I have an Economics test tomorrow and my teacher didn\'t give us the answers to
ID: 1216803 • Letter: I
Question
I have an Economics test tomorrow and my teacher didn't give us the answers to the study guide. I know it's a lot but any help I could get would be awesome! Thanks!
Question 1 of 33
Which of the following will not cause a shift in the demand curve for a good?
A. Income
B. Taste
C. The price of the good itself
D. Price of a substitute or complementary good
Question 2 of 33
What are the four factors of production?
A. Land, water, labor and entrepreneurship
B. Land, labor, money and entrepreneurship
C. Land, water, labor and money
D. Land, labor, capital and entrepreneurship
Question 3 of 33
Economics is the study of
A. how much people should buy and the prices they should be willing to pay.
B. how much people should sell and the prices they should be willing to accept.
C. the allocation of the world's freely available resources and who should get them.
D. the allocation and use of scarce resources to satisfy unlimited human wants
Question 4 of 33
The fact that we are operating at a point inside a bowed out production possibilities frontier, indicates there is
A. scarcity.
B. constant opportunity cost.
C. unemployment.
D. increasing opportunity cost.
Question 5 of 33
In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?
A. dollars spent on goods and services
B. dollars paid to land, labor, and capital
C. goods and services
D. wages, rent, and profit
Question 6 of 33
Which of the following statements about economic models is correct?
A. Economic models are built to mirror reality exactly.
B. Economic models are useful, but they should not be used for the purpose of improving public policies.
C. Economic models seldom incorporate equations or diagrams.
D. Because economic models omit many details, they allow us to see what is truly important.
Question 7 of 33
In the circular-flow diagram, which of the following is not a factor of production?
A. Money
B. Labor
C. Land
D. Capital
Question 8 of 33
In the markets for the factors of production in the circular-flow diagram,
A. households are sellers and firms are buyers.
B. households are buyers and firms are sellers.
C. households and firms are both buyers.
D. households and firms are both sellers.
Question 9 of 33
The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and
A. society’s preferences.
B. the available production technology.
C. a fair distribution of the output.
D. the available demand for the output.
Question 10 of 33
Suppose coke and pepsi are substitutes. What happens to demand for pepsi when price of coke increases?
A. Demand for pepsi increases .
B. Demand for pepsi decreases.
C. Demand for pepsi remains unchanged
D. None of the above.
Question 11 of 33
Which of the following events would cause a rightward shift in the market-supply curve for large automobiles?
A. A technological improvement that reduces the cost of production for large automobiles.
B. An increase in the wages of all autoworkers.
C. An excise tax on large automobiles.
D. A decrease in the number of sellers of automobiles.
Question 12 of 33
Which of the following would cause an increase in the price of web design services?
A. A decrease in the wages paid to web designers.
B. An increase in the number of buyers of web design services.
C. A decrease in on-line purchases because of fear about credit card fraud.
D. An increase in the cost of monthly Internet service.
Question 13 of 33
When rent controls are imposed, the quantity demanded of apartments will be:
A. Less than the equilibrium quantity, and rents will be less than the equilibrium rents.
B. Less than the equilibrium quantity, and rents will be greater than the equilibrium rents.
C. Greater than the equilibrium quantity, and rents will be less than the equilibrium rents.
D. Greater than the equilibrium quantity, and rents will be greater than the equilibrium rents.
Question 14 of 33
Adam Smith’s concept of the invisible hand refers to:
A. Central planning.
B. Oppression of the working class by rich entrepreneurs.
C. The market mechanism.
D. Government regulation
Question 15 of 33
Price elasticity of demand shows how:
A. To compute the slope of the demand curve.
B. Quantity demanded responds to price changes.
C. Quantity demanded responds to changes in the price of other goods.
D. Price responds to demand changes
Question 16 of 33
When the percentage change in quantity demanded is numerically less than the percentage change in price, ceteris paribus, demand is:
A. Elastic.
B. Inelastic.
C. Unitary elastic.
D. Perfectly elastic
Question 17 of 33
If the price elasticity of demand is 1.0 and a firm raises its price by 10 percent, the total revenue will:
A. Rise by 10 percent.
B. Fall by 10 percent.
C. Possibly rise or fall.
D. Not change.
Question 18 of 33
A price cut will increase the total revenue a firm receives, ceteris paribus, only if the demand for its product is:
A. Unitary elastic.
B. Perfectly inelastic (i.e., E = 0).
C. Inelastic.
D. Elastic.
Question 19 of 33
When demand is price inelastic, ceteris paribus:
A. A rise in price leads to lower total revenue.
B. A rise in total revenue due to a price change means quantity rises.
C. A rise in total revenue indicates a reduction in price.
D. A rise in price leads to greater total revenue.
Question 20 of 33
The presence of a price control in a market for a good or service usually is an indication that
A. an insufficient quantity of the good or service was being produced in that market to meet the public’s need.
B. the usual forces of supply and demand were not able to establish an equilibrium price in that market.
C. policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.
D. policymakers correctly believed that price controls would generate no inequities of their own once imposed.
Question 21 of 33
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
A. the quantity of physicals demanded increases.
B. there is shortage of physicals.
C. the quantity of physicals supplied decreases.
D. All of the above are correct.
Question 22 of 33
Which of the following will NOT lead to an increase in the equilibrium price of milkshake?
A. An increase in income
B. An increase in price of milk (an input for making milkshake)
C. A study which shows that drinking milkshake decreases risk of heart disease
D. A decrease in income
Question 23 of 33
A rent control is an example of a
A. Price floor
B. Price ceiling
C. Floating Price
D. None of the above
Question 24 of 33
Which of the following is TRUE in the market for ice cream?
A. An increase in price of milk shifts the supply curve to the right.
B. A decrease in income shifts the demand curve for ice cream to the right
C. An increase in number of sellers shifts the supply curve of ice cream to the right.
D. An increase in price of ice cream shifts the demand curve to the left.
Question 25 of 33
If the price elasticity of demand for a good is 0.8, then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?
A. a 0.2 percent increase in the price of the good
B. a 3.2 percent increase in the price of the good
C. 4.8 percent increase in the price of the good
D. a 5 percent increase in the price of the good
Question 26 of 33
When quantity demanded responds strongly to changes in price, demand is said to be
A. inelastic
B. elastic.
C. dynamic.
D. highly variable.
Question 27 of 33
Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?
A. An increase in the price of flour, which is used to make bread.
,
B. A decrease in the price of lunch meat.
C. A decease in the price of unsliced bread, which people consider as a substitute for sliced bread.
D. An decrease in the price of peanut butter and jelly.
Question 28 of 33
A legal minimum on the price at which a good can be sold is called a
A. price subsidy
B. price floor.
C. tax.
D. price ceiling.
Question 29 of 33
If a price floor is a binding constraint on a market, then
A. the equilibrium price must be above the price floor.
B. the quantity demanded must exceed the quantity supplied.
C. sellers cannot sell all they want to sell at the price floor.
D. buyers cannot buy all they want to buy at the price floor.
Question 30 of 33
If a price floor is a binding constraint on a market, then
A. the equilibrium price must be above the price floor.
B. the quantity demanded must exceed the quantity supplied.
C. sellers cannot sell all they want to sell at the price floor.
D. buyers cannot buy all they want to buy at the price floor.
Question 31 of 33
Which of the following is not an assumption of the productions possibilities frontier?
A. A country produces only two goods or types of goods.
B. Technology does not change.
C. The amount of available resources does not change.
D. There is a fixed quantity of money.
Question 32 of 33
Rent control
A. serves as an example of how a social problem can be alleviated or even solved by government policies.
B. serves as an example of a price ceiling.
C. is regarded by most economists as an efficient way of helping the poor.
D. is the most efficient way to allocate scarce housing resources.
Question 33 of 33
A legal maximum on the price at which a good can be sold is called a price
A. floor.
B. subsidy.
C. support
D. ceiling.
I have an Economics test tomorrow and my teacher didn't give us the answers to the study guide. I know it's a lot but any help I could get would be awesome! Thanks!
Question 1 of 33
Which of the following will not cause a shift in the demand curve for a good?
A. Income
B. Taste
C. The price of the good itself
D. Price of a substitute or complementary good
Question 2 of 33
What are the four factors of production?
A. Land, water, labor and entrepreneurship
B. Land, labor, money and entrepreneurship
C. Land, water, labor and money
D. Land, labor, capital and entrepreneurship
Question 3 of 33
Economics is the study of
A. how much people should buy and the prices they should be willing to pay.
B. how much people should sell and the prices they should be willing to accept.
C. the allocation of the world's freely available resources and who should get them.
D. the allocation and use of scarce resources to satisfy unlimited human wants
Question 4 of 33
The fact that we are operating at a point inside a bowed out production possibilities frontier, indicates there is
A. scarcity.
B. constant opportunity cost.
C. unemployment.
D. increasing opportunity cost.
Question 5 of 33
In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?
A. dollars spent on goods and services
B. dollars paid to land, labor, and capital
C. goods and services
D. wages, rent, and profit
Question 6 of 33
Which of the following statements about economic models is correct?
A. Economic models are built to mirror reality exactly.
B. Economic models are useful, but they should not be used for the purpose of improving public policies.
C. Economic models seldom incorporate equations or diagrams.
D. Because economic models omit many details, they allow us to see what is truly important.
Question 7 of 33
In the circular-flow diagram, which of the following is not a factor of production?
A. Money
B. Labor
C. Land
D. Capital
Question 8 of 33
In the markets for the factors of production in the circular-flow diagram,
A. households are sellers and firms are buyers.
B. households are buyers and firms are sellers.
C. households and firms are both buyers.
D. households and firms are both sellers.
Question 9 of 33
The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and
A. society’s preferences.
B. the available production technology.
C. a fair distribution of the output.
D. the available demand for the output.
Question 10 of 33
Suppose coke and pepsi are substitutes. What happens to demand for pepsi when price of coke increases?
A. Demand for pepsi increases .
B. Demand for pepsi decreases.
C. Demand for pepsi remains unchanged
D. None of the above.
Question 11 of 33
Which of the following events would cause a rightward shift in the market-supply curve for large automobiles?
A. A technological improvement that reduces the cost of production for large automobiles.
B. An increase in the wages of all autoworkers.
C. An excise tax on large automobiles.
D. A decrease in the number of sellers of automobiles.
Question 12 of 33
Which of the following would cause an increase in the price of web design services?
A. A decrease in the wages paid to web designers.
B. An increase in the number of buyers of web design services.
C. A decrease in on-line purchases because of fear about credit card fraud.
D. An increase in the cost of monthly Internet service.
Question 13 of 33
When rent controls are imposed, the quantity demanded of apartments will be:
A. Less than the equilibrium quantity, and rents will be less than the equilibrium rents.
B. Less than the equilibrium quantity, and rents will be greater than the equilibrium rents.
C. Greater than the equilibrium quantity, and rents will be less than the equilibrium rents.
D. Greater than the equilibrium quantity, and rents will be greater than the equilibrium rents.
Question 14 of 33
Adam Smith’s concept of the invisible hand refers to:
A. Central planning.
B. Oppression of the working class by rich entrepreneurs.
C. The market mechanism.
D. Government regulation
Question 15 of 33
Price elasticity of demand shows how:
A. To compute the slope of the demand curve.
B. Quantity demanded responds to price changes.
C. Quantity demanded responds to changes in the price of other goods.
D. Price responds to demand changes
Question 16 of 33
When the percentage change in quantity demanded is numerically less than the percentage change in price, ceteris paribus, demand is:
A. Elastic.
B. Inelastic.
C. Unitary elastic.
D. Perfectly elastic
Question 17 of 33
If the price elasticity of demand is 1.0 and a firm raises its price by 10 percent, the total revenue will:
A. Rise by 10 percent.
B. Fall by 10 percent.
C. Possibly rise or fall.
D. Not change.
Question 18 of 33
A price cut will increase the total revenue a firm receives, ceteris paribus, only if the demand for its product is:
A. Unitary elastic.
B. Perfectly inelastic (i.e., E = 0).
C. Inelastic.
D. Elastic.
Question 19 of 33
When demand is price inelastic, ceteris paribus:
A. A rise in price leads to lower total revenue.
B. A rise in total revenue due to a price change means quantity rises.
C. A rise in total revenue indicates a reduction in price.
D. A rise in price leads to greater total revenue.
Question 20 of 33
The presence of a price control in a market for a good or service usually is an indication that
A. an insufficient quantity of the good or service was being produced in that market to meet the public’s need.
B. the usual forces of supply and demand were not able to establish an equilibrium price in that market.
C. policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.
D. policymakers correctly believed that price controls would generate no inequities of their own once imposed.
Question 21 of 33
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
A. the quantity of physicals demanded increases.
B. there is shortage of physicals.
C. the quantity of physicals supplied decreases.
D. All of the above are correct.
Question 22 of 33
Which of the following will NOT lead to an increase in the equilibrium price of milkshake?
A. An increase in income
B. An increase in price of milk (an input for making milkshake)
C. A study which shows that drinking milkshake decreases risk of heart disease
D. A decrease in income
Question 23 of 33
A rent control is an example of a
A. Price floor
B. Price ceiling
C. Floating Price
D. None of the above
Question 24 of 33
Which of the following is TRUE in the market for ice cream?
A. An increase in price of milk shifts the supply curve to the right.
B. A decrease in income shifts the demand curve for ice cream to the right
C. An increase in number of sellers shifts the supply curve of ice cream to the right.
D. An increase in price of ice cream shifts the demand curve to the left.
Question 25 of 33
If the price elasticity of demand for a good is 0.8, then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?
A. a 0.2 percent increase in the price of the good
B. a 3.2 percent increase in the price of the good
C. 4.8 percent increase in the price of the good
D. a 5 percent increase in the price of the good
Question 26 of 33
When quantity demanded responds strongly to changes in price, demand is said to be
A. inelastic
B. elastic.
C. dynamic.
D. highly variable.
Question 27 of 33
Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?
A. An increase in the price of flour, which is used to make bread.
,
B. A decrease in the price of lunch meat.
C. A decease in the price of unsliced bread, which people consider as a substitute for sliced bread.
D. An decrease in the price of peanut butter and jelly.
Question 28 of 33
A legal minimum on the price at which a good can be sold is called a
A. price subsidy
B. price floor.
C. tax.
D. price ceiling.
Question 29 of 33
If a price floor is a binding constraint on a market, then
A. the equilibrium price must be above the price floor.
B. the quantity demanded must exceed the quantity supplied.
C. sellers cannot sell all they want to sell at the price floor.
D. buyers cannot buy all they want to buy at the price floor.
Question 30 of 33
If a price floor is a binding constraint on a market, then
A. the equilibrium price must be above the price floor.
B. the quantity demanded must exceed the quantity supplied.
C. sellers cannot sell all they want to sell at the price floor.
D. buyers cannot buy all they want to buy at the price floor.
Question 31 of 33
Which of the following is not an assumption of the productions possibilities frontier?
A. A country produces only two goods or types of goods.
B. Technology does not change.
C. The amount of available resources does not change.
D. There is a fixed quantity of money.
Question 32 of 33
Rent control
A. serves as an example of how a social problem can be alleviated or even solved by government policies.
B. serves as an example of a price ceiling.
C. is regarded by most economists as an efficient way of helping the poor.
D. is the most efficient way to allocate scarce housing resources.
Question 33 of 33
A legal maximum on the price at which a good can be sold is called a price
A. floor.
B. subsidy.
C. support
D. ceiling.
Explanation / Answer
Option in bold is answer
Which of the following will not cause a shift in the demand curve for a good?
A. Income
B. Taste
C. The price of the good itself= It causes movement along Demand curve
D. Price of a substitute or complementary good
Question 2 of 33
What are the four factors of production?
A. Land, water, labor and entrepreneurship
B. Land, labor, money and entrepreneurship
C. Land, water, labor and money
D. Land, labor, capital and entrepreneurship
Question 3 of 33
Economics is the study of
A. how much people should buy and the prices they should be willing to pay.
B. how much people should sell and the prices they should be willing to accept.
C. the allocation of the world's freely available resources and who should get them.
D. the allocation and use of scarce resources to satisfy unlimited human wants
Question 4 of 33
The fact that we are operating at a point inside a bowed out production possibilities frontier, indicates there is
A. scarcity.
B. constant opportunity cost.
C. unemployment.
D. increasing opportunity cost.
Question 5 of 33
In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?
A. dollars spent on goods and services = Rest all are transfers from firms to household
B. dollars paid to land, labor, and capital
C. goods and services
D. wages, rent, and profit
Question 6 of 33
Which of the following statements about economic models is correct?
A. Economic models are built to mirror reality exactly.
B. Economic models are useful, but they should not be used for the purpose of improving public policies.
C. Economic models seldom incorporate equations or diagrams.
D. Because economic models omit many details, they allow us to see what is truly important.
Question 7 of 33
In the circular-flow diagram, which of the following is not a factor of production?
A. Money
B. Labor
C. Land
D. Capital
Question 8 of 33
In the markets for the factors of production in the circular-flow diagram,
A. households are sellers and firms are buyers.
B. households are buyers and firms are sellers.
C. households and firms are both buyers.
D. households and firms are both sellers.
Question 9 of 33
The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and
A. society’s preferences.
B. the available production technology.
C. a fair distribution of the output.
D. the available demand for the output.
Question 10 of 33
Suppose coke and pepsi are substitutes. What happens to demand for pepsi when price of coke increases?
A. Demand for pepsi increases because demand for coke decrease.
B. Demand for pepsi decreases.
C. Demand for pepsi remains unchanged
D. None of the above.
Question 11 of 33
Which of the following events would cause a rightward shift in the market-supply curve for large automobiles?
A. A technological improvement that reduces the cost of production for large automobiles => This will increase supply.
B. An increase in the wages of all autoworkers.
C. An excise tax on large automobiles.
D. A decrease in the number of sellers of automobiles.
Question 12 of 33
Which of the following would cause an increase in the price of web design services?
A. A decrease in the wages paid to web designers.
B. An increase in the number of buyers of web design services.
C. A decrease in on-line purchases because of fear about credit card fraud.
D. An increase in the cost of monthly Internet service.
Question 13 of 33
When rent controls are imposed, the quantity demanded of apartments will be:
A. Less than the equilibrium quantity, and rents will be less than the equilibrium rents.
B. Less than the equilibrium quantity, and rents will be greater than the equilibrium rents.
C. Greater than the equilibrium quantity, and rents will be less than the equilibrium rents.
D. Greater than the equilibrium quantity, and rents will be greater than the equilibrium rents.
Question 14 of 33
Adam Smith’s concept of the invisible hand refers to:
A. Central planning.
B. Oppression of the working class by rich entrepreneurs.
C. The market mechanism.
D. Government regulation
Question 15 of 33
Price elasticity of demand shows how:
A. To compute the slope of the demand curve.
B. Quantity demanded responds to price changes.
C. Quantity demanded responds to changes in the price of other goods.
D. Price responds to demand changes
Question 16 of 33
When the percentage change in quantity demanded is numerically less than the percentage change in price, ceteris paribus, demand is:
A. Elastic.
B. Inelastic.
C. Unitary elastic.
D. Perfectly elastic
Question 17 of 33
If the price elasticity of demand is 1.0 and a firm raises its price by 10 percent, the total revenue will:
A. Rise by 10 percent.
B. Fall by 10 percent.
C. Possibly rise or fall.
D. Not change because quantity demanded will fall by 10 %.
Question 18 of 33
A price cut will increase the total revenue a firm receives, ceteris paribus, only if the demand for its product is:
A. Unitary elastic.
B. Perfectly inelastic (i.e., E = 0).
C. Inelastic.
D. Elastic.
Question 19 of 33
When demand is price inelastic, ceteris paribus:
A. A rise in price leads to lower total revenue.
B. A rise in total revenue due to a price change means quantity rises.
C. A rise in total revenue indicates a reduction in price.
D. A rise in price leads to greater total revenue.
Question 20 of 33
The presence of a price control in a market for a good or service usually is an indication that
A. an insufficient quantity of the good or service was being produced in that market to meet the public’s need.
B. the usual forces of supply and demand were not able to establish an equilibrium price in that market.
C. policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.
D. policymakers correctly believed that price controls would generate no inequities of their own once imposed.
Question 21 of 33
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
A. the quantity of physicals demanded increases.
B. there is shortage of physicals.
C. the quantity of physicals supplied decreases.
D. All of the above are correct.
Question 22 of 33
Which of the following will NOT lead to an increase in the equilibrium price of milkshake?
A. An increase in income
B. An increase in price of milk (an input for making milkshake)
C. A study which shows that drinking milkshake decreases risk of heart disease
D. A decrease in income
Question 23 of 33
A rent control is an example of a
A. Price floor
B. Price ceiling
C. Floating Price
D. None of the above
Question 24 of 33
Which of the following is TRUE in the market for ice cream?
A. An increase in price of milk shifts the supply curve to the right.
B. A decrease in income shifts the demand curve for ice cream to the right
C. An increase in number of sellers shifts the supply curve of ice cream to the right.
D. An increase in price of ice cream shifts the demand curve to the left.
Question 25 of 33
If the price elasticity of demand for a good is 0.8, then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?
A. a 0.2 percent increase in the price of the good
B. a 3.2 percent increase in the price of the good
C. 4.8 percent increase in the price of the good
D. a 5 percent increase in the price of the good
Question 26 of 33
When quantity demanded responds strongly to changes in price, demand is said to be
A. inelastic
B. elastic.
C. dynamic.
D. highly variable.
Question 27 of 33
Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?
A. An increase in the price of flour, which is used to make bread.
,
B. A decrease in the price of lunch meat.
C. A decease in the price of unsliced bread, which people consider as a substitute for sliced bread.
D. An decrease in the price of peanut butter and jelly.
Question 28 of 33
A legal minimum on the price at which a good can be sold is called a
A. price subsidy
B. price floor.
C. tax.
D. price ceiling.
Question 29 of 33
If a price floor is a binding constraint on a market, then
A. the equilibrium price must be above the price floor.
B. the quantity demanded must exceed the quantity supplied.
C. sellers cannot sell all they want to sell at the price floor.
D. buyers cannot buy all they want to buy at the price floor.
Question 30 of 33
If a price floor is a binding constraint on a market, then
A. the equilibrium price must be above the price floor.
B. the quantity demanded must exceed the quantity supplied.
C. sellers cannot sell all they want to sell at the price floor.
D. buyers cannot buy all they want to buy at the price floor.
Question 31 of 33
Which of the following is not an assumption of the productions possibilities frontier?
A. A country produces only two goods or types of goods.
B. Technology does not change.
C. The amount of available resources does not change.
D. There is a fixed quantity of money.
Question 32 of 33
Rent control
A. serves as an example of how a social problem can be alleviated or even solved by government policies.
B. serves as an example of a price ceiling.
C. is regarded by most economists as an efficient way of helping the poor.
D. is the most efficient way to allocate scarce housing resources.
Question 33 of 33
A legal maximum on the price at which a good can be sold is called a price
A. floor.
B. subsidy.
C. support
D. ceiling.
Which of the following will not cause a shift in the demand curve for a good?
A. Income
B. Taste
C. The price of the good itself= It causes movement along Demand curve
D. Price of a substitute or complementary good
Question 2 of 33
What are the four factors of production?
A. Land, water, labor and entrepreneurship
B. Land, labor, money and entrepreneurship
C. Land, water, labor and money
D. Land, labor, capital and entrepreneurship
Question 3 of 33
Economics is the study of
A. how much people should buy and the prices they should be willing to pay.
B. how much people should sell and the prices they should be willing to accept.
C. the allocation of the world's freely available resources and who should get them.
D. the allocation and use of scarce resources to satisfy unlimited human wants
Question 4 of 33
The fact that we are operating at a point inside a bowed out production possibilities frontier, indicates there is
A. scarcity.
B. constant opportunity cost.
C. unemployment.
D. increasing opportunity cost.
Question 5 of 33
In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?
A. dollars spent on goods and services = Rest all are transfers from firms to household
B. dollars paid to land, labor, and capital
C. goods and services
D. wages, rent, and profit
Question 6 of 33
Which of the following statements about economic models is correct?
A. Economic models are built to mirror reality exactly.
B. Economic models are useful, but they should not be used for the purpose of improving public policies.
C. Economic models seldom incorporate equations or diagrams.
D. Because economic models omit many details, they allow us to see what is truly important.
Question 7 of 33
In the circular-flow diagram, which of the following is not a factor of production?
A. Money
B. Labor
C. Land
D. Capital
Question 8 of 33
In the markets for the factors of production in the circular-flow diagram,
A. households are sellers and firms are buyers.
B. households are buyers and firms are sellers.
C. households and firms are both buyers.
D. households and firms are both sellers.
Question 9 of 33
The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and
A. society’s preferences.
B. the available production technology.
C. a fair distribution of the output.
D. the available demand for the output.
Question 10 of 33
Suppose coke and pepsi are substitutes. What happens to demand for pepsi when price of coke increases?
A. Demand for pepsi increases because demand for coke decrease.
B. Demand for pepsi decreases.
C. Demand for pepsi remains unchanged
D. None of the above.
Question 11 of 33
Which of the following events would cause a rightward shift in the market-supply curve for large automobiles?
A. A technological improvement that reduces the cost of production for large automobiles => This will increase supply.
B. An increase in the wages of all autoworkers.
C. An excise tax on large automobiles.
D. A decrease in the number of sellers of automobiles.
Question 12 of 33
Which of the following would cause an increase in the price of web design services?
A. A decrease in the wages paid to web designers.
B. An increase in the number of buyers of web design services.
C. A decrease in on-line purchases because of fear about credit card fraud.
D. An increase in the cost of monthly Internet service.
Question 13 of 33
When rent controls are imposed, the quantity demanded of apartments will be:
A. Less than the equilibrium quantity, and rents will be less than the equilibrium rents.
B. Less than the equilibrium quantity, and rents will be greater than the equilibrium rents.
C. Greater than the equilibrium quantity, and rents will be less than the equilibrium rents.
D. Greater than the equilibrium quantity, and rents will be greater than the equilibrium rents.
Question 14 of 33
Adam Smith’s concept of the invisible hand refers to:
A. Central planning.
B. Oppression of the working class by rich entrepreneurs.
C. The market mechanism.
D. Government regulation
Question 15 of 33
Price elasticity of demand shows how:
A. To compute the slope of the demand curve.
B. Quantity demanded responds to price changes.
C. Quantity demanded responds to changes in the price of other goods.
D. Price responds to demand changes
Question 16 of 33
When the percentage change in quantity demanded is numerically less than the percentage change in price, ceteris paribus, demand is:
A. Elastic.
B. Inelastic.
C. Unitary elastic.
D. Perfectly elastic
Question 17 of 33
If the price elasticity of demand is 1.0 and a firm raises its price by 10 percent, the total revenue will:
A. Rise by 10 percent.
B. Fall by 10 percent.
C. Possibly rise or fall.
D. Not change because quantity demanded will fall by 10 %.
Question 18 of 33
A price cut will increase the total revenue a firm receives, ceteris paribus, only if the demand for its product is:
A. Unitary elastic.
B. Perfectly inelastic (i.e., E = 0).
C. Inelastic.
D. Elastic.
Question 19 of 33
When demand is price inelastic, ceteris paribus:
A. A rise in price leads to lower total revenue.
B. A rise in total revenue due to a price change means quantity rises.
C. A rise in total revenue indicates a reduction in price.
D. A rise in price leads to greater total revenue.
Question 20 of 33
The presence of a price control in a market for a good or service usually is an indication that
A. an insufficient quantity of the good or service was being produced in that market to meet the public’s need.
B. the usual forces of supply and demand were not able to establish an equilibrium price in that market.
C. policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.
D. policymakers correctly believed that price controls would generate no inequities of their own once imposed.
Question 21 of 33
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
A. the quantity of physicals demanded increases.
B. there is shortage of physicals.
C. the quantity of physicals supplied decreases.
D. All of the above are correct.
Question 22 of 33
Which of the following will NOT lead to an increase in the equilibrium price of milkshake?
A. An increase in income
B. An increase in price of milk (an input for making milkshake)
C. A study which shows that drinking milkshake decreases risk of heart disease
D. A decrease in income
Question 23 of 33
A rent control is an example of a
A. Price floor
B. Price ceiling
C. Floating Price
D. None of the above
Question 24 of 33
Which of the following is TRUE in the market for ice cream?
A. An increase in price of milk shifts the supply curve to the right.
B. A decrease in income shifts the demand curve for ice cream to the right
C. An increase in number of sellers shifts the supply curve of ice cream to the right.
D. An increase in price of ice cream shifts the demand curve to the left.
Question 25 of 33
If the price elasticity of demand for a good is 0.8, then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?
A. a 0.2 percent increase in the price of the good
B. a 3.2 percent increase in the price of the good
C. 4.8 percent increase in the price of the good
D. a 5 percent increase in the price of the good
Question 26 of 33
When quantity demanded responds strongly to changes in price, demand is said to be
A. inelastic
B. elastic.
C. dynamic.
D. highly variable.
Question 27 of 33
Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?
A. An increase in the price of flour, which is used to make bread.
,
B. A decrease in the price of lunch meat.
C. A decease in the price of unsliced bread, which people consider as a substitute for sliced bread.
D. An decrease in the price of peanut butter and jelly.
Question 28 of 33
A legal minimum on the price at which a good can be sold is called a
A. price subsidy
B. price floor.
C. tax.
D. price ceiling.
Question 29 of 33
If a price floor is a binding constraint on a market, then
A. the equilibrium price must be above the price floor.
B. the quantity demanded must exceed the quantity supplied.
C. sellers cannot sell all they want to sell at the price floor.
D. buyers cannot buy all they want to buy at the price floor.
Question 30 of 33
If a price floor is a binding constraint on a market, then
A. the equilibrium price must be above the price floor.
B. the quantity demanded must exceed the quantity supplied.
C. sellers cannot sell all they want to sell at the price floor.
D. buyers cannot buy all they want to buy at the price floor.
Question 31 of 33
Which of the following is not an assumption of the productions possibilities frontier?
A. A country produces only two goods or types of goods.
B. Technology does not change.
C. The amount of available resources does not change.
D. There is a fixed quantity of money.
Question 32 of 33
Rent control
A. serves as an example of how a social problem can be alleviated or even solved by government policies.
B. serves as an example of a price ceiling.
C. is regarded by most economists as an efficient way of helping the poor.
D. is the most efficient way to allocate scarce housing resources.
Question 33 of 33
A legal maximum on the price at which a good can be sold is called a price
A. floor.
B. subsidy.
C. support
D. ceiling.
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