Download Economics_files/econ unit 1and2 Online

Name _______________________________________
Date ____________
MULTIPLE CHOICE: For each of the following, circle the letter of the best choice.
1)
2)
Macroeconomics is the study of
a. large corporations.
c. entire economies.
b. households.
d. individual consumers.
Food, clothing, and shelter are examples of
a. wants.
b. factors of production
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c. human resources
d. needs.
Which of the following is a good?
a. a bicycle
c. tennis shoes
b. pizza
d. all of the above
The things that people use to make or obtain what they need or want are called
a. products.
c. goods.
b. resources.
d. services.
Which of the following could be a factor of production?
a. a doctor
b. a car
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c. a coffee pot
d. all of the above
The buildings, structures, machinery, and tools used in the production process are called
a. human resources.
b. capital goods.
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c. natural resources.
d. consumer goods.
Consumer goods are
a. the goods and services that people buy.
c. also known as factors of production.
b. made from natural resources.
d. available only in capitalist economies.
The use of technical knowledge and methods to create new products or make existing
products more efficiently is called
a. efficiency.
c. technology.
b. utility.
d. production.
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Name _______________________________________
9)
Date ____________
Which of the following best describes an entrepreneur?
a. a risk-taker
c. an efficiency specialist
b. an inventor
d. a computer expert
10) The basic problem of economic life is
a. interdependence.
c. scarcity.
b. productivity.
d. sacrifice.
11) What term do economists use for the value of the next best alternative given up in order to
obtain an item or pursue an activity?
a. production possibilities
c. utility
b. efficiency
d. opportunity cost
12) A production possibilities curve illustrates
a. technological changes that help to increase production.
b. choices a person can make between items.
c. economic choices a society can make.
d. combinations of two goods or services that can be produced.
13) The means of exchange that relies on bargaining is:
a. money.
c. value.
d. barter.
b. credit.
14) The purpose of money is to serve as a
a. medium of exchange.
c. measure of value.
b. store of value.
d. all of the above.
15) A product's usefulness to a person is called its
a. efficiency.
c. price.
b. availability.
d. utility.
16) Today, all economic systems are
a. market economies.
b. command economies.
c. mixed economies
d. traditional economies.
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Name _______________________________________
Date ____________
17) The distribution of goods and services is determined by family or tribal considerations in a
a. market economy.
c. mixed economy.
b. traditional economy.
d. command economy.
18) During the Old Kingdom period, when the pharaoh owned the land, collected taxes,
controlled all trade, and supervised all building projects, Egypt had a
a. market economy.
c. command economy.
b. mixed economy.
d. traditional economy.
19) In pure market economies, the basic economic decisions are made by
a. governments.
c. business leaders.
b. central planners.
d. individuals.
20) Economies closest to the pure market model are classified as
a. free enterprise.
c. authoritarian socialism.
b. democratic socialism.
d. capitalism.
21) The economic system in which the government's role is most limited is
a. democratic socialism.
b. capitalism.
c. authoritarian socialism.
d. communism.
22) Under democratic socialism, individuals are able to influence economic planning by
a. voting in elections for government offices.
b. gaining management positions in key industries.
c. purchasing stock in government-owned industries.
d. refusing to pay government officials.
23) Private ownership of property is a characteristic of
a. socialism.
b. free enterprise.
c. communism.
d. command economies.
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Name _______________________________________
Date ____________
24) The feature that distinguishes the U.S. economy from the pure market model is
a. private ownership of the factors of production.
b. contractual relationships between businesses and individuals.
c. limited government involvement.
d. self-interest and incentives.
25) Which of the following economic goals is concerned with making the best use of scarce
resources?
a. stability.
c. efficiency.
b. security.
d. growth.
26) The scarcity of resources requires the U.S. economy to pursue the goal of economic
a. freedom.
c. growth.
b. efficiency.
d. stability.
27) Providing unemployment compensation is an example of the pursuit of the goal of
economic
a. stability.
c. freedom.
d. equity.
b. security.
28) Which goal of the U.S. economy is concerned with questions of fairness and right and
wrong?
a. economic stability
c. economic security
b. economic freedom
d. economic equity
29) The two concerns of the goal of economic stability are
a. full employment and stable prices.
c. full employment and rising prices.
b. high employment and low prices.
d. high employment and falling prices.
30) If the number of workers in the population grows faster than the average production of
each worker, the standard of living will
a. rise.
b. fluctuate slightly.
c. remain stable.
d. fall.
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Name _______________________________________
Date ____________
31) The tendency of consumers to replace a relatively more expensive product with a similar,
lower-priced product is called the
a.!income effect.
c.!substitution effect.
b.!marginal effect.
d.!demand effect.
32) If, over a period of time, factors other than price cause an increase in the demand for a
product, the demand curve shifts
a.!downward.
c.!to the right.
b.!upward.
d.!to the left.
33) If, over a period of time, factors other than price cause a decrease in the demand for a
product, the demand curve will shift
a.!downward.
c.!to the right.
b.!upward.
d.!to the left.
34) It is revealed that a rock star did not actually sing or play on any of his CDs. His
popularity declines and demand for his CDs decreases, causing the demand curve to shift
a.!downward.
c.!to the right.
b.!upward.
d.!to the left.
35) If the U.S. government prohibited trade with China, the demand curve for American
products sold to China would move
a.!downward.
c.!to the right.
b.!upward.
d.!to the left.
36) Blue jeans are an example of a product that has elastic demand. How will a small increase
in price affect demand for blue jeans?
a.!It will have little effect.
c.!Demand will fall markedly.
b.!Demand will rise markedly.
d.!It will cause demand to fluctuate.
37) A product such as salt has inelastic demand. How will a small increase in price affect
demand for salt?
a.!It will have little effect.
c.!Demand will fall markedly.
b.!Demand will rise markedly.
d.!It will cause demand to fluctuate.
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Name _______________________________________
Date ____________
38) A price increase causes a fall in a company’s total revenue. This indicates that demand for
the company’s products is
a.!steady.
c.!inelastic.
b.!elastic.
d.!fluctuating.
39) A price increase causes a rise in a company’s total revenue. This indicates that demand for
the company’s products is
a.!steady.
c.!inelastic.
b.!elastic.
d.!fluctuating.
40) In a free enterprise system, the key factor affecting supply is
a.!rate of production.
c.!profits.
b.!price.
d.!cost of production.
41) If a good can be made quickly, inexpensively, and using a few, readily available resources
it has
a.!negative returns.
c.!elastic supply.
b.!inelastic supply.
d.!diminishing returns.
42) Gold is an example of a good that has
a.!negative returns.
c.!elastic supply.
b.!inelastic supply.
d.!diminishing returns.
43) If, after the passage of time, the determinants of supply cause a decrease in the supply of a
product, the supply curve for that product shifts
a.!downward.
c.!to the right.
b.!upward.
d.!to the left.
44) If prices of resources fall, supply will
a.!increase.
c.!fluctuate.
b.!decrease.
d.!stabilize.
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Name _______________________________________
Date ____________
45) New technology makes the production of video games more efficient and less expensive.
How will this affect the supply of video games?
a.!Supply will remain the same.
c.!Supply will fall.
b.!Supply will increase.
d.!Supply to fluctuate.
46) The production costs that change as the level of output changes are called
a.!average costs.
c.!fixed costs.
b.!variable costs.
d.!overhead costs.
47) On what does a free-enterprise economy rely to answer the basic economic questions of
what, how, and for whom to produce goods?
a.!competition
c.!the invisible hand
b.!the price system
d.!supply and demand
48) Pollution is an example of a
a.!positive externality.
c.!negative internality.
b.!negative externality.
d.!positive internality.
49) The judicial system is an example of a
a.!public utility.
c.!public good.
b.!public service.
d.!public consumption.
50) The process through which the price system moves producers and consumers toward the
equilibrium point often involves
a.!trial and error.
c.!market failures.
b.!price ceilings.
d.!rationing.
51) A government regulation that sets a minimum level for prices is called a
a.!price floor.
c.!minimum wage.
b.!price ceiling.
d.!black market.
52) When a college sets aside event tickets for students and alumni, it has imposed a
a.!rationing system.
c.!price ceiling.
b.!price floor.
d.!market price.
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Name _______________________________________
Date ____________
53) The place where goods are exchanged illegally at prices that are higher than officially
established prices is called a
a.!market place.
c.!black market.
b.!surplus market.
d.!market sector.
54) In a perfectly competitive market, price is set by
a.!the forces of supply and demand.
c.!the Invisible Hand.
b.!buyers and sellers entering the market.
d.!competitive contracts.
55) A noncompetitive market is characterized by
a.!fewer products.
c.!higher prices.
b.!less choice.
d.!all of the above
56) In an oligopoly
a.!there are only a few sellers.
c.!sellers offer identical or similar products.
b.!sellers cannot enter the market easily.
d.!all of the above
57) When sellers secretly agree to set production levels or prices, it is called
a.!price leadership.
c.!interdependent pricing.
b.!collusion.
d.!compliance.
58) What kind of monopoly is encouraged by the granting of patents?
a.!natural monopoly
c.!technological monopoly
b.!geographic monopoly
d.!government monopoly
59) Antitrust legislation was enacted in the late 1800s to
a.!monitor and regulate big business.
c.!dismantle existing monopolies.
b.!prevent monopolies from forming.
d.!all of the above
60) Which of the following pieces of legislation established an agency to oversee the railroad
freight business?
a.!Interstate Commerce Act
c.!Clayton Antitrust Act
b.!Sherman Antitrust Act
d.!Federal Trade Commission Act
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