Can You ACE This Economics Exam? Trivia Quiz

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  • 1/26 Questions

    Which of the following statements is true about scarcity?

    • Scarcity is not a problem for the wealthy.
    • Scarcity refers to the situation in which unlimited wants exceed limited resources.
    • Scarcity is only a problem when a country has too large a population.
    • Scarcity arises when there is a wide disparity in income distribution.
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About This Quiz


Think you are an expert in Economics? Can you ace this economics exam? This quiz is an excellent tool to prove your knowledge and use for practice. Economics is the study or practice of how people interact with value. The manufacture, circulation, and utilization of goods and services are heavily influenced by economics and vice versa. It also measures the See moreway that wealth affects our society, and it can even predict future wealth. This quiz can help you pass the economics exam. You can do it.

Can You ACE This Economics Exam? Trivia Quiz - Quiz

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  • 2. 

    By definition, economics is the study of?

    • The choices people make to attin their goals, given their scarce resources.

    • Supply and demand.

    • How to make money in the stock market.

    • How to make money in a market economy.

    Correct Answer
    A. The choices people make to attin their goals, given their scarce resources.
    Explanation
    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.

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  • 3. 

    Which of the above statements demonstrates that economic agents respond to incentives? A.) Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. B.) Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. C.) Firms produce more of a particular DVD when its selling price rises.

    • A only

    • B only

    • C only

    • A and b

    • A,b, and c

    Correct Answer
    A. A,b, and c
    Explanation
    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.

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  • 4. 

    A grocery store sells a bag of potatoes at a fixed price of $2.30.  Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

    • Pure profit

    • Gross earnings

    • Net benefit

    • Marginal costs

    • Marginal revenue

    Correct Answer
    A. Marginal revenue
    Explanation
    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.

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  • 5. 

    The three fundamental questions that any economy must address are?

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

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

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

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

    Correct Answer
    A. What goods and services to produce; how will these goods and services be produced; and who receives them?
    Explanation
    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.

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  • 6. 

    Consider the following economic agents: A.) The government B.) Consumers C.) Producers Who, in a modern mixed economy, decides what goods and services will be produced with the scarce resources available in that economy?

    • Consumers

    • Consumers and producers

    • The government, consumers, and producers

    • The government

    • Producers

    Correct Answer
    A. The government, consumers, and producers
    Explanation
    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.

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  • 7. 

    How are the fundamental economic questions answered in a market economy?

    • The government alone decided the answers.

    • Individuals, firms, and the government interact in markets to decide the answers to these questions.

    • Large corporations alone decide the answers.

    • Households and firms interact in markets to decide the answers to these questions.

    Correct Answer
    A. Households and firms interact in markets to decide the answers to these questions.
    Explanation
    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.

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  • 8. 

    Voluntary exchange increases economic efficiency

    • Because it allows wealthy individuals to act altruistically and give to the poor.

    • Because voluntary exchange only takes place with government permission.

    • Because neither the buyer nor the seller would agree to trade unless they both benefit.

    • Because it is free and consequently does not cost anything.

    Correct Answer
    A. Because neither the buyer nor the seller would agree to trade unless they both benefit.
    Explanation
    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.

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  • 9. 

    Which of the following statements about positive economic analysis is false?

    • Unlike normative economic analysis, positive economic analysis can be tested.

    • Positive analysis uses an economic model to estimate the costs and benefits of different course of actions.

    • There is much more disagreement among economists over positive economic analysis than over normative economic analysis.

    • There is much more disagreement among economists over normative economic analysis than over positve economic analysis.

    Correct Answer
    A. There is much more disagreement among economists over positive economic analysis than over normative economic analysis.
    Explanation
    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.

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  • 10. 

    The economic analysis of minimum wage involves both normative and positive analysis.  Consider the following consequences of a minimum wage: A.) The minimum wage law causes unemployment. B.) A minimum wage law benefits some groups and hurts others. C.) 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. D.) 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. Which of the consequences above are positive statements and which are normative statements?

    • A, b, and C are positive statements, and D is a normative statement.

    • Only a is a positive statement,b, ca nd D are a normative statement.

    • A and c are positive statements, b and d are a normative statements.

    • A and b are positive statements, c and d are a normative statements.

    Correct Answer
    A. A and b are positive statements, c and d are a normative statements.
    Explanation
    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.

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  • 11. 

    Technology is defined as

    • New innovations and creations.

    • The processes used to produce goods and services.

    • The processes of recycling products.

    • The process of developing and revising models.

    Correct Answer
    A. The processes used to produce goods and services.
    Explanation
    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.

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  • 12. 

    The principle of opportunity cost is that

    • The cost of production varies depending on the opportunity for technological application.

    • The economic cost of using a factor of production is the alternative use of that factor that is given up.

    • In a market economy, taking advantage of profitable opportunities involves some money cost.

    • Taking advantage of investment opportunities involves costs.

    Correct Answer
    A. The economic cost of using a factor of production is the alternative use of that factor that is given up.
    Explanation
    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.

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  • 13. 

    The production possibilities frontier model shows that

    • Economic growth can only be achieved by free-market economies.

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

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

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

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

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  • 14. 

    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.

    • The law of scarcity.

    • The more resources already devoted to any activity, the benefits from allocating yet more resources to that activity decreases by progressively larger amounts.

    • That rising opportunity cost makes it inefficient to produce beyond a certain quantity.

    Correct Answer
    A. The more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.
    Explanation
    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.

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  • 15. 

    An outward shift of a nation's production possibilities frontier represents?

    • A situation in which a country produces more of one good and less of another.

    • Economic growth.

    • An impossible situation.

    • Rising prices of the two goods on the production possibilites frontier model.

    Correct Answer
    A. Economic growth.
    Explanation
    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.

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  • 16. 

    The great depression of the 1930s with a large number of workers and factories unemployed would be represented in a production possibilities frontier graph by

    • A point on the frontier.

    • A point inside the frontier.

    • A point outside the frontier.

    • An intercept on eitehr the vertical or the horizontal axis.

    Correct Answer
    A. A point inside the frontier.
    Explanation
    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.

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  • 17. 

    If the lawyer in town is also the best at operating a word processor, then according to economic reasoning, this person should

    • Should pursue the activity she enjoys more.

    • Specialize in being a work processor becuase it is more capital-intensive.

    • Specialize in being a lawyer because its oppurtunity cost is lower.

    • Split her time evenly between being a lawyer and a word processor.

    Correct Answer
    A. Specialize in being a lawyer because its oppurtunity cost is lower.
    Explanation
    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.

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  • 18. 

    What is the difference between an "increase in demand" and an "increase in quantity demanded"?

    • There is no difference between the two terms; they both refer to a movement downward along a given demand curve.

    • An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve.

    • There is no difference between the two terms; they both refer to a shift of the demand curve.

    • An "increase in demand" is represented by a rightward shift of teh demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

    Correct Answer
    A. An "increase in demand" is represented by a rightward shift of teh demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.
    Explanation
    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.

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  • 19. 

    The phrase "demanded has increased" means that

    • A demand curve has shifted to the left.

    • A demand curve has shifted to the right.

    • There has been a downward movement along a demand curve.

    • There has been an upward movement along a demand curve.

    Correct Answer
    A. A demand curve has shifted to the right.
    Explanation
    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.

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  • 20. 

    The income effect of a price change refers to the impact of a change in

    • Demand when income changes.

    • The quantity demanded when income changes.

    • Income on the price of a good.

    • The price of a good on a consumer's purchasing power.

    Correct Answer
    A. The price of a good on a consumer's purchasing power.
    Explanation
    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.

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  • 21. 

    Several studies have shown promising links between green tea consumption and cancer prevention. How does this affect the market for green tea?

    • The green tea demand curve shifts to the left because this new information will increase the price of green tea.

    • The green tea supply curve shifts to teh left becuase this new information will increase the price of green tea.

    • The green tea demand curve shifts to the right because of a change in tastes in favor of green tea.

    • The green tea supply curve shifts to the right because of a change in tastes in favor of green tea.

    Correct Answer
    A. The green tea demand curve shifts to the right because of a change in tastes in favor of green tea.
    Explanation
    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.

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  • 22. 

    Last month, the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit.  This month, the company supplied the same quantity of binders at $4 per unit.  Based on this evidence, Tecumseh has experienced...

    • An increase in supply.

    • An increase in the quantity supplied.

    • A decrease in the quantity supplied

    • A decrease in supply.

    Correct Answer
    A. An increase in supply.
    Explanation
    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.

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  • 23. 

    What is the difference between an "increase in supply" and an "increase in quantity supplied"?

    • There is no difference between the two terms; they both refer to a shift of the supply curve.

    • An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

    • An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" means at any given price supply has increased.

    • There is no difference between the two terms; they both refer to a movement along a given supply curve.

    Correct Answer
    A. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.
    Explanation
    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.

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  • 24. 

    In october 2005, the U.S. Fish and Wildfire Service banned the importation of belgua caviar, the most prized of caviars, from the Caspian Sea.  What happened in the market for caviar in the U.S.?

    • The supply curve shifted to the left.

    • The supply curve shifted to the right.

    • The demand curve shifted to the left.

    • The demand curve shifted to the right.

    Correct Answer
    A. The supply curve shifted to the left.
    Explanation
    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.

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  • 25. 

    If the quantity demanded a product exceeds the quantity supplied, the market price will rise until?

    • Only wealthy consumers will be able to afford the product.

    • The quantity demanded equals teh quantity supplied. The product will then no longer be scarce.

    • Quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.

    • Quantity demanded equals quantity supplied. The equilibrium price will then be greater than the market price.

    Correct Answer
    A. Quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.
    Explanation
    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.

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  • 26. 

    Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

    • An increase in the price of flour.

    • An increase in the price of rye bread, a substitute for white bread.

    • A decrease in the price of flour.

    • An increase in the price of butter, a complement for white bread.

    Correct Answer
    A. A decrease in the price of flour.
    Explanation
    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.

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  • Mar 20, 2023
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  • Feb 24, 2013
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