Questions:
1. After wearing seat belts became mandatory, drivers reacted by driving faster and less carefully. This is consistent with what Principle of Economics?
a. trade can make everyone better off
b. the cost of something is what you give up to get it
c. governments can sometimes improve market outcomes
d. people respond to incentives
2. The term 'quantity supplied' means _____
a. the same things as 'supply'.
b. the amount of a good that customers need.
c. the amount of a good that consumers ultimately desire.
d. the amount of a good sellers are willing to sell at a given price.
3. Economists believe that self-sufficiency (no trade) _____
a. is needed, in order to guarantee national security.
b. ensures an equitable distribution of resources.
c. prevents exploitation of the working class, by limiting the power of capitalists.
d. results in lower levels of output and consumption than would prevail under free trade.
4. Opportunity cost is _____
a. any lost opportunity.
b. the value of the next-best opportunity that one foregoes when making a choice.
c. used to exploit weaker parties to a transaction by stronger parties.
d. the aggregate value of all foregone opportunities.
5. Economists argue that rent controls carry long-run unintended consequences such as _____
a. a fairer price for people who can't afford market-determined rents.
b. improved quality of apartment units.
c. fewer apartment units as landlords seek substitute uses of their property.
d. a higher cost to landlords who discriminate through non-price criteria.
6. Other things constant, a lower price for corn tends to decrease _____
a. the supply of corn.
b. the quantity supplied of corn.
c. the demand for corn.
d. the quantity demanded for corn.
7. Economists study _____
a. the choices individuals make, but not the consequences of their choices.
b. the costs of production of goods and services, in order to set fair prices.
c. the choices that individuals make under conditions of scarcity and uncertainty.
d. theories and ignore all the facts.
8. If a consumer pays $12 for a product but he/she is willing to pay up to $20, what is his/her consumer surplus?
a. $20
b. $32
c. $0
d. $8
9. Price gouging is _____
a. a natural response to a sudden increase in demand.
b. irrational behavior that violates economic logic.
c. not subject to economic analysis, because it is illegal.
d. a precisely defined concept that leaves no room for dispute or disagreement.
10. The Production Possibilities Frontier Illustrates this Principle of Economics:
a. People Face Trade-Offs
b. The Cost of Something is What You Give Up to Get It
c. Both 1 and 2 above are right
d. Neither 1 nor 2 above are right
11. A tariff is a _____
a. tax imposed on exports
b. limitation on the amount of imports allowed into a country.
c. tax imposed on imports
d. limitation on the amount of exports sent out of a country
12. A legal floor set above the market-clearing price for a good would tend to ______
a. protect suppliers from unfair competition and predatory pricing.
b. lead to a surplus of that good.
c. lead to a shortage of that good.
d. all of the above
13. Price elasticity of demand refers to:
a. How the quantity supplied reacts to changes in the price of a product
b. How the quantity demanded reacts to changes in consumers' income
c. How the quantity demanded reacts to changes in the price of a product
d. How the quantity supplied reacts to increases in the cost of production
14. All other things being equal, a decrease in supply results in a(n)_____.
a. increase in equilibrium price and a decrease in equilibrium quantity
b. increase in equilibrium quantity and a decrease in equilibrium price
c. decrease in equilibrium quantity and a decrease in equilibrium price
d. decrease in demand
15. In one hour, a person can fix 4 flat tires or type 200 words. The opportunity cost of fixing ONE flat tire is _____.
a. 200 words
b. 4 flat tires
c. 1 word
d. 50 words
16. All other things being equal, an increase in demand results in a(n) _____
a. increase in equilibrium price and a decrease in equilibrium quantity
b. increase in equilibrium quantity and a decrease in equilibrium price
c. decrease in equilibrium quantity and a decrease in equilibrium price
d. increase in equilibrium price and an increase in equilibrium quantity
17. In a free market, a shortage of a product always leads to:
a. Increases in the price
b. Decreases in the price
c. No change in the price
d. Any of the above
18. A price imposed by the government below an equilibrium price is called a ____
a. price ceiling
b. price floor
c. price carpet
d. price surplus
19. When doing research, Economists:
a. follow the scientific method: observation, theory, and more observation
b. cannot use experiments, as they are often done in areas like Physics and Chemistry
c. have to use whatever data the world happens to give them
d. all of the above.
20. Economic models_____.
a. must completely describe every aspect of the economy in order to be useful
b. are simplified abstract representations of reality
c. avoid the use of assumptions wherever possible
d. are ideals that economics agents aspire to achieve