Economics Midterm Review (short)

A

Which of the following are factors of production? E1.1.1 a. capital and land b. scarcity and shortages c. technology and productivity d. economics and business decisions

D

5. How is the U.S. government involved in the factor market? E.1.4.4 a. It buys paper from firms. b. It purchases telephones and computers. c. It tells businesses and firms what to purchase. d. It pays wages to government employees.

C

A country is changing from a centrally planned economy to a free market economy. What will be one difficulty for citizens in this country? E1.4.4 a. Farmers will have to grow the crops that government instructs them to. b. Only poor quality goods will become available to consumers. c. Workers will lose job security and guaranteed incomes. d. Entrepreneurs will have fewer opportunities to start new businesses.

D

A town wants to repair a school in one of its poorest neighborhoods. To pay for it, citizens vote to raise taxes on households and businesses. What social goal best explains this economic decision? E1.4.4 a. freedom b. security c. growth d. equity

B

Scarcity requires that people make trade-offs because? E1.1.1 a. people have more wants than needs. b. there is a limited supply of resources. c. services are more available than goods. d. producers rarely make enough of a good.

D

What "invisible hand" regulates the free market economy? E1.4.4 a. incentive and efficiency b. specialization c. competition between firms d. competition and self-interest

D

What happens after the demand for a very popular product drops? E1.3.1 a. The supply goes down, and the price goes up. b. The supply and the price both go up. c. Shortage makes the product hard to get. d. Excess supply makes the product easy to get.

C

What is one way government could limit negative externalities of a new highway? E1.4.4 a. limit the number of vehicles b. charge higher tolls c. build noise barriers nearby d. increase the speed limit

B

What must a nation's economy do in order to improve the standard of living? E1.4.4 a. remain stable b. grow c. reach economic equity d. allow central planning

C

Why does an economist create a market demand schedule? E1.3.1 a. to learn what demands the market will make under unusual conditions c. to predict how people will change their buying habits when prices change b. to have an idea of how a market would change if conditions in an area changed d. to show how various conditions can change the demand for a good