Econ 101 - Microeconomics » Fall 2022 » Quiz 1

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Question #1
The role of government in a market economy includes all the following except:
A.   extensive ownership of productive resources
B.   providing services such as national defense
C.   collecting taxes
D.   making and enforcing laws
E.   a government in a market economy does none of the above
Question #2
In the product market of the circular flow model,
A.   firms buy factors of production from consumers.
B.   consumers buy finished products from firms.
C.   consumers buy factors of production from firms.
D.   firms sell factors of production to consumers.
E.   consumers sell factors of production to firms.
Question #3
Which of the following statements is true about how the market system deals with risk?
A.   Entrepreneurs bear risk and must share the rewards with their employees.
B.   Entrepreneurs bear risk and have financial incentives to make prudent business decisions. Employees are shielded from risk and are not personally liable for business success or failure.
C.   Entrepreneurs bear risk and must share the rewards with their employees. Entrepreneurs bear risk and have financial incentives to make prudent business decisions.
D.   Entrepreneurs bear risk and must share the rewards with their employees. Employees are shielded from risk and are not personally liable for business success or failure.
Question #4
All other things equal, which of the following would cause a decrease in the price of bicycles?
A.   The cost of aluminum used in the production of bicycles increases.
B.   The cost of gas increases.
C.   None of these
D.   The government imposes a tax on bicycle producers for each bicycle sold.
E.   The cost of rubber used in the production of bicycles falls.
Question #5
Consider the market for denim jeans. If the price of khaki pants increases, and at the same time, the price of cotton falls, what will be the effect on the price of jeans and the quantity sold?
A.   Price decreases and quantity sold increases
B.   Price may increase or decrease and quantity sold increases
C.   Price increases and quantity sold increases
D.   Price increases and quantity sold may increase or decrease
E.   Price increases and quantity sold decreases
Question #6
Consider the market for beef. If the World Health Organization identifies red meat as a carcinogen (something that causes cancer), and at the same time the government provides a subsidy to cattle ranchers, what will be the effect on the price of beef and the quantity sold?
A.   Price increases and quantity sold increases
B.   Price decreases and quantity sold may increase or decrease
C.   Price decreases and quantity sold decreases
D.   Price may increase or decrease and quantity sold decreases
E.   Price decreases and quantity sold increases
Question #7
Which of the following is not an example of fiscal policy?
A.   increasing personal income taxes
B.   allocating more funds towards defense
C.   decreasing spend on social programs
D.   lowering the corporate tax rate
E.   increasing interest rates

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