in demand refers to a situation where consumers are willing and able to buy more of a product at each price level, leading to a shift of the entire demand curve to the right. On the other hand, an increase in quantity demanded refers to a situation where there is a change in the quantity of a product demanded due to a change in price, resulting in a movement along the demand curve.

Positive economic analysis can be tested, as it involves the use of empirical data and objective analysis to understand and explain economic phenomena. On the other hand, normative economic analysis is more subjective and value-based, leading to greater disagreement among economists.

A decrease in the price of flour would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase because flour is an input in the production of white bread. When the price of flour decreases, it reduces the cost of production for white bread. As a result, producers can lower the price of white bread, leading to an increase in demand and quantity supplied in the market. This decrease in price and increase in quantity is a typical response to a decrease in the cost of production.