Basic Economics

(55-61)

1. Joe has $100. He needs a new jacket and would like to buy a pair of tickets for Sunday’s game. He cannot afford both. He buys the jacket. What is the opportunity cost?

A. The jacketB. The ticketsC. The $100D. The time spent at the game

2. In the above scenario, what is the scarce resource?

A. The jacketB. The ticketsC. MoneyD. None are scarce

3. Which of the following is a land resource?

A. TeacherB. BulldozerC. CoalD. A diamond ring

4. Which of the following is a capital resource?

A. Teacher B. BulldozerC. CoalD. A river

5. Which of the following is a labor resource?

A. Coal B. DoctorC. BulldozerD. Natural Gas

6. Which of the following is true concerning the division of labor?

A. Productivity is not affected by it.B. Society does not benefit from it.C. Production increases and the standard of living improved.D. There are no examples of the division of labor within the schools.

7. Exchanging one item for the use of another is called a(n) _______________.

A. Opportunity costB. Trade-offC. ScarcityD. Factor of production

8. What forces individuals and nations to make decisions?

A. Laissez-faire economicsB. The invisible hand theoryC. Scarce resourcesD. The unlimited resources

9. In which economic system would the government answer all of the basic economic questions?

A. TraditionalB. CommandC. MixedD. Free Market

10. Which economic system has the least amount of government regulation?

A. Pure CommandB. Mixed Economy that leans toward a command economyC. Mixed Economy that leans toward a pure market economyD. A pure free market

11. The Baka of Cameroon, Africa are a semi-nomadic people who rely heavily on custom and religion in determining who will produce what, how goods will be produced, and who will share in what is produced. What economic system best describes these people?

A. TraditionalB. CommandC. Mixed D. Free Market

12. Of the following, which statement best describes the economic system in the U.S.?

A. A traditional economy where men perform certain work that women cannotB. A mixed economy that has extreme government regulationsC. A mixed economy that is closer to a free market than mostD. A pure command economy

13. If the U.S. spends more money on military goods this year than last; which of the following will also occur?

A. America is guaranteed it will not be attacked.B. Less money will be spent on Civilian goods (Social Programs).C. The military will be made weaker.

D. The stock market will drop

14. The most common economic system is a _____________ economy.

A. CommandB. MarketC. MixedD. Traditional

15. Adam Smith advocated which economic system?

A. Command B. MarketC. MixedD. Traditional

16. The invisible hand represents _______________.

A. Laissez-faire economicsB. Private propertyC. Freedom of choiceD. Competition

17. Adam Smith advocated an economy that was free from government regulation. This is called __________________.

A. Laissez-faireB. The invisible hand theoryC. Profit incentiveD. Communism

18. Which of the following statements best describes Adam Smith’s invisible hand theory?

A. The government should provide for the welfare of all it’s people.B. Competition will improve economic conditions better than the governmentC. Greed is a necessary evilD. The love of money is the root of all evil

19. The desire one has to make money is called __________________.

A. Private PropertyB. Free EnterpriseC. Profit IncentiveD. The invisible hand

20. Bartering is characteristic of which economic system?

A. Traditional B. CommandC. Free MarketD. Mixed

21. Lower prices, better wages, and improved quality result from ________________.

A. Government regulationB. Command EconomyC. TraditionsD. Competition

22. The basic problem in economics is ________________.

A. Commodity GoodsB. Supply and DemandC. InflationD. Scarcity

23. Technology has what economic impact?

A. Increases competitionB. Increases productionC. Slows economic growthD. Causes inflation

24. Breaking a job into several smaller jobs (such as carpenters do when building a house; some do the roof, others do the walls, ect…..)is called_____________.

A. Profit incentiveB. EntrepreneurshipC. Division of LaborD. Factor of Production

25. The willingness and ability of consumers to purchase goods and services at different prices in the market?

A. SupplyB. DemandC. Law of demandD. Law of diminishing marginal utility

26. As the price of a product rises, what will happen to its’ demand?

A. Remain the sameB. RiseC. DropD. Inflate

27. Which economic law is defined as follows? As the price of a good or service rises, so does its’ supply; as the price drops, so does the supply.

A. The law of supplyB. The law of demandC. The law of diminishing returnsD. The law of elasticity

28. Which economic law is defined as follows? As the price rises the demand falls; as the price fall the demand rises.

A. The law of supplyB. The law of demandC. The law of diminishing marginal utilityD. The law of diminishing returns

29. The willingness and ability of producers to provide goods and services at different prices in the market is called _______________.

A. ElasticityB. DemandC. SupplyD. Inelasticity of Demand

30. Which of the following is the best reason for producers providing more goods and services at higher prices?

A. Profit IncentiveB. Social consciousnessC. Division of laborD. Competition

31. Which statement is true concerning goods with more elastic demand schedules?

A. They have fewer substitutesB. They have more substitutesC. They are necessitiesD. Both A and C

32. The more of an item is consumed the less satisfaction is received with each additional unit. Which economic law is this?

A. Law of supplyB. Law of demandC. Law of Diminishing ReturnsD. Law of Diminishing Utility

33. The point where supply and demand meet is called the ______________.

A. Surplus PriceB. Shortage Price C. Market PriceD. Elasticity

34. Which of the following is a substitute good for Chicken?

A. Ice CreamB. PepsiC. PorkD. All of the above

35. Which of the following is a complimentary good for taco shells?

A. BeefB. MilkC. HoneyD. Mustard

36. What will happen to the demand for Pepsi if coca-cola prices rise?

A. The demand for Pepsi will decreaseB. The demand for Pepsi will remain the sameC. The demand for Pepsi will increaseD. None of the above

37. The economic condition that occurs above the equilibrium price is called a _______________.

A. ShortageB. SurplusC. Elasticity of DemandD. Real Income Effect

38. If the unemployment rate decreases, what will the impact be?

A. Demand for goods and services will increaseB. Demand for goods and services will decreaseC. Supply will increaseD. Supply will decrease

39. If S1 is the original supply curve; which curve represents a decrease in supply?

A. S2B. S3

S2

S1S3

40. If S1 is the original supply curve; which curve is the likely result of an increase in the cost of production?

A. S2B. S3

S2

S1S3

41. If S1 is the original supply curve; which curve is the likely result of a strike by employees?

A. S2B. S3

S2

S1S3

42. If D1 is the original demand curve; which curve represents a increase in demand?

A. D2B. D3

D3

D1D2

43. If D1 is the original demand curve; which curve is the likely result of a drop in the price of a substitute good?

A. D2B. D3

D3

D1D2

44. If D1 is the original demand curve; which curve is the likely result from a decrease in the unemployment rate?

A. D2B. D3

D3

D1D2

45. What is the market price?

A. .50B. .75C. 1.00D. 2.00

S1 D1

0

2.00

1.00

.50

.75

46. What economic condition is occurring above the market price?

A. ShortageB. SurplusC. InflationD. Deflation

S1 D1

0

2.00

1.00

.50

.75

47. What economic condition is occurring below the market price?

A. ShortageB. SurplusC. InflationD. Deflation

S1 D1

0

2.00

1.00

.50

.75

48. The price where the supply and the demand of a product meet is called what?

A. demand priceB. supply price C. equilibrium priceD. none of the above

49. If the demand does not change significantly due to a change in price, the item is said to be ________________ in demand.

A. inelasticB. elasticC. surplusD. shortage

50. If the Articles of Incorporation are in agreement with state law the state will grant the business a _______.

A. business licenseB. insuranceC. corporate charterD. tax relief

51. One advantage of a sole proprietorship is the owner keeps the _______.

A. recordsB. receiptsC. profitsD. complaints

52. What is the oldest, most common type of business organization?

A. sole proprietorshipB. partnershipC. franchiseD. corporation

53. Which business organization is owned and operated by it’s members for it’s members?

A. CorporationsB. Non-profit corporationsC. Sole proprietorshipsD. Cooperatives

54. All of the following are examples of non-profit organizations except which?

A. GoodwillB. McDonaldsC. Salvation ArmyD. The Red Cross