On Microeconomics: Quiz
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- 1.A recurring theme in economics is
- A.
Unlimited resources and unlimited economic wants
- B.
People can increase resources by limiting their economic wants
- C.
People have limited economic wants and limited resources
- D.
People have unlimited economic wants, but limited resources
- 2.Opportunity cost is best defined as
- A.
Marginal cost minus marginal benefit
- B.
The time spent on an economic activity
- C.
The value of the best foregone alternative
- D.
The money cost of an economic decision
- 3.
- A.
What is the current national rate of unemployment?
- B.
Is the economy experiencing a decline in the rate of inflation
- C.
Will a new type of television set increase the number of buyers
- D.
Is the production of goods and services in the economy greater this year than last year?
- 4.Macroeconomics focuses on
- A.
The working of the whole economy or large sectors of it
- B.
The pricing decisions of a large company in an economy
- C.
Studies of how competition in an industry affects economic efficiency
- D.
Studies of how a business determines how to make the best use of the factors of production
- 5.Which is not considered to be an economic resource
- A.
Land
- B.
Money
- C.
Labor
- D.
Tools and machinery
- 6.
- A.
The maximum amount of labor and capital available for production
- B.
Combinations of goods and services among which consumers are indifferent
- C.
Maximum combinations of products available with fixed resources and technology
- D.
The maximum rate of growth of capital and labor in an economy
- 7.A point inside the production possibilities curve is
- A.
Attainable and the economy is efficient
- B.
Attainable but the economy is inefficient
- C.
Unattainable but the economy is inefficient
- D.
Unattainable and the economy is efficient
- 8.A point outside the production possibilities curve is
- A.
Attainable but there is not full employment
- B.
Attainable but there is not optimal allocation
- C.
Unattainable because the economy is inefficient
- D.
Unattainable because of limited resources
- 9.The production possibility curve
- A.
Is convex to the origin
- B.
Is based on the law of diminishing returns
- C.
Is the boundary between attainable and unattainable outputs
- D.
Reflects the mixed economy found with most economic systems
- 10.The law of increasing opportunity costs says that
- A.
Cost of production increase and then decrease
- B.
Increase in wages cause increases in the costs of production
- C.
Along a production possibilities curve, increases in the production of one type of good require larger and larger sacrifices of the other type of good
- D.
Along a production possibilities curve, deceases in the production of one type of good require larger and larger sacrifices of the other type of good
- 11.Capitalism is an economic system that
- A.
Produces more capital goods than consumer goods
- B.
Produces more consumer goods than capital goods
- C.
Gives the government the right to tax individuals and corporations
- D.
Gives private individuals and corporations the right to own productive resources
- 12.Which would not be a characteristic of a capitalist economy.
- A.
Government ownership of the factors of production
- B.
Competition and unrestricted markets
- C.
Reliance on the market system
- D.
Free enterprise and choice
- 13.Which is a key feature of the market system
- A.
Price floors and price ceilings in all markets
- B.
Reallocation of all resources from private to public uses
- C.
The right to own private property and control resource use
- D.
Central planning by government to provide goods and services
- 14.Which is necessary to make a trade in a barter economy
- A.
Money
- B.
Unlimited wants
- C.
A medium of exchange
- D.
A coincidence of wants
- 15.The idea that the desires of resource suppliers and producers to further their own self-interest will automatically further the public interest is known as
- A.
Consumer sovereignty
- B.
The invisible hand
- C.
Derived demand
- D.
Profit maximization
- 16.The influential book written by Adam Smith was
- A.
The Worldly Philosophers
- B.
The Affluent Society
- C.
The Age of Economist
- D.
The Wealth of Nations
- 17.A market demand schedule for a product indicates that
- A.
As the product's price falls, consumers buy less of the good
- B.
As a product's price rises, consumers buy less of other goods
- C.
There is a direct relationship between price and quantity demanded
- D.
There is an inverse relationship between price and quantity demanded
- 18.A lower price increases the quantity demanded because
- A.
The purchasing power of individuals decreases
- B.
The financial assets of individuals decrease
- C.
Individuals buy more of the product and less of a substitute
- D.
Individuals buy less of the product and more of a substitute
- 19.Which will not, ceteris paribus, cause the demand curve for good A to shift?
- A.
A change in the price of A
- B.
A change in the price of B, a complement
- C.
A change in the price of C, a substitute
- D.
An increase in average income
- 20.A normal good is one
- A.
Which people like
- B.
Which all normal people like
- C.
For which demand increases when price decreases
- D.
For which demand increases when income increases
- 21.
- A.
The demand curve has shifted to the left
- B.
The product has become particularly scarce for some reason
- C.
The product price has increased and as a consequence consumers are buying less of the product
- D.
Consumers are now willing and able to purchase more of this product at each possible price
- 22.The law of supply is illustrated by a supply curve that is
- A.
Vertical
- B.
Horizontal
- C.
Upward sloping
- D.
Downward sloping
- 23.Which will not cause the supply curve to shift
- A.
A change in resource costs
- B.
A technological change
- C.
A change in the price of the good
- D.
A change in the prices of other goods
- 24.There is a shortage in a market for a product when
- A.
The increase in supply is greater than the increase in demand
- B.
The increase in demand is greater than the increase in supply
- C.
Quantity demanded is less than quantity supplied
- D.
Quantity demanded is greater than quantity supplied
- 25.If the market price is above the equilibrium price
- A.
A shortage will occur and producers will produce more and lower prices
- B.
A surplus will occur and producers will produce less and lower prices
- C.
A surplus will result and consumers will bid prices up
- D.
Producers will make extremely high profits
- 26.A headline reads "storms destroy half of the lettuce crop." this situation would lead to a(n)
- A.
Increase in the price of lettuce and quantity purchased
- B.
Decrease in the price of lettuce and quantity purchased
- C.
Increase in the price of lettuce and decrease in quantity purchased
- D.
Decrease in the price of lettuce and increase in the quantity purchased
- 27.
- A.
Affect price in an indeterminate way and decrease the equilibrium quantity
- B.
Increase price and increase the equilibrium quantity
- C.
Affect price in an indeterminate way and increase the equilibrium quantity
- D.
Decrease price and increase the equilibrium quantity
- 28.What combination of changes in supply and demand would most likely increase the equilibrium price
- A.
When supply increases and demand decreases
- B.
When supply decreases and demand increases
- C.
When supply decreases and demand decreases
- D.
When supply increases and demand increases
- 29.The richest 20 percent of all households receives about what proportion of total income in the united states
- A.
20 percent
- B.
50 percent
- C.
68 percent
- D.
91 percent
- 30.A nondurable good is a product that
- A.
Is constructed with flexible materials
- B.
Is used only for personal consumption
- C.
Has an expected life of 3 years or less
- D.
Has an expected life of 3 years or more
- 31.The type of business that is most common is the
- A.
Partnership
- B.
Corporation
- C.
Conglomerate
- D.
Sole proprietorship
- 32.Person consumption expenditures constitute about what proportion of total income in the united states
- A.
16 percent
- B.
49 percent
- C.
88 percent
- D.
99 percent
- 33.The most effective form of business organization for raising money to finance the expansion of its facilities and capabilities is a
- A.
Partnership
- B.
Corporation
- C.
Conglomerate
- D.
Sole proprietorship
- 34.Which of the following is correct
- A.
A person who purchases a corporate bond is borrowing money from a corporation
- B.
A person who purchases a corporate stock is buying ownership in the corporation
- C.
A person who purchases a corporate bond is guaranteed to earn dividends from the stock
- D.
A person who purchases a corporate stock gets the option to buy other shares at lower prices
- 35.One principal advantage of the corporations is that owners
- A.
Are not taxed for income received
- B.
Always control the company
- C.
Are sole proprietors
- D.
Have limited liability
- 36.When the government provides price-support programs for farms or minimum-wage legislation it is primarily implementing these economic policies to
- A.
Maintain competition
- B.
Stabilize the economy
- C.
Redistribute income
- D.
Maintain a legal and social framework
- 37.Examples of transfer payments are
- A.
Benefits provided by social security and unemployment insurance
- B.
Salaries of the police and other government employees
- C.
Federal government spending for national defense
- D.
Wages, profits, and rents
- 38.A pure market economy tends to produce too much of goods which
- A.
Involve spillover costs
- B.
Are public goods
- C.
Have high prices
- D.
Are not scarce
- 39.Supply is constant and demand decreases
- A.
Price increases
- B.
Price deceases
- C.
Quantity increases
- D.
Quantity decreases
- E.
Unknown
- 40.Demand increases and supply decreases
- A.
Price increases
- B.
Price deceases
- C.
Quantity increases
- D.
Quantity decreases
- E.
Unknown
- 41.Supply is constant and demand inccreases
- A.
Price increases
- B.
Price deceases
- C.
Quantity increases
- D.
Quantity decreases
- E.
Unknown
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