Question 1: Opportunity costs are
only dollar expenditures.
costs that never include dollar expenditures.
dollar expenditures plus time costs and other forgone activities.
not important.
only relevant for individuals and not for government.
Question 2: Sales of bananas have dropped from 100,000 pounds to 75,000 pounds per day because a freeze resulted in a smaller supply. In the process, the average price of a pound of bananas has risen from $0.80 to $1.00. Which of the following is most likely true?
The demand for bananas has increased because of the increase in price.
The demand for ice cream (used in banana splits) is likely to decrease.
The price of tapes will rise about 25 percent.
The total revenue (P times Q) from sales has risen.
The quantity demanded of ice cream will increase.
Question 3: If the demand for coffee decreases as income decreases, coffee is a(n):
normal good.
inferior good.
substitute good.
complementary good.
Question 4: If left alone, a market-directed economy will
invariably provide the correct economic choices.
provide the correct economic choice in many but not all cases.
protect consumers from monopoly.
avoid the production problems encountered in command economies.
disintegrate.
Question 5: The measure of the cost of a particular good in terms of what is given up to produce that good is called
a fixed cost.
a dollar cost.
a necessary cost.
an opportunity cost.
an explicit cost.
Question 6: Capital consists of
the assets of a firm.
the assets of the government.
the assets of upper-income groups.
aids to production created by humans.
stocks and bonds.
Question 7: If there is a need to increase the quantity and supply of oil, the most effective way to get it quickly is to
improve technology.
reduce the prices of the resources that produce oil.
increase the price of oil.
put a limit on the price of oil.
ban imports.
Question 8: In economics, scarcity means that
there are not sufficient resources to produce everything that people want.
poverty will always exist.
a country can never feed all of its citizens.
the price of a good may increase more rapidly than the general price level.
there is not enough of a particular good for people to buy all they want at the prevailing price.
Question 9: When price changes, one should expect a change in
supply.
demand.
the weather.
technology and income.
quantity supplied.
Question 10: Self-interested behavior and incentives are
not operational in socialistic economic systems.
the organizing principles in a market economy.
not present in markets for goods and services.
available in third-world economies.
the basis for the Canadian currency.