1) According to economics, what causes us to have to make choices?
A. unlimited resources.
2) Why do consumers have to make tradeoffs in deciding what to consume?
A. there are not enough of all goods produced.
B. the prices of goods vary.
C. not all goods give them the same amount of satisfaction.
D. they are limited by a budget constraint.
3) What is the term in economics by which a group of buyers and sellers of a product come together to trade?
4) Which of the following is not a critical function of the government in facilitating the operation of a market economy?
A. enforcing contracts.
B. enforcing property rights.
C. protecting private property.
D. ensuring an equal distribution of income to all citizens.
5) Which of the following statements describes the actions of producers in the circular flow model?
A. spend earnings from resource sales on goods and services in the product market.
B. hire resources sold by households in the factor market.
C. sell goods and services in the input market.
D. and households spend earnings from resource sales on goods and services in the factor market.
6) Which of the following is an example of spending on goods and services in the circular flow model?
A. Timmy purchases a new examination table for use in his veterinary clinic.
B. Celeste buys fresh herbs at the farmers' market to use in her restaurant.
C. Belinda purchases a new computer for her tax-preparation business.
D. Javier buys 800 square feet of wood flooring for his vacation home.
7) If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded, then the demand for golf balls is
A. relatively elastic.
B. relatively inelastic.
D. perfectly elastic.
8) If demand is inelastic, the absolute value of the price elasticity of demand is
A. greater than the absolute value of the slope of the demand curve.
B. greater than one.
D. less than one.
9) Economists in general
A. Incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.
B. Do not try to explain people's tastes, but they do try to explain what happens when tastes change.
C. Believe that they must be able to explain people's tastes in order to explain what happens when tastes change.
D. Do not believe that people's tastes determine demand and therefore they ignore the subject of tastes.
10) Which of the following is evidence of a surplus of bananas?
A. The quantity demanded of bananas is greater than the quantity supplied.
B. Firms raise the price of bananas.
C. The price of bananas is lowered in order to increase sales.
D. The equilibrium price of bananas rises due to an increase in demand.
11) At a product's equilibrium price
A. the product's demand curve crosses the product's supply curve.
B. the product's demand curve is the same as the product's supply curve.
C. the quantity of the product demanded is greater than the quantity of the product supplied.
D. the quantity of the product demanded is less than the quantity of the product supplied.
12) If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until
A. quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.
B. the quantity demanded exceeds the quantity supplied. The market will then be in equilibrium.
C. quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price.
D. all consumers...