Download Unit 1 Practice Test w/Answers

Unit 1 Economics
Practice Test
1. Which of the following factors cause a
movement along the demand curve?
a. change in the prices of related goods
b. change in the price of the good
c. change in the population
d. both a change in the price of the good
and a change in population
2. The law of demand states that
a. as the price increases, the quantity
demanded will increase
b. as the price decreases, the demand
curve will shift to the right
c. as the price increases, the demand will
decrease
d. as the price increases, the quantity
demanded will decrease
3. If goods A and B are substitutes, a decrease in
the price of good B will
a. increase the demand for good A
b. increase the demand for good B
c. decrease the demand for good A
d. increase the demand for good B and
decrease the demand for good A
4. If goods A and Z are complements, an increase
in the price of good Z will
a. increase the demand for good A
b. decrease the demand for good Z
c. decrease the demand for good A and
good Z
d. decrease the demand for good A
5. Recently, consumer tastes for tattoos have
increased. This means that the ___________ for
tattoos has ___________.
a. quantity demanded; increased
b. demand; decreased
c. demand; increased
d. quantity demanded; decreased
6. A good is inferior if
a. when income increases, the demand is
unchanged
b. when income increases, the demand
decreases
c. when income increases, the demand
increases
d. income and the demand are unrelated
7. A decrease in the price of eggs will result in
a(n)
a. increase in the demand for eggs
b. increase in the supply of eggs
c. greater quantity of eggs supplied
d. greater quantity of eggs demanded
8. The demand curve for DVDs has shifted to the
right.
a. a decrease in the price of DVDs
b. an increase in the price of DVDs
c. an increase in the supply of DVDs
d. an increase in the income of buyers
9. When the price of gas goes up, the demand for
tires goes down. This means tires and gas are
a. substitutes
b. complements
c. both expensive
d. things you need so you can drive your
car
10. Since chicken and beef are substitute goods, if
the price of chicken decreases significantly,
there would be
a. an increase in demand for beef
b. an increase in the supply of chicken
c. an increase in the quantity demanded of
beef
d. a decrease in the demand for beef
11. An increase in the demand for gas today caused
by concerns that gas prices will be higher
tomorrow is attributable to which of the
following?
a. income
b. consumer expectations
c. consumer preferences
d. producer expectations
12. Which of the following is likely to cause a
rightward shift in the demand for homedelivered pizza?
a. a lower price of pizza
b. a lower price of fast-food hamburgers
c. a higher price of pepperoni
d. a larger population
13. An inverse relationship between price and
quantity is represented by
a. the demand curve
b. the supply curve
c. the production possibility curve
d. Taco Bell
20. A technological advance in the production of
automobiles will
a. increase the demand for automobiles
b. increase the supply of automobiles
c. decrease the demand for automobiles
d. decrease the supply of automobiles
14. The ___________ apples will decrease due to
higher apple prices
a. demand for
b. tastes for
c. supply of
d. quantity demanded of
21. A decrease in supply means
a. a shift of the supply curve to the left
b. a downward movement along the
supply curve
c. less will be demanded at every price
d. more will be supplied at every price
15. The demand curve for running shoes has
shifted to the right. What could have caused it?
a. a decrease in the price of running shoes
b. an increase in the price of running
shoes
c. an increase in the supply of running
shoes
d. an increase in the income of runners
22. An increase in supply can be caused by
a. input prices rising
b. a decrease in the price of the good
c. an increase in the number of sellers
d. expectations of future prices increases
16. If the market for corn is in equilibrium
a. every buyer who wants to consume
corn can acquire corn
b. every producer who wants to sell corn
can do so
c. the price is at a level where the quantity
of corn produced is equal to the
quantity of corn consumed
d. all consumers of corn receive the same
quantity of corn
17. When the price of lamps increases, the
a. supply increases
b. quantity supplied increases
c. supply decreases
d. quantity supplied decreases
18. A decrease in the price of eggs will result in
a(n)
a. increase in the demand for eggs
b. increase in the supply of eggs
c. decrease in the supply of eggs
d. downward movement along the supply
curve of eggs
19. Consider the supply curve for cotton shirts. An
increase in the price of cotton will
a. increase the supply of cotton shirts
b. decrease the supply of cotton shirts
c. decrease the demand for cotton shirts
d. increase the quantity supplied of cotton
shirts
23. An increase in supply can be caused by
a. A decrease in the number of firms
producing the good
b. A decrease in prices of goods that are
substitutes in production
c. An increase in the price of the good
d. An increase in input prices
24. A decrease in supply can be caused by
a. a decrease in input prices
b. a decrease in the number of sellers in
the market
c. suppliers’ expectations of higher future
prices
d. an advancement in the technology for
producing the good
25. When the price of corn is rising, we would
expect
a. the quantity demanded for corn to be
rising
b. the quantity supplied of corn to be
rising
c. the demand for corn to be shifting left
d. the supply of corn to be shifting right
26. Which of the following is most likely to shift the
supply of milk to the right?
a. a tax on each gallon of milk produced
b. a decrease in the price of feed given to
dairy cows
c. an increase in household income
d. the bankruptcy of many small dairy
farmers
27. A surplus occurs when
a. quantity demanded equals quantity
supplied
b. the quantity demanded exceeds the
quantity supplied
c. the price is below the equilibrium
d. the price is above the equilibrium price
28. If the supply and demand curves intersect at a
price of $47, a price set at $40 would lead to
a(n)
a. shortage
b. surplus
c. equilibrium
d. increase in demand
29. A farmer finds that when he produces more
corn, he also has more corn stalks that he can
then sell as decorative ornaments. To the
farmer, corn and corn stalks are
a. complements in production
b. substitutes in production
c. unrelated
d. luxury goods in production
30. The price of DVD players falls and the quantity
of DVD players sold increases. This set of
observations can be the result of the
a. demand for DVD players shifting to the
right
b. demand for DVD players shifting to the
left
c. supply of DVD players shifting to the
right
d. supply of DVD players shifting to the
left
31. Which of the following is a normative
statement?
a. The women’s labor force participation
rate has increased during the past 100
years.
b. The federal minimum wage is higher
today than it was in 1990.
c. Children in the U.S. are required to go to
school until they reach a certain age.
d. The best way to encourage growth in
the economy is through government
spending.
32. The opportunity cost of something is
a. greater during periods of rising prices
b. equal to the money cost
c. what is given up to acquire it
d. equal to zero if it was a gift
33. Microeconomics deals with
a. the working of the entire economy or
large sectors of it
b. economic growth
c. decisions of individuals and firms
d. gross domestic policy
34. The primary emphasis in macroeconomics is on
a. how firms set prices
b. the national economy
c. bits and pieces of the economy
d. the employment of individual workers
35. Scarcity in economics means
a. the needs of people are limited
b. the wants of people are limited
c. there must be poor people in rich
countries
d. not having sufficient resources to
produce all the goods and services
people want
36. We have to make choices because
a. we have unlimited income
b. resources are scarce
c. choices involve a trade-off
d. resources are scarce and choices
involve a trade-off
37. Which is not an example of a resource?
a. land
b. labor
c. capital
d. production
e. oil reserves
38. Khalil is offered a free ticket to a concert. His
opportunity cost of going to the opera is
a. zero-the tickers were free
b. the price listed on the ticket
c. whatever Khalil would have done had
he not gone to the opera
d. the price listed on the ticket plus
whatever Khalil would have done had
he not gone to the opera
39. Which of the following is a positive statement?
a. Current tax policy will lead to an
increasing budget deficit.
b. A high rate of economic growth is good
for a country
c. Everyone in the country needs to save
money for retirement
d. Basketball players should not be paid
higher salaries than teachers.
e. Yes, they should.
40. A business cycle is
a. a very deep and prolonged economic
downturn
b. a period in which output and
employment are rising
c. a period in which output and
employment are falling
d. an alteration between economic
upturns and downturns
41. Technological improvements will
a. leave the PPC unchanged
b. shift the PPC left
c. shift the PPC right
d. lead to increased unemployment
42. An economy that has the lowest opportunity
cost for producing a particular good is said to
have a(n)
a. technological advantage
b. comparative advantage
c. absolute advantage
d. increasing opportunity cost
43. If Eastland can produce 100 oranges or 100
peaches and Westland can produce 50 oranges
or 200 peaches, Eastland has an absolute
advantage in producing
a. oranges only
b. a combination of oranges and peaches
c. both oranges and peaches
d. neither oranges nor peaches
44. If Eastland can produce 100 oranges or 100
peaches and Westland can produce 50 oranges
or 200 peaches, Westland has a comparative
advantage in producing
a. oranges only
b. peaches only
c. both oranges and peaches
d. neither oranges nor peaches
45. If Eastland can produce 100 oranges or 100
peaches and Westland can produce 50 oranges
or 200 peaches, Eastland has a comparative
advantage in producing
a. Oranges only
b. Peaches only
c. Both oranges and peaches
d. Neither oranges nor peaches
46. If Eastland can produce 100 oranges or 100
peaches and Westland can produce 50 oranges
or 200 peaches, Westland has an absolute
advantage in producing
a. oranges only
b. a combination of oranges and peaches
c. both oranges and peaches
d. peaches only
47. If Eastland can produce 100 oranges or 100
peaches and Westland can produce 50 oranges
or 200 peaches, the opportunity cost of
producing 1 orange for Eastland is
a. 1 peach
b. ¼ peach
c. 4 peaches
d. 10 peaches
48. If Eastland can produce 100 oranges or 100
peaches and Westland can produce 50 oranges
or 200 peaches, the opportunity cost of
producing 1 orange for Westland is
a. 1 peach
b. ¼ peach
c. 4 peaches
d. 10 peaches
49. If Eastland can produce 100 oranges or 100
peaches and Westland can produce 50 oranges
or 200 peaches, the opportunity cost of
producing 1 peach for Westland is
a. 1 orange
b. ¼ orange
c. 4 oranges
d. 10 oranges
50. In a single day, George can bake 10 cakes while
Greta can bake 5 cakes.
a. George has a comparative advantage in
baking cakes.
b. George has an absolute advantage in
baking cakes
c. Greta has a comparative advantage in
baking cakes
d. Gera has an absolute advantage in
baking cakes