unit+one--basic+economic+concepts

Unit One--Basic Economic Concepts

Answer page--Unit One


 * Concepts include:** Scarcity, Choice, Opportunity cost, PPF, Basic Marginal Benefit/Marginal Cost Analysis, Comparative and Absolute Advantage, Demand, Law of Diminishing Marginal Benefits, Supply, Consumer and Producer Surplus, Allocative Efficiency, Deadweight Loss, Elasticity, Price Floors and Ceilings

(Mahsa Poorak) 1. Which of the following is a determinant of demand? A) Technology B) Taxes C) Resource prices D) Price expectations E) Consumer income

(Mahsa Poorak) 2. Which of the following would correspond with the shift in the graph shown above? A) A decrease in the money income of consumers B) An increase in taxes C) An increase in the consumers preferences for a product D) A drop in the price of raw materials E) An increase in the number of consumers in the market

(Mahsa Poorak) 3. A luxury good is A) More elastic than a necessity good B) Less elastic than a necessity good C) Has an elasticity coefficient that is less than one D) Is not sensitive to price changes E) Is perfectly inelastic

(Mahsa Poorak) 4. The Law of Diminishing Marginal Benefits states that A) A lower priced good can be substituted for a higher priced one B) The government holds back something as a result of scarcity C) Income goes farther at a lower price D) Each successive unit of a product provides less utility E) As price falls, quantity demanded rises

(Mahsa Poorak) 5. Which of the following is an example of a price ceiling? A) The price of a cheeseburger at Mcdonalds B) The price of an automobile C) Rent controls D) Payment a babysitter receives E) The price of over the counter medicine

(Mahsa Poorak) 6. The opportunity cost of eating at Chik Fil A for lunch is A) The dollar amount the lunch will cost B) Lunch at another restaurant C) Waiting in a line at Chik Fil A D) The cost of transportation to Chik Fil A E) The amount of time spent eating dinner

(Mahsa Poorak) 7. Which of the following limits options and necessitates that an economy make choices? A) Scarcity B) Production C) Opportunity cost D) Demand E) Price

(Mahsa Poorak) 8. The right mix of goods and services for our economy is A) Law of demand B) Productive efficiency C) Comparative advantage D) Absolute advantage E) Allocative efficiency

(Mahsa Poorak) 9) Which of the following would cause the shift demonstrated in the above graph? A) A shortage B) An increase in demand C) An increase in consumer incomes D) A surplus E) A decrease in supply

(Mahsa Poorak)

10) On a production possibility curve, outside of the curve is A) An inefficient use of resources B) Possible, but not sustainable C) Productive efficiency D) Allocative efficiency E) Impossible

(Ryan Cox) 11. Scare economic resources that are considered to be I. Cheap II. Limited III. Common A) I only B) II only C) III only D) I and III E) I, II and III

(Ryan Cox) 12. Which of these items would be considered scarce? I. Diamonds II. Fruit III. Gold A) I only B) II only C) III only D) I and III E) I, II and III

(Ryan Cox) 13. is defined as the value of the best alternative foregone when a decision is made. A) Absolute Advantage B) Comparative Advantage C) Opportunity Cost D) Trade-off E) Demand

(Ryan Cox) 14. What are the money payments called made to entrepreneurs, owners of land, owners of labor, and owners of capitol? (The order of the answer needs to match the question) A) Rent, Wages, Interest, and Profits B) Interest, Wages, Rent, and Profits C) Rent Wages, Dividends, and Interest D) Rent, Profits, Wages, and Interest E) Profits, Rent, Wages, and Interest

(Ryan Cox) Use the Table below to answer the following question
 * = Spain ||||= France ||
 * = Food ||= Cars ||= Food ||= Cars ||
 * = 0 ||= 20 ||= 0 ||= 30 ||
 * = 2 ||= 16 ||= 5 ||= 24 ||
 * = 4 ||= 12 ||= 10 ||= 18 ||
 * = 6 ||= 8 ||= 15 ||= 12 ||
 * = 8 ||= 4 ||= 20 ||= 6 ||
 * = 10 ||= 0 ||= 15 ||= 0 ||

The two nations each produce food and cars. The table above shows points on each nation’s production possibility curve. 15. In Spain, The opportunity cost for obtaining the first two units of food is how many units of cars? A) 2 B) 4 C) 8 D) 12 E) 16

(Ryan Cox) 16. A caller to a TV show says that large corporations are “extremely greedy exploiters of the poor.” This is an example of: A) The economic perspective B) The fallacy of composition C) Loaded Terminology D) Ceteris Paribus E) Law of Demand

(Ryan Cox) 17. Macroeconomics if the study of A) Government involvement in the economy B) Individual Firms C) Foreign Firms D) Specific markets of goods E) The entire economy

(Ryan Cox) 18. The Market System has which of the following fundamental characteristics? A) Central planning by the government B) A standard wage for all C) Government set prices D) Unselfish behavior E) Property rights



(Ryan Cox) 19. Refer to the graph above. The Economy will experience the most unemployment at which point A) Point A B) Point B C) Point C D) Point D E) Unemployment is the same at all points



(Ryan Cox) 20. The demand curve needs to have (a) so that wheat prices decrease A) Right shift B) Left shift C) No shift D) Supply shift up E) Supply shift down

21. The slope of a typical production possibilities curve reflects… a. Increasing opportunity cost b. Increasing fixed costs c. Constant returns d. Decreasing marginal cost e. Increasing returns (Alex Walters)

22. If George can make 2 paper airplanes and 3 origami cranes in a minute and Paul can make 4 paper airplanes and 2 origami cranes in a minute, then… a. George has an absolute advantage in paper airplanes b. Paul has an absolute advantage in origami cranes c. George has a comparative advantage in paper airplanes d. George has a comparative advantage in origami cranes e. Neither has an advantage (Alex Walters)

23. One country enjoys a comparative advantage over another in producing wheat when… a. It has more wheat plants than the other country. b. It can produce wheat at a lower opportunity cost than the other country. c. It does not need to import wheat. d. It wants to export as much wheat as possible. e. It wants to import more wheat. (Alex Walters)

24. If the cost of flour rises and flour is a major ingredient in cake, then the cake… a. Demand curve shifts to the left. b. Supply curve shifts to the left. c. Supply curve shifts to the right. d. Demand and supply curves both shift to the right. e. Supply nor demand curves shift (Alex Walters)

25. Which of the following is imposed when the government wants sellers to receive some minimum reward for their goods and services? a. Price ceiling b. Capital gain c. Price floor d. Equilibrium law e. Marginal gain (Alex Walters)

26. Graph A illustrates while Graph B illustrates. a. Elastic demand/Elastic supply b. Inelastic supply/ Inelastic demand c. Elastic demand/ Inelastic demand d. Elastic supply/ Inelastic supple e. Inelastic demand/ Inelastic supply (Alex Walters)

27. Which of the following is NOT a factor determining elasticity? a. The availability of substitutes b. Amount of income available to spend on goods c. Time d. Inflation e. All of the above are determining factors in elasticity (Alex Walters)

28. A decrease in income should… a. Shift demand for an inferior product outwards b. Shift demand for an inferior product inwards c. Shift supply for an inferior product outwards d. Shift supply for an inferior product inwards e. Shift neither the supply nor the demand for an inferior product (Alex Walters)

29. An economy may operate outside the Production Possibility Frontier if… a. It is not utilizing its resources fully b. It is being productively efficient c. It is a mixed economy d. It invokes a contractionary fiscal policy e. It is trading with other economies (Alex Walters)

30. Resources in an economy… a. Are always fixed b. Can never decrease c. Always increase over time d. Are limited at any moment in time e. Are only limited at certain times (Alex Walters)

(Kyle Speed) 31. What is the opportunity cost of corn in Brazil?

A. 2/5 Wheat B. 2/5 Corn C. 5/2 Wheat D. 5/2 Corn E. 2 Corn
 * Country || Corn || Wheat ||
 * Brazil || 6 || 15 ||
 * France || 20 || 7 ||

(Kyle Speed) 32. PPF (Production Possibilities Frontier) is? A. the ability to produce something more efficiently B. law that states when more of a product is initially being produced, the higher the opportunity cost will be to produce still more C. economic problems faced by individual units within the overall economy D. economics analysis that draws conclusions based on logical deduction or induction E. the combinations of two goods that can be produced if the economy uses all of its resources fully and efficiently

(Kyle Speed) 33. All the following are determinates of demand except? A. number of consumers B. subsidies C. tastes and preferences D. price of related goods (substitutes and complements) E. consumer income

(Kyle Speed) 34. The range of output over which smaller and smaller additional units of output are produced as successive equal increments of a variable input are added to fixed quantities of other inputs in the short run is the law of ? A. comparative advantage B. diminishing marginal returns C. demand D. diminishing marginal benefit E. increasing cost

(Kyle Speed) 35. Use the graph to answer the question below What line on the graph shows a price ceiling? A. E B. EB C. AB D. AE E. None of the above

(Kyle Speed) 36. Which statement is true about dead-weight loss? A. Dead-weight loss is the gain to society in the form of a reduction of consumer surplus from a competitive norm beyond any surplus reduction from a monopoly profit B. Dead-weight loss is the loss to society in the form of a reduction of consumer deficit from a competitive norm beyond any surplus reduction from a monopoly profit C. Dead-weight loss is the loss to society in the form of a reduction of consumer surplus from a competitive norm beyond any surplus reduction from a monopoly profit D. Dead-weight loss is the gain to society in the form of a reduction of consumer deficit from a competitive norm beyond any surplus reduction from a monopoly profit E. Dead-weight loss is the loss to society in the form of a reduction of consumer surplus from a competitive norm beyond any deficits reduction from a monopoly profit

(Kyle Speed) 37. Price elasticity of demand or supply which has a numerical coefficient >1 is? A. elastic B. unit elastic C. inelastic D. cross elastic E. numerical elastic

(Kyle Speed) 38. All the following are determinants of Supply except? A. number of sellers B. costs of production C. technology D. consumer income E. taxes

(Kyle Speed) 39. The channeling of resources (land, labor, capital, entrepreneurial ability) to their most productive and desired uses is? A. measures of efficiency B. technological efficiency C. none of the above D. pareto efficiency E. a locative efficiency

(Kyle Speed) 40. Use the graph to answer the question below

Which letter represents a consumer surplus? A. A B. B C. C D. D E. None of the above



41. I  n What why could country A maximize its productivity? a.   Produce both computer chips and shirts b.   Produce shirts and trade them to country B for computer chips c.   Produce computer chips and trade them to Country B for shirts d.   Neither, Country B would utilize its time by producing both goods e.   Neither Countries would profits from trade.

(John Fleming) 42.   What are the reasons for specialization a.   Specialization makes uses of difference in abilities b.   Specialization fosters learning by doing c.   Specialization saves time by allocating resources properly d.   None of the above e.   All the above

(John Fleming) 43.   When the best decision is chosen over a list of alternatives including the next best alternative this refers tp the concept of? a.   Substitution b.   Intelligent business c.   Comparative advantage d.   Opportunity cost e.   All the above

(john Fleming) 44.   In theoretical conjection the ideals and economic theorams are absolute, then why is applying economic strategy’s so difficult in real life application? a.   Human inefficeiny b.   Corruption c.   Lack of international co-operation d.   Allocation of resources properly e.   Taxes

(john Fleming) 45.   What are scarce resources? I.   Land II. Capital III. Labor IV. Entreneurial ability a.   I and II    b.    I and III c.   I, II, III and IV    d.    II, III and IV    e.    None of the above

(John Fleming)

46.     The Graph above represents the production possibilty Frontier, what products would this country currently be able to produce? a.    A, B     b.     A,B,C c.    A nd C     d.     X and Y     e.     A and B

47. The piping for the water supply in New York City is very old and outdated, some of the pipes are made out of lead. The reason for the inhabitants of New York being willing to pay for the reconstruction of the water pipes would be an example of? (John Fleming) a. Marginal benefit b. marginal cost c. the lead in the water has already damaged them and they’re not thinking d. Marginal costs out weighing marginal benfits e. Marginal benefits out weighning marginal costs (John Fleming) 48. On the elastic demand curve if price decreases by 20%, the quantity will most likely a. Increase by more then twenty percent b. Decrease by twenty percent c. Level off d. Increase by exactly 20 percent e. decrease by exactly twenty percent (John Fleming) 49. What is the scenario when country A has absolute advantage over country B? a. when country A production of a product unable to compete in all scenarios b. when a country A can produce both items of exchange more efficiently c. when both countries produce the same amount of each good d. when country A’s economy is so massive that trade has become counter productive to all scenarios e. none of the above

(john Fleming) 50. Macroeconomics is the study of economics the pays attention to the aspects of   a.    Small business management b.   Exchange rates c.   Government policies towards the economy d.   The economy as a whole e.   Regional economic interactions