This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions, which are related to each week’s objectives. Highlight the correct response, and then refer to the answer key at the end of this Study Guide to check your answers.
Use each week’s questions as a self-test at the start of a new week to reflect on the previous week’s concepts. When you come across concepts that you are unfamiliar with, refer to the Student Guide for that particular week. The Student Guide provides a breakdown of the readings that align to the Final Examination questions.
Week One: Principles of Economics
Objective: Explain how the principles of economics relate to decision-making, interaction, and the workings of the economy as a whole.
1.Economists make use of assumptions, some of which are unrealistic, for the purpose of a. teaching economics to people who have never before studied economics b. advancing their political agendas
c. developing models when the scientific method cannot be used d. focusing their thinking
Objective: Compare and contrast economic systems.
2.In a market economy,
a. supply determines demand and, in turn, demand determines prices b. demand determines supply and, in turn, supply determines prices c. the allocation of scarce resources determines prices and, in turn, prices determine supply and demand d. supply and demand determine prices and, in turn, prices allocate scarce resources
3.Which of the following statements is correct in regards to market economies? a. Buyers determine supply and sellers determine demand.
b. Buyers determine demand and sellers determine supply.
c. Buyers and sellers as one group determine supply, but only buyers determine demand. d. Buyers and sellers as one group determine demand, but only sellers determine supply.
Objective: Determine how changes in supply and demand influence price, quantity, and market equilibrium.
4.A table that shows the relationship between the price of a good and the quantity demanded of that good is called a(n) a. price–quantity table
b. complementary table
c. demand schedule
d. equilibrium schedule
Week Two: Markets and Types of Goods
Objective: Summarize the factors that affect labor supply and demand.
5.Which of the following will increase labor demand?
c. Technology improvement
d. Cost reduction
6.Which of the following events could decrease the demand for labor? a. An increase in migrant workers
b. An increase in the marginal productivity of workers
c. A decrease in demand for the final product produced by labor d. A decrease in the labor supply
Objective: Compare and contrast public goods, private goods, common resources, and natural monopolies.
7.The typical firm in the U. S. economy
a. has some degree of market power
b. sells its product for a price that is equal to the marginal cost of producing the last unit c. is perfectly competitive
d. is a monopoly
Objective: Describe the characteristics of competitive markets, monopolies, and oligopolies.
8.A firm under monopolistic competition will earn
a. a zero profit as it sets P = MC
b. a positive profit as it has some monopoly power
c. a zero profit as its P = ATC
d. a positive profit as it sets MC = MR
9.What do economists call a market structure in which there are many firms selling products that are similar but not identical? a. Perfect competition
c. Monopolistic competition
10.Which of the following is a characteristic of oligopoly but NOT perfect competition? a. Advertising and sales promotion
b. Profit maximization according to the MR = MC rule
c. Firms are price takers rather than price makers
d. Horizontal demand and marginal revenue curves
Week Three: Measuring Economic Health and Fiscal Policy.
Objective: Describe use of Gross Domestic Policy...