1. Which of the following will shift an economy's Production Possibilities Curve (or Production Possibilities Frontier) to the right (i.e. move outward)?
An improvement in technology
An increase in the number of retirees (reduction in work force)
Decrease in university graduates
A decrease in land, labor, or capital
2. The term "opportunity cost" refers to:
equal opportunity programs
the monetary cost of seizing good opportunities
An increase in the availability of natural resources
the alternative that is sacrificed when a choice is made
Out of pocket expenses a firm must pay
3. The Production Possibilities Curve (PPC) is bowed out from the origin of the graph, which represents:
Increasing opportunity costs.
Decreasing opportunity costs.
The fact opportunity costs are no longer relevant.
Constant opportunity costs.
4. In the Circular Flow Model, Businesses ___ the resources market and ___ the market for goods and services.
supply to; supply to
supply to; buy from
buy from; supply to
buy from; buy from
5. In the market for goods and services ("Real Flow" of the Circular Flow Model):
households buy resources from firms
households supply goods and services to firms
firms supply resources to households
firms supply goods and services to households
6. Which of these does 'not' distinguish capitalism, communism, and socialism from each other:
Who Makes the Production Decisions.
Who Buys the Goods.
Who Sets the Prices.
Who Owns the Resources.
7. Economists view pollution as an economic problem that arises because
private enterprise always minimizes the amount of pollution produced.
profitable firms rarely pollute.
as the economy grows, the level of pollution declines.
firms that pollute do not pay the full external cost on environment.
pollution costs are borne by the government.
8. Which of the following is not primarily a market economy?
Canada
Cuba
Mexico
Great Britain
United States
9. Production Possibilities Frontier represents
All resources be unlimited
Labor be unlimited
Time be flexible
Our economy at full employment and full production
10. Which of the following is not an example of the definition of economics?
Shortage of resources cause people to substitute.
Goods and services wanted by people exceed the availability of resources to produce them.
There are many goods and services that no one really wants.
Goods and Services are scarce relative to the demand for them.
11. The 'Law of Demand' implies that as the 'Price' of a good increases,
people feel that its price may not come down in the future, so they buy a large quantity now rather than later
consumers tend to shift their purchases to relatively less expensive substitutes
people will stop buying in the hope that the commodity will be cheaper in the future
people in general do not care whether prices rise or fall.
None of the above
12. Which of the following will change the 'Quantity' demanded (Qd) for strawberries?
a change in the cost of strawberry farmers
a change in the price of strawberries
decrease of the strawberry subsidies
a change in the income of strawberry producers
None of the above
13. An increase in the price of GM Cars would be most likely to cause:
demand for Ford cars (Substitute of GM) will increase.
demand for Ford cars(Substitute of GM) will decrease.
supply of Ford cars(Substitute of GM) will decrease.
the quantity demanded for GM cars will not change.
None of the above
14. Which of the following does not shift the demand curve for new cars?
changes in the retail price of new cars.
changes in income.
changes in the prices of substitutes and complements
changes in tastes for new cars
changes in the driving population.
15. Which of the following will cause an increase in demand for home remodeling, other things being equal?
An increase in the price of remodeling materials
An increase in consumers' incomes
A fall in the number of remodeling businesses
A fall in the number of home buyers
16. According to the 'Law of Supply,' an increase in 'Quantity' supplied (Qs) of a given good is caused by:
consumer demand
high salaries
high energy prices
an increase in the price of the good.
high business taxes
17. Which of the following would shift the supply curve for a product to the right (i.e. Supply would Increase)?
an increase in the cost of a resource used in the good's production.
the expectation of a higher oil price in the near future.
a decrease in the demand of the product.
an increase in the price of an alternative good.
an improvement in the technology for producing the good.
18. Which of the following will not cause a decrease in the demand for apples?
Reports surface that apples are infected with a deadly virus.
Consumers' incomes drop.
The price of apples rises.
Consumers expect the price of apples to decrease in the future.
19. As coffee price goes up just a little bit, if quantity demanded [Qd] drops by a large amount,
The supply of coffee is price elastic.
The demand for coffee is price elastic.
The supply of coffee is price inelastic.
The demand for coffee is price inelastic.
20. If a luxury furniture has an 'Elastic' demand, this means that
consumers are relatively insensitive to a change in the price of the furniture.
consumers are no longer interested in the price of the furniture.
consumers are relatively sensitive to a change in the price of the furniture.
producers are relatively insensitive to a change in the price of the furniture.
21. A 'perfectly inelastic' supply curve tells us that
Consumers can buy any quantity they want at only 1 specific price.
Producers only have a specific quantity for sale at any price.
The supply curve is parallel to the quantity axis.
Suppliers can easily change the quantity produced.
22. If SUVs have an 'elastic' demand, the automaker would ______ in order to 'increase' total revenue.
decrease price
increase price
hold price steady
stop selling
23. If a used car has an 'elastic' demand, the used car dealer would ______ in order to 'increase' total revenue.
decrease price
hold price steady
increase price
stop selling
24. If a 10 percent big increase in the Price of heating oil causes a very tiny 0.1 percent drop in the quantity demanded (Qd) of heating oil in cold winter, then the price elasticity of demand (Ep) is
perfectly inelastic.
perfectly elastic.
inelastic.
elastic.
25. If a 10 percent big increase in the Price of gas causes a very tiny 1 percent drop in the quantity demanded (Qd) of gas, then the price elasticity of demand (Ep) is
perfectly elastic.
elastic.
inelastic.
perfectly inelastic.
26. Suppose we observe that as an airline company decreases its ticket price, its total revenue increases. Which of the following is a possible value of its price elasticity of demand?
2
0.5
0.1
1
27. Suppose we observe that as a firm decreases its price its total revenue decreases. Which of the following is a possible value of its price elasticity of demand?
1
10
0.5
5
28. Demand for a good is price inelastic if consumers refuse to substitute any other good for it.
This is sometimes true if the elasticity coefficient is greater than 1.
This is false.
This is true.
This is a trick question as substitutes have nothing to do with price elasticity of demand.
29. Demand is more "inelastic" when
the demand curve is steeper
the time period becomes shorter
a good takes a smaller percentage of a consumer's budget
All of the above
30. If you 'always' drive regardless of pump gas Price, then you have a (an) _____ demand.
elastic
very inelastic
indeterminate
perfectly elastic