Knowledge
Identify the choice that best
completes the statement or answers the question.
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1.
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An improvement in production technology will:
a. | shift the supply curve to the left | b. | shift the supply curve to the
right | c. | shift the demand curve to the left | d. | tend to increase equilibrium
price |
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2.
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What is the ultimate decision-factor in all areas of economic study?
a. | Law of diminishing returns | b. | Law of supply and demand | c. | Law of economies of
scale | d. | How incentives motivate human choices |
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3.
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"Because of unseasonably cold weather, the supply of oranges has
substantially decreased." This statement indicates that:
a. | the price of oranges will fall | b. | the demand for oranges will
rise | c. | the amount of oranges that will be available at all price levels has
declined | d. | consumers will be willing and able to buy fewer oranges at each possible
price |
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4.
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The law of supply indicates that:
a. | producers will offer more of a product at low prices than they will at high
prices | b. | the supply curve is downward-sloping | c. | producers will offer more of a product at high
prices than they will at low prices | d. | consumers will purchase less of a good at high
prices than they will at low prices |
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5.
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The basic purpose of the ceteris paribus assumption is to:
a. | determine whether x causes y or vice versa | b. | isolate the
relationship between two variables by assuming all other factors remain constant | c. | allow one to focus
upon macro variables by ignoring micro variables | d. | allow one to focus upon micro variables by
ignoring macro variables |
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6.
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Which of the following does not cause the demand for product K to
change?
a. | an increase in consumer incomes | b. | a change in the price of K | c. | a change in consumer
preferences | d. | a change in the price of substitute product J |
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7.
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A demand schedule:
a. | incorporates the effect of changes in consumer preferences | b. | is a timeline of
prices | c. | reflects the relationship between all quantities demanded and all prices, ceteris
paribus, in a graphical form | d. | is constructed on the assumption that price is
constant |
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8.
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When an economist says that the demand for a product has increased, he or she
means that:
a. | the product has become particularly scarce for some reason | b. | the demand curve has
shifted to the left | c. | the product's price has fallen and,
consequently, consumers are buying a larger quantity of the product | d. | consumers are now
willing to purchase more of this product at every price |
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9.
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Quantity demanded refers to the:
a. | minimum amount of a product that a consumer purchases to continue collecting social
assistance | b. | amount of a product that consumers are willing to purchase at a certain
price | c. | Dependent variable in the relationship between price and quantity
demanded | d. | amount of a product that consumers would be willing to purchase if they only had the
income to afford it |
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10.
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The law of demand states that:
a. | consumers buy more of a given product at high prices than they buy at low
prices | b. | price and quantity demanded are directly related | c. | price and quantity
demanded are inversely related | d. | the larger the number of buyers in a market,
the lower the price of the product |
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11.
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The demand curve for chocolate shifts to the right if:
a. | consumers expect the price of chocolate to fall in the future | b. | the price of
chocolate increases | c. | the government imposes a new tax on
milk | d. | medical studies conclusively find that chocolate offers significant health
benefits |
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12.
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When you hold one or more resources constant, and continue to increase all other
resources, you will experience a continual decline in output per resource. This is known
as:
a. | the falacy of composition | b. | the law of economies of
scale | c. | the law of increasing relative cost | d. | the law of diminishing
returns |
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13.
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The production possibilities curve is most closely related to which of the
following economic laws?
a. | Law of increasing relative cost | b. | Law of economies of scale | c. | Law of supply and
demand | d. | Law of diminishing returns |
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Look at the graph below and answer the following questions.
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14.
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Which point indicates inefficient/incomplete use of resources?
a. | Point A | b. | Point B | c. | Point
C | d. | Point D |
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15.
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Which point is currently not attainable?
a. | Point A | b. | Point B | c. | Point
C | d. | Point D |
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16.
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Which point makes use of all resources?
a. | None of them do | b. | Point B | c. | Point
C | d. | Point D |
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17.
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What is the opportunity cost of producing 700 cars instead of 600?
a. | We don’t know the price or cost | b. | 200 computers | c. | 2000
computers | d. | 2200 computers | e. | 100 cars |
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18.
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Can the company produce 2,200 computers and 700 cars?
a. | No it can’t | b. | Yes it can |
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19.
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Which of the following are the main assumptions we make when analyzing a
microeconomic market using supply and demand graphs?
a. | Markets don’t cost anything, everything is ceterus paribus, and no company is
dominant | b. | Markets are competitive, markets are free, humans are rational seeking to advance
their own self-interests, and conditions are fixed in the short-run but can change over
time | c. | Governments regulate markets to make sure they’re efficient, the market is
capitalistic, resources are scarce, and humans are rational | d. | Resources are
scarce, markets are free, and consumers vote with their purchases |
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Multiple Response
Identify one or more choices
that best complete the statement or answer the question.
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20.
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Junior Palmer wins millions in a lottery and he has a love of automobiles. What
happens to the market for automobiles in his community? Pick ONE correct result, and ONE correct
cause.
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21.
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A terrible hurricane affects the orange crop. What happens to the supply of
oranges? Pick ONE correct result, and ONE correct cause.
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22.
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The NHL orders the Toronto Maple Leafs to significantly drop their ticket
prices. What will happen?
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