1Why does scarcity make it necessary that every economy has an economic system?
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a. / Scarcity is a lack of money: an economic system generates the money people need.
b. / Since resources are limited, a society has to organize itself to make choices as to what to produce.
c. / Scarcity is when a country has too little to live on, so the economy has to expand those resources.
d. / Scarcity is the tendency of the production system to become unstable: an economy stabilizes this system.
2Which of the following is the best description of the economic problem of scarcity?
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a. / In many economies, there are very few resources.
b. / Resources are often very difficult to find. .
c. / Some people don't have enough money to buy what they need.
d. / Resources are limited, but people's wants are not.
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3The best definition of Economics is the study of:
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a. / Investments in stocks and movements in investment markets.
b. / Society’s choices about how to use its scarce resources.
c. / How businesses generate profits in the market system.
d. / Money: its exchange and its growth.
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4Macroeconomics is the part of economics that focuses primarily on:
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a. / Government regulation of market failure.
b. / The circulation of money in the economy.
c. / Investments and growth in individual industries.
d. / Performance in the entire economic system
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5When economists say that there are "optimal outcomes" in the market place, they mean that:
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a. / Business decisions have led to profits in the marketplace have been maximized.
b. / Market signals have lead to a use of resources that is the best possible.
c. / Prices on consumer goods are realtively low and yet business profits are relatively high.
d. / Everyone that wants a good or service can get it.
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6A decrease in available resources would cause:Top of Form
a. / An economy to move inside its production-possibilities curve.
b. / The production-possibilities curve to shift inward.
c. / Opportunity costs to increase.
d. / The unemployment of resources.
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7The factors of production are:
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a. / Labor, time and financial investment.
b. / Labor, land, capital and entrepreneurship.
c. / Wages, interest, prices and output.
d. / Goods and services.
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8Which of the following is an investment in the economic sense?
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a. / Putting your savings in corporate bonds.
b. / Buying and holding stocks for several years.
c. / Searching for a better job.
d. / Creating tools or equipment used to produce goods.
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9Assuming an economy were already using its available resources efficiently; which of the following will, all else equal, cause an increase in the amount of productive capacity in the future?
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a. / Increase consumer spending.
b. / Increase the amount of capital stock.
c. / An increase in the value of the stock market.
d. / An increase in the money stock.
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10
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What is human capital?
a. / Abilities, knowledge and experiences of workers.
b. / Public education.
c. / Hours of labor used to produce a good.
d. / Financial investments made by workers.
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11An example of human capital is:
a. Stocks owned by an individual.
b. Machine used by a worker.
c. Time you spend doing a task.
d. The ability to design a computer chip.
12 A point on a nation's production-possibilities curve represents:
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a. / An undesirable combination of goods and services.
b. / Combinations of production that are unattainable, given current technology and resources.
c. / Levels of production that will cause both unemployment and inflation.
d. / The full employment of resources to achieve a particular combination of goods and services.
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12 If the economy is originally at the production-possibilities curve PP1, a move from C to A would reflect: Top of Form
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14Given the same economy- originally with PP1, an increase in unemployment would be best represented in by a movement from point:
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a. / C to point A.
b. / D to point C.
c. / C to point B.
d. / E to point D.
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15Which of the following news items are Macroeconomic issues?
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a. / Prices of Cellular Service falls with new Portability Ruling.
b. / Falling Income levels lead to Falling Consumer Expenditures.
c. / Producers Of Electricity Have Slowed Production To Increase Sales Revenues.
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16If you purchase a computer that was produced this year, to use in your schoolwork, it will count in GDP as:
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a. / Consurmer durable
b. / Investment
c. / Manufacturing
d. / It is added as net imports, since part of the good was pobably imported.
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17Economic production is defined as:
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a. / An activity that produces a money income.
b. / An activity that uses resources and provides benefits.
c. / A product that is sold for more than it costs to produce
d. / A good or service produced by a private company.
18In economics, what does it mean for production to be efficient?
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a. / When producers make profit on their production.
b. / Producing at the least possible dollar cost.
c. / It is the most possible output given the resources.
d. / It is produce in the shortest possible time.
e. / Made with the most advance technology.
19
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Which of the following is an investment in the economic sense?
a. / Putting your savings in corporate stocks.
b. / Raising funds to start a new business.
c. / Searching for a better job.
d. / Using labor and metal to make a machine.
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20Opportunity cost may be defined as the:
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a. / The value of what we give up to produce something else.
b. / The total amount of money that it costs in producing a product.
c. / Dollar cost of purchasing a product we need.
d. / Difference between what is produced and what is sold.
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21The opportunity cost of producing a wool sweater is equal to:
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a. / Dollar payments for the wool used in making it.
b. / The time it would take a person to make it.
c. / Whatever one would give up by using resources for the sweater. .
d. / The loss of consumer utility in not having a sweater.
22The sector that has increased the most during the 20th century and is now the largest sector in the economy is the ______sector.
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Ceteris paribus means:
a. / Allowing the free market to decide, not government.
b. / Changing prices to see how demand (or supply) shifts.
c. / The assumption that everything else stays the same.
d. / Holding prices constant to see how other factors affect demand.
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24Demand, as defined in economics, is:
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a. / The amount that consumers want and/or need of the good.
b. / The amounts that buyers are willing and able to purchase at various prices.
c. / The satisfaction that consumers expect to get from the good.
d. / The quantity that consumers actually buy of the good.
25A Demand curve gives us what information?
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a. / How much people need a particular good.
b. / The quantity of a good that people would buy at various prices.
c. / The value of a good and the cost of producing a good.
d. / The amounts of a good that consumers are willing to buy at various incomes.
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26The Law of Demand states that:
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a. / The economy should produce only the amount of a good that people demand.
b. / All else equal, if the price decreases, people will be willing to buy more of the good.
c. / If more of the good is supplied, more will be demanded.
d. / If the demand for a good increases, all else equal, the price of the good will decrease.
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27If consumers expect their incomes to increase, ceteris paribus:
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a. / Supply curve shifts to the left.
b. / Supply curve shifts to the right.
c. / Demand shifts to the left.
d. / Demand shifts to the right.
28If the costs of producing steak dinners increases, what will happen in the market?
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a. / Demand decreases, causing a surplus. Price will increase.
b. / Demand decreases and therefore producers will produce less. Price will decrease.
c. / Supply decreases, causing a shortage, which makes price increase.
d. / Producers increase the price by the cost increase, which causes a surplus and then price will fall.
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29Which of the following is a determinant of the Supply of red ballpoint pens?
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a. / The incomes of students and teachers.
b. / A recent increase in the popularity of use red pens.
c. / The price of red ink used to make pens.
d. / All of the above.
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30If the quantity supplied of a good is greater than the quantity demanded at the current price, then:
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a. / Price will decrease until it reaches the equilibrium price.
b. / The demand curve will shift to the left to create an equilibrium.
c. / The supply curve will shift to the right to create an equilibrium.
d. / There is a shortage of the good.
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31Each of the following changes would, by itself (ceteris paribus), cause a shift in the Demand curve for mechanical pencils except :
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a. / More school assignments are required to be written in pen (not pencil)
b. / Mechanical pencils become more popular with older people.
c. / The cost of producing mechanical pencils falls.
d. / A fall in the price of pencil leads (used with the pencils).
32The law of supply implies that:
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a. / The higher the price, the more product firms are willing to supply.
b. / The higher the cost, the more firms have to sell to make profits.
c. / The lower the price, the more output firms will want to sell.
d. / The supply curve slopes downward (from left to right), since firms will lower price over time.
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33If the technology of producing tires improves, lowering the cost of producing tires:
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a. / The supply curve for tires will shift to the right.
b. / The supply curve for tires will shift to the left.
c. / Both the supply and demand curves will shift to the left.
d. / The supply curve for tires will stay the same, but the demand curve will shift to the left.
34When the quantity supplied in a market is less than the quantity demanded, we expect the price to
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a. / Increase, because producers will raise price to maintain their profits.
b. / Increase, because there is a shortage of cameras at the current price.
c. / Decrease, because producers’ inventories are increasing.
d. / Decrease, because consumers will be willing and able to buy less.
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35In the Figure below at a price of $40:
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a. / The quantity supplied is greater than the quantity demanded.
b. / There is a surplus of 20 units.
c. / With no interference in the market, there is a downward pressure on price.
d. / All of the above.
36IN the market represented in the figure below, at a price of $5
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a. / The quantity demanded is 10 units.
b. / The quantity demanded is 50 units.
c. / The quantity supplied is 30 units.
d. / The quantity supplied is 50 units.
37A change in demand is the same as saying that the demand curve has shifted, which means that:
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a. / Consumers are willing to buy more (or less) of the good at each price.
b. / When consumers cannot locate one type of good, they shift to buying another.
c. / The price and quantity demanded will be at a different place on the same demand curve.
d. / Consumers are wiling to buy more of a good because its price will be lower.
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38A change in quantity supplied of leather shoes (not a shift in the curve, but a movement along the supply curve) would be the result of:
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a. / A change in the price of leather shoes.
b. / A change in technology.
c. / An increase in the number of sellers.
d. / All of the above.
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39An increase in the price of a good:
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a. / Causes a shift in the supply curve to the right.
b. / Results in a change in the amount that producers would be willing to produce at the original price.
c. / Results in an increase in quantity supplied, which is a movement to a new point on the original supply curve
d. / Results in a change in quantity supplied AND a shift in the supply curve.
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40A leftward shift of the market demand curve for HDTVs, ceteris paribus, causes equilibrium:
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a. / Price to increase and quantity to decrease.
b. / Price to increase and quantity to increase.
c. / Price to decrease and quantity to decrease.
d. / Price to decrease and quantity to increase.
41A decrease in the market supply of Airline flights, ceteris paribus, causes equilibrium:
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a. / Price to increase and quantity to decrease.
b. / Price to increase and quantity to increase.
c. / Price to decrease and quantity to decrease.
d. / Price to decrease and quantity to increase.