What is a scarce good? A good in which the choice of one alternative requires that another be given up A good in which the choice of one use does not require that we give up another A good in which the cost of one is equal to the cost of another A good in which the cost of alternative goods cannot be calculated _
1.
When considering the issue of scarcity, which one of the following
questions must be answered? How should the goods or services be distributed? What should be produced? Where should the goods or services be produced? What should the goods or services cost? _
2.
The study of individual consumers and the decisions they make is
contained in the field of: Financial Economics Natural Economics Macroeconomics Microeconomics _
3.
Which of the following may be an example of an opportunity cost when
you make the decision to play a video game rather than studying for your
economics exam? A Good Grade on the Economics Exam A good score on your video game Your time is scarce, therefore there is no opportunity cost The price of the video game _
4.
John purchases a new tractor to help him produce the vegetables he sells
at the farmers market. What type of production is the tractor? Capital Natural Resource Equipment Labor _ 5.
One requirement for total utility maximization is that budgets are fully
expended. What is the second requirement that must be met? Marginal indifference rates are equal across all consumption choices Total utility to price ratios are equal across all consumption choices Marginal utility to price ratios are equal across all consumption choices Marginal rates of substitution are equal across all consumption choices _
6.
If all the factors of production that are available for use under current
market conditions are being utilized, which of the following would be true? The economy has achieved full employment The economy will have high unemployment There will be a high level of under-employment Poverty will increase sharply _
7.
In theory, perfect price discrimination _____. Decreases consumer surplus Increases deadweight loss Decreases the monopolist's profits Lowers prices _
8.
A single firm sells hammers at a retail price to consumers for $18.99 each.
The same firm sells the same hammer to the government at a price of
$678.00 each. What is this known as? Price discrimination Rule of reason Predatory pricing Price fixing _
9.
How do surpluses arise? When quantity demanded is greater than quantity supplied When quantity supplied is greater than quantity demanded When quantity supplied is less than quantity demanded When quantity supplied is equal to quantity demanded _
10. Which of the following is an example of a demand shifter? Input cost increases Price fluctuations Production technology advances Buyer expectations _
11.
If a reduction in the price of one good increases the demand for another,
the two goods are called what? Substitutes Normal goods Inferior goods Complements _
12.
Which of the following represents how much a market can offer? Marginal Utility Quantity Demanded Supply Demand _
13.
An decrease in supply is shown as a shift of the supply curve in which
direction? Right Left Down Up _
14.
When the price of labor increases significantly for car manufactures, what
change will take place? An increase in the quantity suppliers will offer at any price A decrease in the quantity suppliers will offer at any price A shift in the supply curve to the right A movement along the supply curve _
15.
What is net benefit? The difference between consumer surplus and producer surplus The measure of consumer utility The sum of consumer surplus and producer surplus The efficiency condition of a market's allocation _
16.
It is time for lunch and you go out with a group of friends to a local pizza
restaurant. You are very hungry and eat one piece of pizza. It provides a
high level of utility. You eat a second piece of pizza and it provides a lower
level of satisfaction. You eat a third piece of pizza and it provides a low
level of utility, or satisfaction. In economics, what is this an example of? The law of diminishing utility The law of marginal utility The law of satisfaction utility The law of diminishing returns _
17.
During the last 10 years in the US there has been an increase in the
number of law students. What effect can be predicted by this increase in
supply? Wages for attorneys will decrease and unemployment will increase Wages for attorneys will increase and unemployment will decrease Wages will not be impacted, but unemployment will increase Wages for attorneys and unemployment will both decrease _
18.
The amount by which total utility rises with consumption of an additional
unit of a good, service, or activity, all other things unchanged, is called
which of the following? Total utility Average utility Utility benefit Marginal utility _
19.
What is the incidence of a sales tax in a market where supply is relatively
less price-responsive than demand? Buyers will pay the tax to government Sellers will bear more of the economic burden of the tax than buyers Buyers will bear more of the economic burden of the tax than sellers Sellers will pay the tax to government _ 20.
Which one of the following is an example of third degree price
discrimination? Purchasing a car at a dealership that negotiates the total cost of the vehicle Purchasing a case of paper towels at a lower cost than if purchased individually A local clothing retail store that offers a "Buy One Shirt, Get the Second one at
Half Price" Charging a lower price to senior citizens at a local restaurant _
21.
If supply is unit elastic and demand is inelastic, a shift in which curve
would cause an effect in quantity? Marginal returns curve Supply curve Demand curve Marginal product curve _
22.
Which of the following is an example of a public good? National Park annual paid membership Radio station Welfare dollars Newspaper _
23.
If a sharp increase in the price of insulin has only a small effect on the
amount of insulin purchased, then what is the demand for insulin
considered to be? Price driven Unit elastic Elastic Inelastic _
24.
If the price elasticity of a computer is -5.3, its elasticity is said to be which
of the following? Price inelastic Price elastic Demand elastic Unit price elastic _ 25.
If a good or service is inferior, then an increase in income will cause which
of the following to occur? Demand for the good or service will decrease Demand for the good or service will increase Supply of the good or service will increase Price of the good or service will increase _
26.
If the price elasticity of oil is 3.0, the supply of oil will do what when the
price is decreased by 2%? Increase by 2% Increase by 3% Decrease by 6% Decrease by 3% _
27.
Using the table below, what would the marginal revenue for three units of
output be?
Units of Output Price Total Cost Total Revenue 1 $7.00 $12.00 $7.00 2 $7.00 $14.00 $14.00 3 $7.00 $16.00 $21.00 4 $7.00 $18.00 $28.00 5 $7.00 $20.00 $35.00 $14.00 $7.00 $9.00 $2.00 _
28.
Please refer to the table below. Using the information from the table, how
many workers will the firm hire if the equilibrium wage rate is $800 per
week?
Quantity of Labor Total Output Marginal Product of Labor Value of Marginal Labor 1 250 250 $1,000 2 600 350 $1,400 3 900 300 $1,200 4 1,125 225 $900 5 1,300 175 $700 6 1,450 150 $600 7 1,560 110 $440 8 1,670 70 $300 6 Workers 3 Workers 5 Workers 4 Workers _
29.
A local pizza restaurant is considering hiring another worker at a wage of
$60 per day. The owners hope an additional worker would be able to make
40 pizzas per day, and each pizza would add $2.00 in revenue. Using the
information provided, what is the marginal product revenue of hiring an
additional worker? $120.00 per day $20.00 per day $80.00 per day $40.00 per day _
30.
Which theory states that public officials are driven by self interest? Public choice theory Public interest theory Consumer protection theory Economic theory _
31.
Rent controls are examples of what type of government induced market
constraint? Price ceilings Supply shifters Demand shifters Price floors _
32.
What conditions do price ceilings create? Artificial scarcities Artificial supply decreases Artificial surpluses Artificial demand increases _
33. What is it called when a firm can consider all factors of production as
"variable" during the planning period? Long run Variable run Fixed run Short run _
34.
What is the relationship called that exists between factors of production
and the output of a firm? Total production Production growth A production plan A production function _
35.
Which points on the graph represent diminishing marginal returns? AI AD HI DH _
36.
Joe's Pizza is thinking of increasing the amount of Pizza Cooks from three
to five. According to the table below, what will be the result of this
decision?
Pizza Cooks Hired Output of Pizza 1 10 2 20 3 30 4 35 5 38 Joe's Pizza will experience diminishing marginal returns Joe's Pizza will experience negative marginal returns Joe's Pizza will experience increasing marginal returns Joe's Pizza will experience economies of scale _
37.
Sally is a receptionist for a local company. She uses a phone several times
throughout the day. The phone is considered what form of a factor of
production? Labor Entrepreneurship Land Capital _
38.
Product price, in a perfectly competitive market, will be determined by
what? Product differentiation Competition, and competitive advantage Demand and Supply in the market The amount of product a firm is willing to sell _
39.
Which one of the following statements is true when comparing a
monopolistic firm to a perfectly competitive firm? Monopolistic firms have very few barriers to entry, where perfectly competitive
firms has many barriers to entry Monopolistic firms are price takers, where perfectly competitive firms are price
setters Monopolistic firms can determine price, where perfectly competitive firms accept
the market price Monopolistic firms have many competitors, where perfectly competitive firms have
only a few competitors _
40.
In what ways are a price-taking firm and a monopoly alike? Their price exceeds marginal cost at the profit-maximizing level of output for both In the long run, they both earn zero economic profits They both maximize profits by choosing an output where marginal revenue equals
marginal cost, provided that price exceeds average variable cost They both have prices that equal marginal revenue _
41.
In the short run, the slope of the total cost curve is which of the following? Marginal cost Minimum cost Average cost Total cost _
42.
A firm that acts as a price setter possesses which of the following? Monopoly power Cartel power Pure-competitive power Democratic power _
43.
Assume capital and labor are complementary factors of production. If the
government implemented regulation that reduces the amount of capital,
what will be the impact to the amount of labor employed? The amount of labor will increase The amount of labor will decrease There will be no change to the amount of labor, however prices will decrease There will be no change in the amount of labor _
44.
Which of the following is a characteristic of monopolistic competition
when compared to a monopoly? High barriers to entry Easy entry and exit Single seller Price setter _ 45.
What do firms face when products in a monopolistically competitive
industry are differentiated? A horizontal supply curve A downward-sloping supply curve A downward-sloping demand curve An upward-sloping demand curve _
46.
Which of the following is a benefit that advertising provides to
consumers? Always reduces product prices through improved consumer knoweldge Reduces competition between firms Discourages price competition Informs consumers about the availability of new products _
47.
Less than the socially optimal level, since the price of the product exceeds
marginal cost The socially optimal output level, since the firm's marginal revenue equals its
marginal cost Greater than the socially optimal level, since the firm's marginal cost exceeds
marginal revenue Greater than the socially optimal level, since the firm earns an economic profit _
48.
In 1999, Coca Cola announced a business strategy that involved a new
vending machine that would be able to charge more for a bottle of Coke on
hot days. What makes this strategy a form of price discrimination? On hot days, the demand for Coke is more elastic than on cool days Consumers are willing to pay higher amounts for Coke, even on cool days The market equilibrium price of Coke is lower than the output caused by providing
products from a vending machine On hot days, the demand for Coke is more inelastic than on cool days 49.
Under oligopoly, why do a few large firms control most of the production
and sale of the product? Marginal costs rise as production expands Average total costs rise as production expands Diseconomies of scale make it difficult for small firms to compete Economies of scale make it difficult for small firms to compete

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