Economics 002- Principles of Economics II » Fall 2022 » Test 1 Ch 1-3
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Question #1
Opportunity cost is an important factor in looking at comparative advantage.
A.
True
B.
False
Question #2
Which of the following does not cause a change in supply?
A.
A change in price
B.
A change in input prices
C.
A change in expectations
D.
A change in technology
Question #3
Which of the following is a normative economic statement?
A.
The government should commit to reducing income inequality.
B.
The inflation rate next year will be less than 3%.
C.
A reduction in the government deficit by 1% will make interest rates decrease 1%.
D.
The national unemployment rate in January of this year was 5.5%.
Question #4
Which of the following is correct?
A.
Economics is the study of the infinite supply of goods.
B.
Economics is the study of the individual.
C.
Economics is the study of the choices people make.
D.
Economics is defined as a natural science.
Question #5
Hierarchy is a way to coordinate the behavior of individuals.
A.
True
B.
False
Question #6
The production possibilities curve will never move outwards.
A.
True
B.
False
Question #7
Kamika travels to visit her parents for her summer vacation. Which of the following is not part of the opportunity cost of her choice?
A.
The cost of hiring a dog-walking service for her beagle, Smokey
B.
The price of the thank you gift she buys for her friend who checked on her apartment while she was away
C.
The rent on her apartment while she is away
D.
The price of her airline ticket
Question #8
In economics, capital includes _____.
A.
stocks and bonds
B.
equipment
C.
money
D.
all of the above
Question #9
What does economics study?
A.
How businesses can make profits
B.
How the government controls the economy and how people earn a living
C.
How society uses its scarce resources to satisfy its unlimited desires
D.
How the allocation of income among different sectors of the economy compares
Question #10
What does demand mean?
A.
The willingness and ability to purchase goods
B.
Willingness to purchase goods
C.
The ability to purchase goods
D.
The numerical utility
Question #11
In economics, markets are an excellent example of which of the following?
A.
Coordination through hierarchy
B.
Coordination through spontaneous order
C.
Centralized control through hierarchy
D.
Centralized control through spontaneous order
Question #12
Positive economics features discussions of _________ and relies heavily on the analysis of ________.
A.
efficiency; facts
B.
efficiency; opinions
C.
fairness; opinions
D.
fairness; facts
Question #13
What is a demand curve?
A.
An undefined curved line
B.
A demand curve is upward sloping.
C.
A graphical representation of the relationship between price of the good and the quantity demanded
D.
A graphical representation of the relationship between price and quality of the good demanded
Question #14
Government controls all market activity in the United States.
A.
True
B.
False
Question #15
Which of the following best illustrates the law of demand?
A.
An increase in income, resulting in increased purchases of Big Macs
B.
An increase in income, resulting in decreased purchases of French fries
C.
Increased purchases of Big Macs as the price of Big Macs decreases
D.
The price of Big Macs increasing, causing consumers to buy more Whoppers
Question #16
If an economist states that "the unemployment rate is 6%," then it is _____.
A.
a positive statement
B.
an opinion
C.
a relative statement
D.
a normative statement
Question #17
The law of demand is based upon which of the following?
A.
A relationship between price and income
B.
A relationship between price and quantity
C.
A relationship between quantity and quality
D.
A relationship between price and quality
Question #18
What will a change in tastes do?
A.
Shift the demand curve
B.
Result in a healthier choice
C.
Shift the demand curve to the right
D.
Lead to more uniform goods being produced
Question #19
What is the supply curve?
A.
A representation of the relationship between quantity and preferences
B.
A representation of the relationship between price and quantity of the goods a seller will supply
C.
A representation of the relationship between quality and quantity of the goods the seller is willing to sell.
D.
A representation of the relationship between price and income.
Question #20
The factors of production include
A.
money and labor
B.
money and capital
C.
labor and investment
D.
capital and labor
Question #21
Florida is famous for its oranges, whereas Idaho is famous for its potatoes. What can we conclude?
A.
There is no demand for oranges in Idaho.
B.
Florida has a comparative advantage in oranges and Idaho has a comparative advantage in potatoes.
C.
Consumers prefer locally produced food.
D.
It is technically impossible to grow potatoes in Florida or oranges in Idaho.
Question #22
Comparative advantage is based on
A.
prices of goods
B.
government subsides
C.
wages
D.
opportunity costs
Question #23
Being impossible to satisfy one person's needs without reducing someone else's needs is called _____.
A.
choice
B.
economic efficiency
C.
preferences
D.
opportunity cost
Question #24
A demand curve is drawn holding constant each of the following except which of the following?
A.
The price of the good
B.
The price of substitute goods
C.
Tastes and preferences
D.
Income level
Question #25
Empirical evidence is based on observation.
A.
True
B.
False
Question #26
What does the law of demand state?
A.
As the price increases, quantity demanded remains constant.
B.
As the price decreases, quantity demanded decreases.
C.
As the price increases, quantity demanded decreases.
D.
As the price increases, quantity demanded increases.
Question #27
What occurs to create a shortage in a market?
A.
The market is in equilibrium.
B.
Quantity demanded is less than quantity supplied.
C.
Quantity demanded is more than quantity supplied.
D.
Quantity demanded and quantity supplied are equal.
Question #28
Coke and Pepsi are substitutes. The price of Pepsi increases. What would we expect?
A.
The supply of Coke to increase
B.
The demand for Coke to increase
C.
The demand for Coke to decrease
D.
The supply of Coke to decrease
Question #29
Which statement is incorrect?
A.
The three factors in economics are labor, natural resources, and capital.
B.
Opportunity cost is the cost of what is given up.
C.
Comparative advantage can be used in the analysis of trade.
D.
Normative economics is mainly about facts.
Question #30
In economics, capital refers to physical objects, not money.
A.
False
B.
True
Question #31
The federal government announces a new gasoline tax of $1.00 per gallon that will be imposed tomorrow at noon. What would predict happening before noon tomorrow?
A.
A decrease in the demand for gasoline and shortages of gasoline
B.
An increase in the demand for gasoline and surpluses of gasoline
C.
An increase in the demand for gasoline and shortages of gasoline
D.
A decrease in the demand for gasoline and surpluses of gasoline
Question #32
A model is used to do which of the following?
A.
Exactly duplicate an economic situation
B.
Insure an exact result
C.
Explain an economic relationship
D.
Help students
Question #33
The law of demand states that as the price of the good increases, _____.
A.
quantity demanded decreases
B.
quantity demanded increases
C.
demand increases
D.
demand decreases
Question #34
Which of the following is true at the equilibrium price?
A.
The supply curve and the demand curve do not intersect.
B.
There will be more than enough output to satisfy consumers.
C.
Quantity demanded will equal quantity supplied.
D.
Firms will have more than enough buyers for their output.
Question #35
Adam Smith in the "Wealth of Nations" spoke about _____.
A.
a visible hand
B.
an invisible hand
C.
the labor theory of value
D.
spontaneous order
Question #36
Oil, gold, silver, and coal are examples of
A.
labor
B.
capital
C.
efficient production
D.
natural resources
Question #37
A.
A decrease in quantity demanded
B.
An increase in demand
C.
A decrease in demand
D.
An increase in quantity demanded
Question #38
What is meant by the term opportunity cost?
A.
The value of the next-best option not taken
B.
A measure of the cost of natural resources
C.
The purchase price of a productive asset
D.
The cost of capital
Question #39
What is true of both an increase in demand and an increase in quantity demanded?
A.
They are impacted by a change in the price of the good.
B.
They both involve a shift of the demand curve to the right.
C.
They both involve a change in the willingness or ability to buy.
D.
They both involve a movement down along a fixed demand curve.
Question #40
Microeconomics is the study of which of the following?
A.
Individual economic units
B.
Banks and the U.S. government
C.
Foreign exchange markets
D.
Money and money markets
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