Econ Test 1

1.

1 point

Economics is defined as the study of

business

how society manages its scarce resources

central planning

government regulations

2.

1 point

The law of comparative advantages was developed by

Adam Smith

Edward Young

David Ricardo

Edward Jung

3.

1 point

"Other things equal, when the price of a good rises, the quantity supplied of the good also rises." This is a statement of the law of

increasing costs

diminishing returns

supply

supply and demand

4.

1 point

Two goods are complements if the decrease in price of one good

decreases the demand for the other good

decreases the quantity demanded of the other good

increases the demand for the other good

increases the quantity demanded of the other good

5.

1 point

when the amount that demanders would be willing to buy decreases at every possible price, we know that the demand curve has

shifted to the left

shifted to the right

not shifted

6.

1 point

If a shortage(excess demand) exists in a market we know that the actual price is

below equalibrium price and quantity demanded is greater than quantity supplied

above equalibrium price and quantity demanded is greater than quantity supplied

above equalibrium price and quantity supplied is greater than quantity demanded

below equalibrium price and quantity supplied is greater than quantity demanded

7.

1 point

The expression, "There is no such thing as a free lunch", means that

even people on welfare have to pay for food

the cost of living is always increasing

to get something we like, we usually have to give up something else we like

all costs are included in the price of a product

8.

1 point

The curved(bowed outward)shape of the production possibilities curve(frontier) shows

increasing opportunity costs

constant opportunity costs

unemployment

economic growth

9.

1 point

Lead is an important input in the production of crystal. If the price of lead decreases, other things equal, we would expect the supply of

crystal to be unaffected

crystal to decrease

crystal to increase

lead to increase

10.

1 point

In the markets for goods and services in the 2 sector circular-flow model,

households provide firms with savings for investment

households provide firms with labor, land and capitol

firms provide households with the output they produced

government provides firms with inputs for the production process

11.

1 point

The supply of a good is negatively(Inversely) related to the

price of inputs used to make the good

demand for the good by consumers

price of the good itself

12.

1 point

which of the following is not true concerning good economic models

models simplify reality

models can explain how the economy is organized

models assume away irrelevant details

models cannot to be used to make predictions

13.

1 point

In the markets for factors of production in the 2 sector circular-flow models

households provide firms with labor, land and capital

households provide firms with savings for investment

firms provide households with goods and services

the governemnt provides firms with inputs for the production process

14.

1 point

Economists recognize and focus upon the fact that people respond to

laws

incentives

threats more than rewards

positives but not negatives

15.

1 point

In economics efficiency means that

society is conserving resources in order to save them for the future

societys goods and services are distributed fairly among societys members

society has lessened it dependence on foreign energy sources

society is getting the most it can from its scarce resources

16.

1 point

saying that people make decisions at the margin, means that people

make those decisions that do not impose a marginal cost

evaluate how easily a decision can be reversed if problems arise

compare the marginal cost and marginal benefit of each decision

always calculate the marginal dollar costs as compared with the average dollar benefits for each decision

17.

1 point

When a production possibilities curve(frontier) shifts outward to the right, it is demonstrating the concept of

tradeoffs

efficiency

economic growth

opportunity cost

18.

1 point

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts(an input for peanut butter) went up, the price of jelly(a complementary good) fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you.

Price will fall and the effect on quantity is ambiguous

price will rise and the effect on quantity is ambiguous

quantity will fall and the effect on price is ambiguous

the effect on both price and quantity is ambiguous

19.

1 point

When there is a shortage (excess demand) in a market,

there is downward pressure on the price

there is upward pressure on price

the market could still be in equilibrium

the price must be above equilibrium

20.

1 point

In a 2 sector circular-flow diagram

taxes flow from households to firms, and transfer payments flow from firms to households

income payments flow from firms to households, and sales revenue flows from households to firms

resources flow from firms to households, and goods and services flow from households to firms

inputs and outputs flow in the same directions as the flow of dollars, from firms to households.

21.

1 point

A downward-sloping demand curve illustrates the

relationship between consumers' income and their willingness to purchase the good in question, provided the good inferior

negative relationship between quantity demanded and quantity supplied

idea that the more of one good that a consumer buys, the less income she has to spend on other goods

law of demand

22.

1 point

A technological advance will shift the

supply curve to the right

supply curve to the left

demand curve to the right

demand curve to the left