ECONOMIC QUIZ

QUESTION 1

1. In one week, Susan can sew 4 blouses or bake 280 pies. The opportunity cost per pie for Susan is a.$70 b.70 blouses c.4 blouses d.1/70 of a blouse e.70 pies

4 points  

QUESTION 2

1. If the production possibilities frontier curve is linear and downward-sloping instead of bowed out, that indicates a.constant opportunity cost. b.infinite resources exist instead of scarcity. c.inefficient applications. d.indecision on the part of society. e.specialization.

4 points  

QUESTION 3

1. The concept of the “invisible hand” Adam Smith described can best be expressed as a. actions of entrepreneurs in creating businesses. b.the allocation of resources within markets by market forces. c.the need for government intervention in markets. d.trade is best between two or more countries. e.monopolies directing economic behavior.

4 points  

QUESTION 4

1. A surplus of hats will cause a. a decrease in the supply of hats. b.an increase in the price of hats. c.a decrease in the price of hats. d.a decrease in the demand for hats.e.a decrease in both supply and demand for hats.

4 points  

QUESTION 5

1. A price below the equilibrium price and quantity between demand and supply will lead to a.surpluses. b.shortages. c.no change in markets. d.underground markets. e.both b and d.f.none of the above.

4 points  

QUESTION 6

1. If the supply of petroleum were reduced by petroleum firms due to rising inventories, we can expect a.prices to rise.b.quantity demanded to risec.quantity supplied to fall.d.quantity demanded to fall. e.none of the above. f.a, c, and d. g.a and c only.

4 points  

QUESTION 7

1. What can we expect to occur to hot dog buns if the price of hot dogs were to decrease? a.Quantity demanded of hot dog buns would increase. b.Quantity demanded of hot dog buns would decrease. c.The demand curve for hot dog buns would shift inward. d.Demand for hot dog buns would increase. e.The supply curve of hot dog buns would shift outward.

4 points  

QUESTION 8

1. If suppliers of tea cut supply in markets, what can we expect to happen if the market for coffee? a.A decrease in price and decrease in quantity of coffee. b.A decrease in price and increase in quantity of coffee. c.An increase in price and increase in quantity of coffee. d.An increase in price and decrease in quantity of coffee. e.None of the above.

4 points  

QUESTION 9

1. A shift outward of the production possibilities frontier line indicates a.economic expansion has occurred and more of each good or resource can be produced. b.less of both goods can be produced. c.the producer is less efficient and incurring a reduction in economic wealth. d.a change between two goods produced.

4 points  

QUESTION 10

1. If the demand curve and supply curve arrive at an equilibrium price of $5 and quantity of 6, while the height of the consumer surplus triangle is 5, and the height of the producer surplus triangle is 5, it is correct to say a.producer surplus equals 30. b.consumer surplus and producer surplus are both the same and equal 3. c.consumer surplus equals 30. d.consumer surplus equals 15.

4 points  

QUESTION 11

1. If the equilibrium price is $10 and equilibrium quantity 10 units, and a price ceiling of $8 is imposed, we can expect a.surpluses to occur in markets soon afterwards. b.shortages to occur in markets soon afterwards. c.quantity demanded to fall. d.quantity supplied to fall. e.both answers b and d.

4 points  

QUESTION 12

1. We can expect that government price floors will eventually lead to a.market disequilibrium. b.surpluses. c.higher prices. d.underground markets. e.all of the above.

4 points  

QUESTION 13

1. An increase in consumer income will affect the supply of a product. True
   False

4 points  

QUESTION 14

1. A change in demand is movement along the same demand curve. True
   False

4 points  

QUESTION 15

1. Government actions, such as that of price floors and price ceilings, actually will lead to reduced unemployment and raise efficiency and equity in markets. True
   False

4 points  

QUESTION 16

1. The production possibility frontier assumes the level of technology varies when applying the model. True
   False

4 points  

QUESTION 17

1. Government price controls like price ceilings and price floors will still lead to equilibrium between demand and supply. True
   False

4 points  

QUESTION 18

1. In the circular flow model, firms own the economic resources and households buy the manufactured products and services. True
   False

4 points  

QUESTION 19

1. Economics is a social science concerned with satisfying man’s unlimited wants with limited resources. True
   False

4 points  

QUESTION 20

1. If incomes of Americans decrease, we can expect the supply curve to shift leftward and be negatively affected. True
   False

4 points  

QUESTION 21

1. A demand curve is negatively sloped, while a supply curve is positively sloped. True
   False

4 points  

QUESTION 22

1. A complementary good is a determinant of supply. True
   False

4 points  

QUESTION 23

1. If the price of petroleum is rising, we can expect both the supply curve and demand curve to shift leftward. True
   False

4 points  

QUESTION 24

1. The law of comparative advantages in trade typically applies only to trade between nations and favors the party who has the highest opportunity cost. True
   False

4 points  

QUESTION 25

1. “Big corporations like Exxon Mobil and Ford Motor Company have deep pockets and need to be hiring more people.”  This is a positive statement about economic policy. True
   False