Question 1. Scarcity_______
Ensures people become satisfied with less than they want.
Exists only during a recession
Exists only in some countries
Requires people to make choices

Question 2. Which of the following statements correctly describes at least one of the factors of production.
Natural resources, such as minerals, timber, and water, as well as land itself.
The physical and intellectual services of technological advances.
Buildings and warehouses, but not factories.
Inventories
Automobiles

Question 3. Oil found underground in Texas is an example of:
A labor resource
land or a natural resource
an entrepreneur
human capital
a capital resource

Question 4. The ceteris paribus, or everything else held constant, assumption is used in economics _____
because economic theory is an accurate reflection of the real world.
to make the theory more complicated
to isolate the important variables when formulating the theory
primarily to identify unstable equillibrium situations.
so that economists can impress others with their fluency in latin

Question 5. If you have a choice of consuming either two apples, three oranges, or one candy bar, the opportunity cost of one candy bar is:
two apples
three oranges
two apples and three oranges
two apples or three oranges, whichever you most prefer
the difference in the prices of the three options

Question 6. A point lying outside a nation's production possibilities curve:
represents the use of more resources than are available
represents the use of less resources than are available.
represents a state of high unemployment for that nation.
could easily be achieved if people would just work harder.
can never be achieved, even if more resources are obtained by the nation.

Question 7. Everything else held constant, what would shift the PPC outward?
An increase in the amount of unemployment.
A decrease in the size of the working-age population.
An increase in the quality of labor resources.
A reduction in unemployment
a decline in the formation of new capital.

Question 8.
Combination Clothing Food
A 0 110
B 10 105
C 20 95
D 30 80
E 40 60
F 50 35
G 60 0
According to the table above, if the economy is currently producing at point F, the opportunity cost of 10 additional units of clothing is:
25 units of food
5 units of food
10 units of clothing
35 units of food
3.5 units of clothing

Question 9. Relative price refers to:
The price of a basket of goods stated in 1992 dollars.
a price that is set on the black market.
The price of one good expressed in the terms of the price of another good.
The price of one good expressed in terms of the prices of all other goods.
The money price of a good.

Question 10. According to the law of demand, If the price of CD's decreased, ceteris paribus:
The demand for CDs would increase
The quantity demanded for CDs would increase
The quantity demanded for CDs would decrease
The demand for CDs would decrease
The quantity demanded for CDs would not change.

Question 11.
Price per video Quantity Demanded 1 Quantity Demanded 2 Quantity Demanded 3
$5 10 15 5
4 20 25 15
3 30 35 25
2 40 45 35
1 50 55 45
Refer to the table above. If Quantity Demanded 1, Quantity Demanded 2, and Quantity Demanded 3 are separate individuals demand schedules then at prices: $ 5, 4, 3, 2, 1, market demand is:
30, 40, 50, 60, 70
30, 60, 90, 120, 150
30, 50, 70, 90 ,1100
10, 40, 50, 60, 70
10, 20, 30, 40, 50

Question 12. Which of the following would Not shift the demand curve for golf balls:
demand to increase
A decrease in the popularity of golf.
An increase in the number of golfers
An expected increase in the price of golf balls
A decrease in the price of golf balls

Question 13. A change in consumer tastes for fast food delivered to the home and away from restaurant meals does NOT lead to which of the following:
An inward shift of the demand curve for restaurant meals
An outward shift of the demand curve for home-delivered meals
An increase in the number of resources used for home delivered meals.
A decrease in the number of resources used in restaurant meals
A reduction in the value of resources used in home-delivered food.

Question 14. Competitive firms produce in a manner that ______ costs and _________ profits.
minimizes, minimizes
maximizes, maximizes
eliminates, maximizes
maximizes, minimizes
minimizes, maximizes

Question 15. Consumers often do not know they want something until a firm introduces it. This means that in a market system:
it is the business firms who ultimately determine what is produced
it is the consumer who ultimately determines what is produced because they will purchase the item or not.
it is the entrepreneurs who ultimatly determine what is produced since they invent it.
it is the government who ultimately determines what is produced since the government is always in control.
it is the stockholders who ultimately determine what is produced since they must be able to make money or they won't invest in it.

Question 16. What will happen to a firm that produces something that no consumer wants?
It will remain in business for a long time.
It will produce more.
It will not remain in business very long
it will "buy out" its competitors.
it will grow

Question 17. All of the following are used to justify the intervention of the government in the private economy except:
market imperfections
positive externalities
the existence of private property rights
public goods
incentives to free-ride on others

Question 18. Market imperfection would NOT result from:
imperfect information
prices that reflect the full costs of production and consumption
the absence of warning labels on dangerous products
fraudulent activites by market participants
people having different amounts of information.

Question 19. The market system only works efficiently if the market price reflects:
only the direct costs created in a transaction
only the externalities of a transaction
the full costs of producing and consuming a good or service
the full costs of producing a good, but not consuming it
the full costs of consuming a good, but not producing it

Question 20. Which of the following would not be an appropriate government remedy for a negative externality problem?
taxing the victim of the externality
Establishing a government agency to regulate the problem
Taxing the imposer of the externality
Assigning property rights
None of the above