Economics Mid-term Exam

35 Questions | Total Attempts: 724

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Economics Mid-term Exam

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Questions and Answers
  • 1. 
    Which of these situations describes scarcity?
    • A. 

      A country has an unskilled labor force.

    • B. 

      Consumers want expensive products Consumers want expensive products.

    • C. 

      Human wants exceed available resources.

    • D. 

      Some desired things are in short supply.

  • 2. 
    Who decides what goods and services will be produced in Cuba and North Korea?
    • A. 

      Consumers

    • B. 

      Government

    • C. 

      Producers

    • D. 

      Workers

  • 3. 
    Which of these terms describes the resources that people make and use to produce goods and services?
    • A. 

      Capital

    • B. 

      Entrepreneurship

    • C. 

      Labor

    • D. 

      Land

  • 4. 
    Which factor of production brings the other three factors together?
    • A. 

      Capital

    • B. 

      Entrepreneurship

    • C. 

      Labor

    • D. 

      Land

  • 5. 
    A benefit that is offered to encourage people to act in a certain way is called a(n)
    • A. 

      Incentive

    • B. 

      Opportunity cost

    • C. 

      Trade off

    • D. 

      Utility

  • 6. 
    The value of what you give up in order to get something else you want is the 
    • A. 

      Marginal benefit

    • B. 

      Marginal cost

    • C. 

      Opportunity cost

    • D. 

      Utility

  • 7. 
    The satisfaction received from using one more unit of a good or service is the 
    • A. 

      Incentive

    • B. 

      Marginal benefit

    • C. 

      Opportunity cost

    • D. 

      Trade off

  • 8. 
    The additional cost of using one more unit of a product is the 
    • A. 

      Marginal cost

    • B. 

      Opportunity cost

    • C. 

      Trade off

    • D. 

      Utility

  • 9. 
    Which of these statements is true about economic models?
    • A. 

      They are NOT based on assumptions.

    • B. 

      They do NOT use many variables.

    • C. 

      They do NOT include words, graphs, or equations.

    • D. 

      They do NOT simplify complex relationships.

  • 10. 
    Macroeconomics does NOT study
    • A. 

      Business cycles

    • B. 

      Consumer behavior

    • C. 

      The monetary system

    • D. 

      The public sector

  • 11. 
    North Korea and Cuba are examples of command economies. In these countries, government does all ot the following EXCEPT
    • A. 

      Allocate resources for the common good

    • B. 

      Decide what to produce and how to produce it

    • C. 

      Frequently ask consumers what they want

    • D. 

      Own most of the means of production

  • 12. 
    When economic decisions are made based on beliefs and customs handed down for generations, the economic system is known as a 
    • A. 

      Command economy

    • B. 

      Market economy

    • C. 

      Mixed economy

    • D. 

      Traditional economy

  • 13. 
    In command economies, government decides 
    • A. 

      What should be produced

    • B. 

      How it should be produced

    • C. 

      How much money people make

    • D. 

      All of the above

  • 14. 
    I. Capitalism is the foundation of market economies. II. Competition should be limited to protect producers. III. Producers ultimately control what is produced. IV. Property rights are necessary to make markets work. Which of these statements about market economies are true?
    • A. 

      I and IV

    • B. 

      II and IV

    • C. 

      II and III

    • D. 

      III and IV

  • 15. 
    I. Markets have economic incentives to create public goods. II. Freedom is a chief advantage of a market economy. III. Market economies ensure equal distribution of wealth. IV. The profit motive allocates resources efficiently. Which of these statements about market economies are NOT true?
    • A. 

      I and II

    • B. 

      I and III

    • C. 

      II and III

    • D. 

      I and IV

  • 16. 
    Scarcity is a problem because of the tension between limited resources and unlimited 
    • A. 

      Choice

    • B. 

      Goods

    • C. 

      Needs

    • D. 

      Wants

  • 17. 
    As a factor of production, capital means
    • A. 

      Human-made resources used for business purposes

    • B. 

      Money used for business purposes

    • C. 

      Natural resources used for business purposes

    • D. 

      Stocks sold for business purposes

  • 18. 
    The United States has
    • A. 

      Laissez-faire capitalism

    • B. 

      Laissez faire socialism

    • C. 

      A modified command economy

    • D. 

      A modified capitalist economy

  • 19. 
    A person who lives downstream from a polluting factory may experience a 
    • A. 

      Free ride

    • B. 

      Negative externality

    • C. 

      Positive externality

    • D. 

      Public transfer

  • 20. 
    Government programs designed to protect people from economic hardships may be best described as a 
    • A. 

      Free ride

    • B. 

      Positive externality

    • C. 

      Public good

    • D. 

      Safety net

  • 21. 
    Which of the following is not a factor of production?
    • A. 

      Capital

    • B. 

      Entrepreneurship

    • C. 

      Labor

    • D. 

      Production possibilites

  • 22. 
    What is the most important factor in an economic decision?
    • A. 

      Incentives

    • B. 

      Marginal costs and benefits

    • C. 

      Opportunity costs

    • D. 

      Trade offs

  • 23. 
    Which of the followiing terms means something very different form the others?
    • A. 

      Marginal cost

    • B. 

      Opportunity cost

    • C. 

      Trade off

    • D. 

      Scarcity

  • 24. 
    All of the following are basic types of economic systems except
    • A. 

      Command economies

    • B. 

      Market economies

    • C. 

      Socialist economies

    • D. 

      Traditional economies

  • 25. 
    One key difference between socialism and communism is that 
    • A. 

      Communism allows private ownership

    • B. 

      Communism is a command economy

    • C. 

      Socialism grew from the writings of Karl Marx

    • D. 

      Socialism allows private owenership

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