1.With an increase in labor productivity, there will be:
A. A movement along the production-possibilities curve toward the cheaper good.
B. An outward shift of the production-possibilities curve.
C. No change in the production-possibilities curve.
D. An inward shift of the production-possibilities curve.
2. A minimum wage law set above the current market equilibrium:
A. Has no effect on the market for labor.
B. Is justified because the burden of the law falls only on employers.
C. Creates more employment opportunities for low skill workers.
D. None of the above.
3.When the number of sellers in a market increases, ceteris paribus:
A. The market supply curve shifts right.
B. The market supply curve shifts left.
C. So too will the number of buyers.
D. Both (A) and (C).
4. If a farmer could plant either corn or wheat on the same plot of land, a change in the supply of wheat will take place when, ceteris paribus:
A. The price of corn changes.
B. The price of wheat changes.
C. The demand for wheat changes.
D. All of the above.
5. If the quantity demanded of a good is less than the quantity supplied of the good at the current price, then:
A. Price will increase until it reaches the equilibrium price.
B. The demand curve will shift to the left to create an equilibrium.
C. The supply curve will shift to the right to create an equilibrium.
D. There is a surplus of the good.
6. A leftward shift in a demand curve and a rightward shift in a supply curve both result in a:
A. Lower equilibrium price.
B. Higher equilibrium price.
C. Lower equilibrium quantity.
D. Higher equilibrium quantity.
7. When supply decreases, ceteris paribus, the equilibrium price will increase because:
A. A shortage exists at the old equilibrium price.
B. A surplus exists at the old equilibrium price.
C. The quantity demanded has increased.
D. The quantity supplied has decreased.
8. A leftward shift of the market demand curve, ceteris paribus, causes equilibrium:
A. Price to increase and quantity exchanged to decrease.
B. Price to increase and quantity exchanged to increase.
C. Price to decrease and quantity exchanged to decrease.
D. Price to decrease and quantity exchanged to increase.
9. Which of the following is a predictable effect of a price ceiling set below the current price?
A. An increase in the quantity supplied.
B. A market surplus.
C. A decrease in the quantity demanded.
D. None of the above.
10. In economics, a public good:
A. Is any good produced by the government.
B. Has social costs of production lower than private costs of production.
C. Cannot be denied to consumers who have not paid.
D. All of the above.
11. If a production of a good yields external benefits, then the:
A. Social demand is less than the market demand.
B. Social demand is greater than the market demand.
C. Market demand is equal to the government demand.
D. Both (B) and (C).
12. Suppose that if your income is $50,000, your tax is $10,000, but if your income is $100,000, your tax is $20,000. Such a tax is:
A. Proportional.
B. Progressive.
C. Regressive.
D. Similar to our current federal income tax structure.
13. If the United States decides to convert automobile factories to tank production, as it did during World War II, but finds that some auto manufacturing facilities are not well suited to tank production, then:
A. Increasing opportunity costs will occur with greater tank production.
B. The production-possibilities curve between tanks and automobiles will shift outward.
C. Decreasing opportunity costs will occur with greater automobile production.
D. The production-possibilities curve between tanks and automobiles will curve inward.
14. In a market with negative externalities, a tax on producers in that market will:
A. Raise the market price and increase economic efficiency.
B. Raise the market price and reduce economic efficiency.
C. Lower the market price and reduce economic efficiency.
D. Lower the market price and increase economic efficiency.
15. Which of the following changes in the market for HDTV's can best explain an increase in the equilibrium price?
A. An increase in demand and a decrease in supply.
B. A decrease in demand and an increase in supply.
C. An increase in both demand and supply.
D. A decrease in both demand and supply.