Econ 111 - Refresher

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  • 1/40 Questions

    Which of these is NOT a factor of production?

    • Event
    • Land
    • Labor
    • Capital
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About This Quiz

The Econ 111 - Refresher quiz evaluates understanding of basic economic principles, focusing on economic systems like capitalism, socialism, and mixed economies. It tests knowledge on the allocation of resources, factors of production, and equity in economics.

Econ 111 - Refresher - Quiz

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  • 2. 

    Two scopes of economics include microeconomics and;

    Explanation
    Microeconomics and macroeconomics are two branches of economics that study different aspects of the economy. Microeconomics focuses on individual economic agents such as households, firms, and markets, analyzing their behavior and decision-making processes. On the other hand, macroeconomics examines the overall behavior and performance of the economy as a whole, including factors like inflation, unemployment, and economic growth. Therefore, the correct answer is macroeconomics, as it completes the statement by identifying the other scope of economics alongside microeconomics.

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  • 3. 

    Economics is the study of the allocation of free goods.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Economics is the study of the allocation of SCARCE goods.

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  • 4. 

    It is the cost of something which you give up to get it.

    Correct Answer
    Opportunity Cost
    Explanation
    Opportunity cost refers to the value of the next best alternative that is foregone when making a decision. In other words, it is the cost of choosing one option over another. This concept recognizes that resources are limited and that choosing to allocate them towards one option means sacrificing the benefits that could have been gained from the alternative option. Therefore, the answer "Opportunity Cost" accurately describes the cost of giving up something in order to obtain something else.

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  • 5. 

    Demand Curve and Supply Curve are graphical illustrations and Demand Schedule and Supply Schedule are tabular illustrations.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because demand and supply curves are typically represented graphically, showing the relationship between price and quantity demanded or supplied. On the other hand, demand and supply schedules are presented in tabular form, listing the various quantities demanded or supplied at different price levels. Graphical illustrations provide a visual representation of the relationship, while tabular illustrations present the same information in a more organized and structured format.

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  • 6. 

    If the price of a product increases the demand; 

    Correct Answer
    decreases
    Explanation
    When the price of a product increases, it becomes more expensive for consumers to purchase. As a result, the demand for the product decreases because fewer people are willing or able to afford it. This is a basic principle of economics known as the law of demand, which states that as the price of a product rises, the quantity demanded decreases. Therefore, the correct answer is that the demand decreases when the price of a product increases.

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  • 7. 

    The Production Possibilities Frontier is used to detect trades that are better off and ineffiecencies.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The Production Possibilities Frontier (PPF) is a graphical representation of the maximum output combinations that an economy can produce given its resources and technology. It shows the different trade-offs between producing two goods. By analyzing the PPF, we can identify points that are considered efficient, where resources are allocated optimally, and points that are inefficient, where resources are not fully utilized. Therefore, the PPF is indeed used to detect trades that are better off (efficient) and inefficiencies, making the statement "True."

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  • 8. 

    If price floor is the minimum amount to which below transaction allowed, the maximum amount to which above transaction is not allowed is called.

    Correct Answer
    Price Ceiling
    Explanation
    A price ceiling is a maximum limit set by the government on the price of a particular good or service. It is the opposite of a price floor, which sets a minimum limit. In this scenario, the question is asking for the term that refers to the maximum amount to which an above transaction is not allowed. This aligns with the concept of a price ceiling, as it restricts prices from going above a certain level. Therefore, the correct answer is price ceiling.

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  • 9. 

    If the price ceiling is moved below the equilibrium, it will force the equilibrium to go downwards, in this situation the price and the quantity will change causing a;

    Correct Answer
    Shortage
    Explanation
    It is because when the maximum amount of selling price is lower than normal the producers will cease to create more products.

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  • 10. 

    If the price of the product increases the supply;

    Correct Answer
    increases
    Explanation
    When the price of a product increases, it incentivizes producers to supply more of that product in order to maximize their profits. This is because higher prices mean higher revenues for producers, which can offset any additional costs associated with increasing production. As a result, the quantity of the product supplied in the market increases. Therefore, the answer is that the supply increases when the price of the product increases.

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  • 11. 

    In a Circular Flow Diagram the one that provides resources to the OUTPUT MARKET is the:

    • Firm

    • Household

    • Output Market

    • Input Market

    Correct Answer
    A. Firm
    Explanation
    In a Circular Flow Diagram, the firm is the entity that provides resources to the output market. This is because the firm is responsible for producing goods and services, which are then sold in the output market. The firm hires labor and purchases other inputs from the input market, and uses these resources to produce output. Therefore, the firm plays a crucial role in supplying resources to the output market.

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  • 12. 

    If the income of the person increases the demand for the inferior product;

    Correct Answer
    decreases
    Explanation
    When a person's income increases, their purchasing power also increases. As a result, they are more likely to switch from purchasing inferior products to higher quality alternatives. This is because inferior products are generally considered to be of lower quality and less desirable. Therefore, the demand for inferior products decreases when income increases.

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  • 13. 

    If the cost of production decreases the supply;

    Correct Answer
    increases
    Explanation
    If the cost of production decreases, it becomes more affordable for producers to produce goods. This leads to an increase in the supply of goods in the market. As the cost of production decreases, producers are able to offer their products at lower prices, attracting more buyers and increasing the quantity of goods supplied. Therefore, a decrease in the cost of production results in an increase in the supply of goods.

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  • 14. 

    If the price floor is moved up above the equilibrium point it will cause the equilibrium point to go upwards but in this situation the price will change and the quantity will change causing a; 

    Correct Answer
    Surplus
    Explanation
    Because if the minimum amount of the product is increased the producers are willing to produce more of the product.

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  • 15. 

    It is the number of the producers' willingness to produce.

    Correct Answer
    Supply
    Explanation
    Supply refers to the quantity of goods or services that producers are willing and able to offer for sale at various prices in a given market. It represents the producers' willingness to produce and sell their products. The higher the price, the more willing producers are to supply a larger quantity of goods or services. Conversely, if the price decreases, producers may be less willing to supply as much. Therefore, the correct answer is "Supply."

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  • 16. 

    The current equilibrium is at 3, the current price ceiling is 5.If the price ceiling is change to 2, the price ceiling is binding.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    It is binding because it will force the equilibrium point to move down.

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  • 17. 

    The etymology of the word economics means "household management".

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The word "economics" is derived from the Greek word "oikonomia" which means "household management". This etymology suggests that economics originally referred to the management of a household's resources and finances. Over time, the field of economics has expanded to encompass the study of broader economic systems and the allocation of resources on a larger scale. Therefore, the statement that the etymology of the word economics means "household management" is true.

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  • 18. 

    Is the number of consumers' want that they can afford

    Correct Answer
    Demand
    Explanation
    Demand refers to the quantity of a product or service that consumers are willing and able to purchase at a given price and time. It is influenced by various factors such as consumers' preferences, income levels, and affordability. The statement "Is the number of consumers' want that they can afford" aligns with the concept of demand, as it implies that demand is determined by the desires of consumers that they can actually afford to fulfill.

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  • 19. 

    If the price of the substitute increases, the demand for the product;

    Correct Answer
    increases
    Explanation
    When the price of a substitute product increases, it becomes more expensive for consumers to purchase the substitute. As a result, consumers are more likely to choose the original product instead, leading to an increase in demand for the product. This is because the substitute has become less attractive in comparison, making the original product a more desirable option. Therefore, when the price of the substitute increases, the demand for the product increases as well.

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  • 20. 

    In a Circular Flow Diagram the one that provides resources to the INPUT MARKET is the:

    • Household

    • Firm

    • Output Market

    • Input Market

    Correct Answer
    A. Household
    Explanation
    In a Circular Flow Diagram, the household is the entity that provides resources to the input market. This includes factors of production such as labor, land, and capital. The household supplies these resources to the input market, which in turn distributes them to firms for production purposes. Therefore, the household is responsible for supplying the necessary resources for the production process to take place.

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  • 21. 

    If the current equilibrium is a 3, and the price floor is at 2If I raise the price floor to 2.5, the price floor is binding.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    It is not binding for it will not force the equilibrium point to change.

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  • 22. 

    Inflation is the increase of the individual level of price.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Inflation is the increase of the AGGREGATE levels of prices.

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  • 23. 

    If a price of a veblen good increases the demand;

    Correct Answer
    increases
    Explanation
    When the price of a Veblen good increases, the demand for it also increases. This is because Veblen goods are luxury items that are associated with status and prestige. As the price rises, the perceived value of the good also increases, making it more desirable for individuals who wish to display their wealth and social standing. Therefore, the higher price leads to an increase in demand as consumers are willing to pay more to obtain the Veblen good and signal their high social status.

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  • 24. 

    It is the sum of the consumer surplus and the market surplus.

    Correct Answer
    Total Surplus
    Explanation
    Total Surplus refers to the overall economic welfare gained from a transaction or market. It is calculated by adding the consumer surplus, which represents the difference between what consumers are willing to pay and what they actually pay, and the producer surplus, which represents the difference between the price producers receive and the minimum price they are willing to accept. By considering both the benefits to consumers and producers, the total surplus provides a measure of the overall efficiency and welfare generated in a market.

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  • 25. 

    Which BEST defines equity in the definition of economics?

    • Is the allocation of resources based on the need.

    • Is the equal allocation of resources to both poor and rich.

    • Everyone is a common recipient of the resources of the society.

    • All human beings are subject to same amount of resources.

    Correct Answer
    A. Is the allocation of resources based on the need.
    Explanation
    Equity in the definition of economics refers to the allocation of resources based on the need. This means that resources are distributed in a way that takes into account the varying needs of individuals or groups. It ensures that those who require more resources due to their circumstances or disadvantages are given priority in resource allocation. This approach aims to achieve fairness and reduce inequality by addressing the specific needs of different individuals or groups in society.

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  • 26. 

    If the price of a giffen good decreases the demand;

    Correct Answer
    decreases
    Explanation
    The answer is that when the price of a giffen good decreases, the demand for it also decreases. This is because giffen goods are rare exceptions to the law of demand, where the quantity demanded of a good decreases as its price increases. Giffen goods are inferior goods that have no close substitutes and are considered necessities. When their price decreases, consumers have more purchasing power and can afford to buy more of other goods, leading to a decrease in demand for the giffen good.

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  • 27. 

    Identify the economic system in this situation:The governement of Soseqsui controls all the resources and has the capacity to manipulate these resources, and the government has the capacity to allocate it on what they deem just.

    Correct Answer
    Socialism
    Command Economy
    Command Economy
    Command Economy
    Explanation
    In this situation, the government of Soseqsui controls all the resources and has the power to manipulate and allocate them as they see fit. This indicates a command economy, where the government has centralized control over the allocation and distribution of resources. Additionally, the government's ability to determine what is considered just aligns with the principles of socialism, which aims to achieve economic equality and social justice through government intervention and control.

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  • 28. 

    If the price of the complement decreases, the demand for the product;

    Correct Answer
    decreases
    Explanation
    When the price of a complement decreases, it means that the complementary product has become more affordable. This leads to an increase in the demand for the complementary product, which in turn decreases the demand for the original product. This is because consumers are more likely to purchase the complementary product when it is cheaper, reducing their need for the original product. Therefore, the demand for the product decreases when the price of the complement decreases.

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  • 29. 

    Identify the economic system in this situation:Vyanaira owns a bakeshop and she also has a coffee shop. Marcus runs his own chain of restaurants. Eyricka works as a chemical engineer on a meat processing shop. No one forced them to do these things. 

    Correct Answer
    Capitalism
    Market Economy
    Explanation
    The given situation describes a capitalist economic system, specifically a market economy. In this system, individuals like Vyanaira, Marcus, and Eyricka are free to own and operate their businesses without any external force or coercion. They have the autonomy to make their own decisions and compete in the market to meet the demands of consumers. This system emphasizes private ownership, profit motive, and free market competition.

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  • 30. 

    Identify the economic system in this situation:The government of Natpretti is giving the people of Fhackhers their own area of land, the inhabitants of Fhackers has the liberty to do what they want with it. 

    Correct Answer
    Mixed
    Mixed Economy
    Mixed Economy
    Explanation
    The situation described indicates that the government of Natpretti is allowing the people of Fhackhers to have their own area of land and the liberty to do what they want with it. This suggests that there is a combination of government intervention and individual freedom in the economic system. Therefore, the correct answer is a mixed economy, where there is a mix of private and public ownership and control of resources.

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  • 31. 

    Price/Products  (10-9/5)  (8-9/4)  (7-8/3)  (6-7/2)  (5-6/1)Given the data above what is the producer surplus given that the current market price is 7?

    Correct Answer
    3
    Explanation
    Producer Surplus - PS

    At 10-9 the PS is 5 x 1 = 5
    At 8-9 the PS is 4 x 1 = 4
    At 7-8 the PS is 3 x 1 = 3
    At 6-7 the PS is 2 x 1 = 2
    At 5-6 the PS is 1 x 1 = 1

    total PS of 15

    at 7 the PS excluded above the graph is 12
    so the PS at 7 is 3

    15-12 = 3

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  • 32. 

    On a normal day, Racelle spends 3 gold bars for breakfast and 5 gold bars for lunch and she goes home for dinner. On one day Racelle's mother said she must eat dinner outside the house so she spends 6 gold bars for dinner that day. How much is the marginal cost?

    Correct Answer
    6 gold bars
    Explanation
    Marginal cost is the additional cost at the expense of normal expenditures or budgets.

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  • 33. 

    Identify the analysis used in the observation:The economic status of Crimea as of today is at its critical levels, for they lost connection to Kiev, Crimea's lifeline to the Ukraine economy.

    Correct Answer
    Positive Analysis
    Explanation
    The given observation states that the economic status of Crimea is at critical levels because it lost connection to Kiev, which was its lifeline to the Ukraine economy. Positive analysis involves the objective examination of facts and data without any personal bias or value judgments. In this case, the observation is presenting a factual statement about the current economic situation in Crimea without expressing any subjective opinions or evaluations. Therefore, the analysis used in this observation is positive analysis.

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  • 34. 

    David Ricardo's Comparative Advantage looks at a producer's ability to produce the same good with fewer resources.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Adam Smith's Absolute Advantage looks at a producer's ability to produce the same good with fewer resources.

    David Ricardo's Comparative Advantage looks at the producer's ability to produce at a lower opportunity cost.

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  • 35. 

    It is the sum of all individual demands

    Correct Answer
    Market Demand
    Explanation
    The given answer is correct because market demand refers to the total quantity of a product or service that all consumers in a particular market are willing and able to purchase at a given price. It is calculated by summing up the individual demands of all consumers in the market. By considering the demands of all consumers, market demand provides a comprehensive view of the overall demand for a product or service in the market.

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  • 36. 

    Identify the analysis used in the observation:The Crimean people immediately chose to side with Russia because the Crimean inhabitants are attracted to the promises given by the Russian government.

    Correct Answer
    Normative Analysis
    Explanation
    The given observation states that the Crimean people chose to side with Russia because they are attracted to the promises made by the Russian government. This statement is an example of normative analysis. Normative analysis involves making judgments and evaluations based on opinions, values, and subjective criteria. In this case, the observation is presenting a subjective opinion about why the Crimean people made their choice, rather than providing objective facts or evidence.

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  • 37. 

    The inferior goods are known as giffen goods, the status symbol goods are known as

    Correct Answer
    Veblen Goods
    Explanation
    Veblen goods are a type of luxury goods that are considered status symbols. They have an upward-sloping demand curve, meaning that as the price of the goods increases, the demand for them also increases. This is because consumers perceive these goods as being more desirable and exclusive when they are more expensive. In contrast, inferior goods are those for which demand decreases as consumer income increases. Giffen goods are a specific type of inferior goods for which demand increases as the price increases, but they are not the same as Veblen goods.

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  • 38. 

    Tydings Company is willing to spend up to 700 diamond stones to purchase IGACOS. It turns out that IGACOS' Current Market Price is only 200. What is the consumer surplus?

    Correct Answer
    500 diamond stones
    Explanation
    The consumer surplus is the difference between the maximum price a consumer is willing to pay for a product and the actual price they pay. In this case, Tydings Company is willing to spend up to 700 diamond stones to purchase IGACOS, but the current market price is only 200 diamond stones. Therefore, the consumer surplus would be the difference between these two values, which is 500 diamond stones.

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  • Mar 21, 2023
    Quiz Edited by
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