Economics Chapters 1 - 5

1. The purchase of normal goods, such as used tires, decreases as the average income rises.

True

False

2. What refers to the amount of satisfaction that results from a one-unit increase of a good?

Marginal utility

Value in exchange

Total utility

Value in use

3. Profit motive gives a person the willingness to trade certain goods for other goods that have greater personal value to him.

True

False

4. What type of good is capable of being used in conjunction with another?

Substitute good

Durable good

Complementary good

Nondurable good

5. What type of good is expected to last at least three years?

Substitute good

Durable good

Complementary good

Nondurable good

6. If Miss Johnson quit a job where she annually made $40,000 to start a business whose expense was $20,000 and total revenue was $15,000 during the first year, what would her opportunity cost for the year equal?

$5,000

$25,000

$45,000

$60,000

7. What states that when the price of a certain good rises, people tend to find alternatives that are less expensive?

Substitution effect

Value effect

Income effect

Elasticity effect

Submit

10. Select 4 of the 5 Factors that can change the demand for a good.

Tastes and Preferences

Producer Expectations

Prices of Related Goods

Income

Population

Submit

11. What are three of the six factors that can cause a shift in a good's supply?

Resource Prices

Prices of Consumer Goods

Number of Buyers

Producer Expectations

Government Taxes, Subsidies, and Regulations

Submit

15. A demand schedule is a graphic representation of the amount of goods purchased at different prices.

True

False

16. What refers to the total amount of satisfaction received from possessing a particular amount of a good?

Marginal utility

Value in exchange

Total utility

Value in use

17. Economists use the vertical axis of a graph to represent quantity supplied.

True

False

18. A regulated price level set above the equilibrium price is considered a price floor.

True

False

19. The result of a price ceiling would be a surplus.

True

False

20. The public sector is the part of an economy controlled by national, state, and local governments.

True

False

21. If the demand for a car dealer's new convertibles decreased by he still wanted to sell the same amount of cars, he would have to decrease his prices.

True

False

22. The amount of money that a buyer pays the seller for a particular item is the item's price.

True

False

23. The availability of substitutes is a major reason why the demand for most goods is inelastic.

True

False

24. The income effect says that when the price of a good falls, consumers tend to buy less of that good or of other items because they can do so without giving up anything.

True

False

25. The price paid for a good is higher at point D than it is at point C.

True

False

26. A shift from curve 2 to curve 3 would represent an increase in quantity demanded.

True

False

27. The quantity demanded is higher at point C than it is at point B.

True

False

28. A shift from point D to point B indicates a change in price and the quantity demanded.

True

False

29. Assuming that point E is equilibrium and that supply remains constant, a shift from curve 3 to curve 2 would most likely set the new equilibrium at point B.

True

False

30. The prosperity and efficiency of the free market economy is owed to its foundation of limited government, freedom of enterprise and competition, and natural resources.

True

False

31. Who used his resources wisely to make gunpowder for President Jefferson?

John Adams

E.I. du Pont

Pierre Samuel du Pont

Adam Smith

32. What type of economy is directed by customs and habits?

Traditional economy

Free market economy

Command economy

Mixed economy

33. What type of economy is directed by an "invisible hand"?

Traditional economy

Free market economy

Command economy

Mixed economy

34. What type of economy would a Communist-controlled country have?

Traditional economy

Free market economy

Command economy

Mixed economy

35. What type of good is a forklift that is used to transport imported goods within a warehouse?

Capital

Imported

Consumer

Specialized

36. What type of good is a computer that is used for personal home use?

Capital

Imported

Consumer

Specialized

37. What term refers to a person that owns a share of some business that produces goods?

Distributor

Capitalist

Entrepreneur

Supplier

38. Who is the person that risks his investment of time and money in the management of an economic enterprise?

Distributor

Capitalist

Entrepreneur

Supplier

39. Diligent work directed by ingenious intelligence allowed to develop under conditions of freedom is the true source of what?

Wealth

Value

Prosperity

Utility

40. All people are said to be producers, or people who use goods.

True

False

41. A mixed economy provides barely enough to keep a society alive.

True

False

42. State capitalism is a system in which the government controls most of the capital.

True

False

43. When a country finds ways to produce more goods from existing resources, the prosperity of the national economy increases.

True

False

44. Who wrote the wealth of nations?

John Adams

E.I. du Pont

Pierre Samuel du Pont

Adam Smith

45. The two entities that make the majority of the economic decisions in the free market are private households and private businesses.

True

False

46. Adam Smith stressed the importance of separating work into individualized tasks, an idea known as division of labor.

True

False

47. The difference in value of goods that a country sells abroad compared to those it purchases from other countries is purchasing balance.

True

False

48. According to economists, the factors of production are scarce.

True

False

Submit

54. What refers to the direct benefit received by the owner of a good?

Marginal utility

Value in exchange

Total utility

Value in use

55. Match the following

the study of specific components within a major economy

the establishment of colonies to benefit a mother country

mechanism through which people exchange goods

an intagible item for which people expect to pay

economic system which aimed to accumulate stockpiles of gold and silver

the study of national economics

material items for which people expect to pay

refers to the quantity of a good for sale at a certain price under certain conditions

seeks to show the relationship among the various components of an economy

the amount of a good that is bought at a certain price under certain conditions

the worth that consumers attach to a good

Submit

57. Match the following

quantity demanded and quantity supplied are equal

the excess of a producer's total revenue over his total expenditure

quantity demanded exceeds the quantity supplied at a given price

the price at which a good could be sold in an open market

quantity supplied of a good is greater than the quantity demanded at a given price

used by consumers and producers to determine how much of a good to buy or sell at a given price and time

the diminishing of the value of goods that is caused by wear and time

the value of the best alternative that is foregone when a different alternative is taken

a place where sellers and buyers exchange goods

the total value of a business minus any liabilities

Submit

Economics Chapters 1 - 5

1. The purchase of normal goods, such as used tires, decreases as the average income rises.

2.

What first name or nickname would you like us to use?

2. What refers to the amount of satisfaction that results from a one-unit increase of a good?

3. Profit motive gives a person the willingness to trade certain goods for other goods that have greater personal value to him.

4. What type of good is capable of being used in conjunction with another?

5. What type of good is expected to last at least three years?

6. If Miss Johnson quit a job where she annually made $40,000 to start a business whose expense was $20,000 and total revenue was $15,000 during the first year, what would her opportunity cost for the year equal?

7. What states that when the price of a certain good rises, people tend to find alternatives that are less expensive?

8. What is the relationship between a good's price and the amount that people are willing to buy?

9. What is the relationship between a good's price and the amount that producers are willing to provide for consumers?

10. Select 4 of the 5 Factors that can change the demand for a good.

11. What are three of the six factors that can cause a shift in a good's supply?

12. In a free market, who ultimately determines the distribution of goods?

13. What term refers to incentives given by the government to businesses to try to encourage production?

14. What factor causes a change in quantity supplied within an existing supply?

15. A demand schedule is a graphic representation of the amount of goods purchased at different prices.

16. What refers to the total amount of satisfaction received from possessing a particular amount of a good?

17. Economists use the vertical axis of a graph to represent quantity supplied.

18. A regulated price level set above the equilibrium price is considered a price floor.

19. The result of a price ceiling would be a surplus.

20. The public sector is the part of an economy controlled by national, state, and local governments.

21. If the demand for a car dealer's new convertibles decreased by he still wanted to sell the same amount of cars, he would have to decrease his prices.

22. The amount of money that a buyer pays the seller for a particular item is the item's price.

23. The availability of substitutes is a major reason why the demand for most goods is inelastic.

24. The income effect says that when the price of a good falls, consumers tend to buy less of that good or of other items because they can do so without giving up anything.

25. The price paid for a good is higher at point D than it is at point C.

26. A shift from curve 2 to curve 3 would represent an increase in quantity demanded.

27. The quantity demanded is higher at point C than it is at point B.

28. A shift from point D to point B indicates a change in price and the quantity demanded.

29. Assuming that point E is equilibrium and that supply remains constant, a shift from curve 3 to curve 2 would most likely set the new equilibrium at point B.

30. The prosperity and efficiency of the free market economy is owed to its foundation of limited government, freedom of enterprise and competition, and natural resources.

31. Who used his resources wisely to make gunpowder for President Jefferson?

32. What type of economy is directed by customs and habits?

33. What type of economy is directed by an "invisible hand"?

34. What type of economy would a Communist-controlled country have?

35. What type of good is a forklift that is used to transport imported goods within a warehouse?

36. What type of good is a computer that is used for personal home use?

37. What term refers to a person that owns a share of some business that produces goods?

38. Who is the person that risks his investment of time and money in the management of an economic enterprise?

39. Diligent work directed by ingenious intelligence allowed to develop under conditions of freedom is the true source of what?

40. All people are said to be producers, or people who use goods.

41. A mixed economy provides barely enough to keep a society alive.

42. State capitalism is a system in which the government controls most of the capital.

43. When a country finds ways to produce more goods from existing resources, the prosperity of the national economy increases.

44. Who wrote the wealth of nations?

45. The two entities that make the majority of the economic decisions in the free market are private households and private businesses.

46. Adam Smith stressed the importance of separating work into individualized tasks, an idea known as division of labor.

47. The difference in value of goods that a country sells abroad compared to those it purchases from other countries is purchasing balance.

48. According to economists, the factors of production are scarce.

49. Who were the French group of 18th-century economists who believed the market should be guided by the "rule of nature"?

50. Who was the founder of the Austrian school of economics?

51. What are taxes that governments apply only to imported goods?

52. The value associated with any good is directly related to what TWO things? (two words)

53. What do some economists list as a fifth factor of production?

54. What refers to the direct benefit received by the owner of a good?

55. Match the following

56. What French phrase, often connected with economics, means "let things alone"?

57. Match the following

58. Economics is the study of the choices that individuals and societies make concerning what activities involving goods? (3 separate words)

59. What are the FOUR factors of production? (List all four)