1. Economics is the study of how societies use ------ resources to produce -----
ID: 1104573 • Letter: 1
Question
1. Economics is the study of how societies use ------ resources to produce ------ and distribute them among different people.
a. abundant; tires b. scarce; commodities c. scarce; tires d. abundant; commodities
2. The situation in which there is not enough of something to satisfy all desires for that thing is called:
a. abundance b. scarcity c. demand d. plethora
3. The situation in which limited resources are being used most effectively is called:
a. efficient b. economic c. abundant d. scarce.
4. The study of the behavior of firms, individual markets, and households is called:
a. normative economics b. positive economics c. macroeconomics d. microeconomics
5. The study of the behavior of the overall economy is called:
a. normative economics b. positive economics c. macroeconomics d. microeconomics
6. The extreme case of a market economy is one in which government does not intervene in economic decisions. This kind of market economy is called a ----------------- market.
a. command b. mixed c. weak d. laissez-faire
7. The three broad categories of inputs to production are:
a. earth, wind, and fire b. earth, water, and fire c. land, labor, and capital d. land, labor, and money
8. The ------------------- of a decision is the value of the good or service forgone.
a. opportunity cost b. efficiency c. economics d. scarcity
9. Productive ------------ exists when an economy cannot produce more of one good without producing less of another good.
a. Scarcity b. economics c. efficiency d. opportunity cost
10. Implicit costs are the opportunity costs of using the resources of
a. Outsiders. b. Owners. c. Banks. d. Retained earnings.
11. The law of downward-sloping demand states that:
a. as price increases, quantity demanded increases b. as price decreases, quantity demanded increases
c. as price decreases, quantity demanded decreases d. as price decreases, supply increases
12. Other things held equal, if demand increases, equilibrium price will ------- and equilibrium quantity will --------. However, if supply increases, equilibrium price will ------- and equilibrium quantity will ----------------
a. decrease; decrease; increase; increase b. increase; increase; decrease; increase
c. decrease; decrease; increase; decrease d. increase; increase; decrease; decrease
13. The law of demand states that the quantity demanded of a good changes, other things being equal, when------
a. the price of the good changes. b. consumer income changes.
c. the prices of other goods change. d. a change occurs in the quantities of other goods purchase
14. When the market is at equilibrium, -------------------------------------
a. there can be shortages, but not surpluses. b. there can be surpluses, but not shortages.
c. there can be both shortages and surpluses. d. there can be neither shortages nor surpluses.
15. ----------------------------------------- is the willingness to buy a product and the ability to pay for it.
a. Quantity b. Demand c. The Law of Demand d. Elasticity
Explanation / Answer
(1) (b)
Economics is the study of production and allocation of goods amid scarcity.
(2) (b)
Scarcity means the resources are limited.
(3) (a)
(4) (d)
(5) (c)
Unlike microeconomics, macroeconomics deals ith overall economic indicators and situations like unemloyment, inflation, growth rate, exchange rate etc.
(6) (d)
Laissez-faire economy has complete freedom in market operations.
(7) (c)
Only labr is considered variable in short run.
(8) (a)
(9) (c)
This is also called Pareto optimality in production.
(10) (b)
(11) (b)
Price and quantity demanded are inversely related.
(12) (b)
If demand increases, demand curve shifts right, increasing both price and quantity. If supply increases, supply curve shifts right, increasing quantity but decreasing price.
(13) (a)
(14) (d)
In equilibrium, quantity demanded equals quantity supplied, removing any shortage or surplus.
(15) (b)
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