What is a scarce good? A good in which the choice of one alternative requires that another be given

What is a scarce good?

A good in which the choice of one alternative requires that another be given up

A good in which the choice of one use does not require that we give up another

A good in which the cost of one is equal to the cost of another

A good in which the cost of alternative goods cannot be calculated
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1
When considering the issue of scarcity, which one of the following questions must be answered?

How should the goods or services be distributed?

What should be produced?

Where should the goods or services be produced?

What should the goods or services cost?
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2
The study of individual consumers and the decisions they make is contained in the field of:

Financial Economics

Natural Economics

Macroeconomics

Microeconomics
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3
Which of the following may be an example of an opportunity cost when you make the decision to play a video game rather than studying for your economics exam?

A Good Grade on the Economics Exam

A good score on your video game

Your time is scarce, therefore there is no opportunity cost

The price of the video game
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4
John purchases a new tractor to help him produce the vegetables he sells at the farmers market What type of production is the tractor?

Capital

Natural Resource

Equipment

Labor
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5
One requirement for total utility maximization is that budgets are fully expended What is the second requirement that must be met?

Marginal indifference rates are equal across all consumption choices

Total utility to price ratios are equal across all consumption choices

Marginal utility to price ratios are equal across all consumption choices

Marginal rates of substitution are equal across all consumption choices
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6
If all the factors of production that are available for use under current market conditions are being utilized, which of the following would be true?

The economy has achieved full employment

The economy will have high unemployment

There will be a high level of under-employment

Poverty will increase sharply
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7
In theory, perfect price discrimination _____

Decreases consumer surplus

Increases deadweight loss

Decreases the monopolist’s profits

Lowers prices
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8
A single firm sells hammers at a retail price to consumers for $1899 each The same firm sells the same hammer to the government at a price of $67800 each What is this known as?

Price discrimination

Rule of reason

Predatory pricing

Price fixing
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9
How do surpluses arise?

When quantity demanded is greater than quantity supplied

When quantity supplied is greater than quantity demanded

When quantity supplied is less than quantity demanded

When quantity supplied is equal to quantity demanded
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10
Which of the following is an example of a demand shifter?

Input cost increases

Price fluctuations

Production technology advances

Buyer expectations
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11
If a reduction in the price of one good increases the demand for another, the two goods are called what?

Substitutes

Normal goods

Inferior goods

Complements
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12
Which of the following represents how much a market can offer?

Marginal Utility

Quantity Demanded

Supply

Demand
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13
An decrease in supply is shown as a shift of the supply curve in which direction?

Right

Left

Down

Up
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14
When the price of labor increases significantly for car manufactures, what change will take place?

An increase in the quantity suppliers will offer at any price

A decrease in the quantity suppliers will offer at any price

A shift in the supply curve to the right

A movement along the supply curve
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15
What is net benefit?

The difference between consumer surplus and producer surplus

The measure of consumer utility

The sum of consumer surplus and producer surplus

The efficiency condition of a market’s allocation
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16
It is time for lunch and you go out with a group of friends to a local pizza restaurant You are very hungry and eat one piece of pizza It provides a high level of utility You eat a second piece of pizza and it provides a lower level of satisfaction You eat a third piece of pizza and it provides a low level of utility, or satisfaction In economics, what is this an example of?

The law of diminishing utility

The law of marginal utility

The law of satisfaction utility

The law of diminishing returns
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17
During the last 10 years in the US there has been an increase in the number of law students What effect can be predicted by this increase in supply?

Wages for attorneys will decrease and unemployment will increase

Wages for attorneys will increase and unemployment will decrease

Wages will not be impacted, but unemployment will increase

Wages for attorneys and unemployment will both decrease
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18
The amount by which total utility rises with consumption of an additional unit of a good, service, or activity, all other things unchanged, is called which of the following?

Total utility

Average utility

Utility benefit

Marginal utility
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19
What is the incidence of a sales tax in a market where supply is relatively less price-responsive than demand?

Buyers will pay the tax to government

Sellers will bear more of the economic burden of the tax than buyers

Buyers will bear more of the economic burden of the tax than sellers

Sellers will pay the tax to government
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20
Which one of the following is an example of third degree price discrimination?

Purchasing a car at a dealership that negotiates the total cost of the vehicle

Purchasing a case of paper towels at a lower cost than if purchased individually

A local clothing retail store that offers a “Buy One Shirt, Get the Second one at Half Price”

Charging a lower price to senior citizens at a local restaurant
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21
If supply is unit elastic and demand is inelastic, a shift in which curve would cause an effect in quantity?

Marginal returns curve

Supply curve

Demand curve

Marginal product curve
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22
Which of the following is an example of a public good?

National Park annual paid membership

Radio station

Welfare dollars

Newspaper
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23
If a sharp increase in the price of insulin has only a small effect on the amount of insulin purchased, then what is the demand for insulin considered to be?

Price driven

Unit elastic

Elastic

Inelastic
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24
If the price elasticity of a computer is -53, its elasticity is said to be which of the following?

Price inelastic

Price elastic

Demand elastic

Unit price elastic
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25
If a good or service is inferior, then an increase in income will cause which of the following to occur?

Demand for the good or service will decrease

Demand for the good or service will increase

Supply of the good or service will increase

Price of the good or service will increase
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26
If the price elasticity of oil is 30, the supply of oil will do what when the price is decreased by 2%?

Increase by 2%

Increase by 3%

Decrease by 6%

Decrease by 3%
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27
Using the table below, what would the marginal revenue for three units of output be?
Units of Output Price Total Cost Total Revenue
1 $700 $1200 $700
2 $700 $1400 $1400
3 $700 $1600 $2100
4 $700 $1800 $2800
5 $700 $2000 $3500

$1400

$700

$900

$200
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28
Please refer to the table below Using the information from the table, how many workers will the firm hire if the equilibrium wage rate is $800 per week?
Quantity of Labor Total Output Marginal Product of Labor Value of Marginal Labor
1 250 250 $1,000
2 600 350 $1,400
3 900 300 $1,200
4 1,125 225 $900
5 1,300 175 $700
6 1,450 150 $600
7 1,560 110 $440
8 1,670 70 $300

6 Workers

3 Workers

5 Workers

4 Workers
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29
A local pizza restaurant is considering hiring another worker at a wage of $60 per day The owners hope an additional worker would be able to make 40 pizzas per day, and each pizza would add $200 in revenue Using the information provided, what is the marginal product revenue of hiring an additional worker?

$12000 per day

$2000 per day

$8000 per day

$4000 per day
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30
Which theory states that public officials are driven by self interest?

Public choice theory

Public interest theory

Consumer protection theory

Economic theory
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31
Rent controls are examples of what type of government induced market constraint?

Price ceilings

Supply shifters

Demand shifters

Price floors
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32
What conditions do price ceilings create?

Artificial scarcities

Artificial supply decreases

Artificial surpluses

Artificial demand increases
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33
What is it called when a firm can consider all factors of production as “variable” during the planning period?

Long run

Variable run

Fixed run

Short run
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34
What is the relationship called that exists between factors of production and the output of a firm?

Total production

Production growth

A production plan

A production function
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35
Which points on the graph represent diminishing marginal returns?

AI

AD

HI

DH
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36
Joe’s Pizza is thinking of increasing the amount of Pizza Cooks from three to five According to the table below, what will be the result of this decision?
Pizza Cooks Hired Output of Pizza
1 10
2 20
3 30
4 35
5 38

Joe’s Pizza will experience diminishing marginal returns

Joe’s Pizza will experience negative marginal returns

Joe’s Pizza will experience increasing marginal returns

Joe’s Pizza will experience economies of scale
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37
Sally is a receptionist for a local company She uses a phone several times throughout the day The phone is considered what form of a factor of production?

Labor

Entrepreneurship

Land

Capital
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38
Product price, in a perfectly competitive market, will be determined by what?

Product differentiation

Competition, and competitive advantage

Demand and Supply in the market

The amount of product a firm is willing to sell
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39
Which one of the following statements is true when comparing a monopolistic firm to a perfectly competitive firm?

Monopolistic firms have very few barriers to entry, where perfectly competitive firms has many barriers to entry

Monopolistic firms are price takers, where perfectly competitive firms are price setters

Monopolistic firms can determine price, where perfectly competitive firms accept the market price

Monopolistic firms have many competitors, where perfectly competitive firms have only a few competitors
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40
In what ways are a price-taking firm and a monopoly alike?

Their price exceeds marginal cost at the profit-maximizing level of output for both

In the long run, they both earn zero economic profits

They both maximize profits by choosing an output where marginal revenue equals marginal cost, provided that price exceeds average variable cost

They both have prices that equal marginal revenue
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41
In the short run, the slope of the total cost curve is which of the following?

Marginal cost

Minimum cost

Average cost

Total cost
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42
A firm that acts as a price setter possesses which of the following?

Monopoly power

Cartel power

Pure-competitive power

Democratic power
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43
Assume capital and labor are complementary factors of production If the government implemented regulation that reduces the amount of capital, what will be the impact to the amount of labor employed?

The amount of labor will increase

The amount of labor will decrease

There will be no change to the amount of labor, however prices will decrease

There will be no change in the amount of labor
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44
Which of the following is a characteristic of monopolistic competition when compared to a monopoly?

High barriers to entry

Easy entry and exit

Single seller

Price setter
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45
What do firms face when products in a monopolistically competitive industry are differentiated?

A horizontal supply curve

A downward-sloping supply curve

A downward-sloping demand curve

An upward-sloping demand curve
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46
Which of the following is a benefit that advertising provides to consumers?

Always reduces product prices through improved consumer knoweldge

Reduces competition between firms

Discourages price competition

Informs consumers about the availability of new products
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47
Less than the socially optimal level, since the price of the product exceeds marginal cost

The socially optimal output level, since the firm’s marginal revenue equals its marginal cost

Greater than the socially optimal level, since the firm’s marginal cost exceeds marginal revenue

Greater than the socially optimal level, since the firm earns an economic profit
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48
In 1999, Coca Cola announced a business strategy that involved a new vending machine that would be able to charge more for a bottle of Coke on hot days What makes this strategy a form of price discrimination?

On hot days, the demand for Coke is more elastic than on cool days

Consumers are willing to pay higher amounts for Coke, even on cool days

The market equilibrium price of Coke is lower than the output caused by providing products from a vending machine

On hot days, the demand for Coke is more inelastic than on cool days
49
Under oligopoly, why do a few large firms control most of the production and sale of the product?

Marginal costs rise as production expands

Average total costs rise as production expands

Diseconomies of scale make it difficult for small firms to compete

Economies of scale make it difficult for small firms to compete

 

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