Small Test - Economics EOC (GSE) UPDATED - Fundamental Economic Concepts
In a market economy, a producer who wants to ensure sales and growth must answer all of the following questions EXCEPT (C)
A) "Will consumers want to buy our products?" B) "Will our products perform well against competitors?" C) "Will consumers be legally required to buy our products?" D) "Will our products be affordable to a large enough share of the market?"
Which of these terms is the BEST synonym for the word "entrepreneur"? (A)
A) "business owner" B) "home owner" C) "employee" D) "student"
Of the terms listed below, which is the BEST synonym for the word "profit"?
A) "business" B) "charges" C) "earnings" D) "receipts"
This chart shows labor productivity over a 50 year period. "Output per Hour" represents the average number of units of a good made in that time period. Which statement BEST describes the productivity trends on this chart? (C)
A) 1950-1973 was not productive due to World War II. B) 1950-2000 was not a productive time for any of the countries. C) 1973-1990 saw very little productivity increase among the countries listed. D) 1990-2000 saw the greatest increase in productivity of any period.
Number of Workers Total Costs Marginal Costs Total Revenue Marginal Revenue Total Profit 0 $50.00 --- --- --- $ (50.00) 1 $140.00 $12.86 $105.00 $15.00 $ (35.00) 2 $230.00 $6.92 $300.00 $15.00 $70.00 3 $320.00 $5.00 $570.00 $15.00 $250.00 4 $410.00 $3.75 $930.00 $15.00 $520.00 5 $500.00 $3.21 $1,350.00 $15.00 $850.00 6 $590.00 $4.50 $1,650.00 $15.00 $1,060.00 7 $680.00 $4.74 $1,935.00 $15.00 $1,210.00 8 $770.00 $10.00 $2,070.00 $15.00 $1,300.00 9 $860.00 $15.00 $2,160.00 $15.00 $1,300.00 10 $950.00 $22.50 $2,220.00 $15.00 $1,270.00 11 $1,040.00 --- $2175.00 $15.00 $1,135.00 A company is trying to decide how many workers to hire. They want to maximize profits. What is the maximum number of workers the company can hire to maximize profits while not having marginal costs exceed marginal revenue? (B)
A) 8 B) 9 C) 10 D) 11
A. It is more efficient B. The goods and services may benefit individuals other than the purchaser. C. The value of the goods or services is greater than the individual consumer could afford. D. It promotes economic equity. What are reasons why governments provides public goods and services? (D)
A) A and B B) B and C C) B, C, and D D) A, B, C, and D
Which describes a method for allocating scarce resources? (D)
A) A business films a new commercial to reach a new market of customers. B) A firm hires an workplace psychologist to study employees' motivation. C) The Federal Reserve announces the latest rates of inflation for the 3rd quarter of 2018. D) The Payne County Commission decides to distribute more property taxes to the Public School system for new computer
How did the Cold War contribute to economic growth in the United States? (B)
A) America limited markets for its exports. B) American defense spending remained high. C) The Soviet Union traded more with the United States. D) European countries failed to recover from World War II.
The Center for Disease Control (CDC) evaluates the marginal cost effectiveness of vaccinating all people against certain diseases. If the marginal benefit is set at $5,000, which generalization explains why the CDC does not mandate vaccination of 100% of the people? (GRAPH) (D)
A) At low vaccination coverage rates (0-70%), the marginal cost is greater. B) At high vaccination coverage rates (70-100%), the marginal cost is less. C) At 100% vaccination coverage, the cost per case prevented is less than the marginal benefit. D) At 100% vaccination coverage, the cost per case prevented is greater than the marginal benefit.
If two people are packing and delivering food, what is the most efficient way to do the job? (B)
A) Both people pack and deliver as a team. B) One person packs all the orders and the other delivers them. C) One person packs on Monday while the other delivers and then they switch jobs. D) One person packs half and delivers them; then the other packs the other half and delivers them.
How are the economic systems of North Korea and China similar? (D)
A) Both systems have emerging market economies. B) Both systems lack technological innovations. C) Both systems have democratic-type governments. D) Both systems have a centrally planned economy.
Consumer sovereignty assumes that which fundamental statement in a market economy is true? (C)
A) Buyers should be able to name their own price for goods. B) Sellers should provide products that reflect a good bargain. C) Through purchase choices, buyers determine the production of goods. D) By investing in research and development, sellers bring new products to the market.
How might firms BEST use marginal analysis to determine price and output when there are additional costs related to hiring a new worker? (A)
A) Firms might maximize revenue by raising price or output. B) Firms might minimize revenue by raising price or output. C) Firms might minimize revenue by lowering price or output. D) Firms might maximize revenue by lowering price or output.
Which correctly identifies a NEED as opposed to a want or desire?
A) I need a new pair of jeans. B) John really needs a haircut! C) We all need a certain amount of water. D) Kira needs to call her mom to come get her.
Why is private ownership an important source of economic prosperity? (D)
A) It eliminates the opportunity cost of using a resource. B) It allows owners to do anything they want with their property. C) It makes it possible for owners to ignore the desires of others without having to bear the cost. D) It provides owners with a strong incentive to develop and use assets in ways that others value highly.
Why do command economies believe that an authoritarian system is more efficient than the price system for allocating scarce resources? (D)
A) Prices and the ability to create supply and demand will ensure that no scarce resource gets to a government that control the supply lines. B) The government is not a fair source for allocation and will cheat and steal from most people to ensure that the rich and powerful are taken care of. C) Prices and the ability to make a profit will increase the supply of the scarce resources, thereby lowering prices and increasing demand to increase economic choices. D) The price system is not a more efficient system for allocation of goods and services and the government is a fair and impartial distribution center to help ensure economic equity.
Why is the price system a more efficient system for allocating scarce resources than by authoritarian means, such as in command economies? (A)
A) Prices and the ability to make a profit will increase the supply of the scarce resources, thereby lowering prices and increasing demand. B) Prices and the ability to create supply and demand will ensure that no scarce resource gets to a government that control supply lines. C) The price system is not a more efficient system for allocation of goods and services and the government is a fair and impartial distribution center. D) The government is not a fair source for allocation and will cheat and stea
How can firms use marginal analysis to determine the price of a product? (C)
A) Profit maximization can occur when the marginal cost exceeds the marginal revenue. B) The total cost of production can determine the individual unit price of a product. C) Marginal analysis can be used to determine at what price profit maximization occurs. D) Firms can cal
Kathy, Sue, and Christina own a bakery. Each day all three women spend hours baking cakes, decorating cakes, and packaging cakes. Which economic concept would help them become more efficient? (C)
A) Scarcity B) Productivity C) Specialization D) Interdependence
If a certain combination of goods and services lies inside the production possibilities curve for an economy, which of these statements must be true? (A)
A) That combination is an inefficient use of resources. B) Resources are being used more efficiently now than in the past. C) This economy must be realizing gains from specialization and trade. D) More resources must be obtained to attain that combination of goods and services.
If a new machine was developed that picked coffee beans twice as fast as is currently possible, what would you expect to happen to the price of coffee? (B)
A) The price would increase to pay for the new machinery. B) The price would decrease because there would be more coffee available. C) The price would increase due to greater demand for coffee picked this way. D) The price would decrease because fewer would want coffee picked by machine.
What effect might high worker productivity have on determining the earnings of workers? (B)
A) The productivity of workers might result in little to no impact on the earnings. B) The more productive workers are, it might increase their earnings. C) Higher earnings might increase the productivity of workers. D) Earnings might be solely determined by productivity.
How did technological advances in printing impact the United States in the 19th century? (C)
A) The transfer of information slowed down. B) American demand for reading materials declined. C) Newspapers and magazines became more affordable. D) There was an increase in the number of mill failures.
In markets both parties are better off when they engage in voluntary, non-fraudulent exchange. What is the role of government in promoting such exchange? (B)
A) There is no role for the government; the government only impedes exchange. B) The governments role is to create legislation to prevent fraud. C) The role of government is to make sure all individuals are treated equally. D) The governments role is to make sure sellers make a profit and stay in business.
Which of the four fundamental questions relates most directly to consumer sovereignty? (C)
A) Who will get the goods and services? B) How will the system promote progress? C) What goods and services will be produced? D) How will the goods and services be produced?
One afternoon, you were driving home and listening to your favorite music. You were so engrossed in the music and getting home that you failed to notice your speed. The police pulled you over and gave you a ticket for driving 57 mph in a 45 mph speed zone. Your ticket cost you $245 of your hard-earned summer job money. What is the desired positive incentive of non-distracted driving? (A)
A) You have lower insurance rates and fewer chances of wrecks. B) You will have higher insurance rates and more chances of wrecks. C) You are more aware of your surroundings and able to avoid speed-traps. D) You will be able to drive at faster speeds because you can concentrate better.
Firms use marginal analysis to determine production output levels by (D)
A) adjusting production levels in accordance with information from retailers. B) using comparisons with strong competitors to set production levels accordingly. C) trying to minimize production costs by using better and more efficient methods. D) studying the effect on revenue of small changes to the number of items produced.
The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity and judgement with which it is any where directed, or applied, seem to have been the effects of the division of labour. -Adam Smith, The Wealth of Nations, 1776 Which sector of the economy MOST LIKELY benefited from Adam Smith's ideas? (C)
A) agriculture B) finance C) manufacturing D) service
Assume that an economy produces cotton t-shirts and metal stop signs. Which of these would cause the production possibilities curve for this economy to shift outward? (A)
A) an increase in the labor force B) a decrease in the price of cotton C) a decrease in the demand for t-shirts D) an increase in the prices of both goods
Based on the U.S. Census information in the graph, (D)
A) annual earnings are not impacted by educational attainment. B) educational attainment has an inverse relationship to annual earnings. C) all workers with higher educational attainment have higher annual earnings. D) annual earnings have a generally positive correlation with educational attainment.
When an individual specializes to produce one good, and then acquires additional desired goods from other specialists, (A)
A) both parties gain as a result of voluntary exchange. B) both parties gain as a result of fraudulent exchange. C) neither party gains as specialization decreases efficiency. D) neither party gains as specialization decreases productivity.
In a command economy, how are the prices of goods and services determined?
A) business owners B) the central government C) market forces of supply and demand D) independent agencies and independent regulators
Andre enjoys playing video games, but there is not a video game about his favorite hobby: collecting stamps. Andre decides to make a video game, not his for his enjoyment but to sell to other stamp collectors. In this situation, which productive resource is Andre? (B)
A) capital B) entrepreneur C) human resource D) natural resource
Software Economy (2007 to 2011) Global Information Technology (IT) employment will rise by 7.1 million jobs More than 100,000 new businesses will emerge as a result of the growing IT field IT business will be responsible for over 25% of the new jobs throughout the world Use the chart to answer the question. What type of resource does the data in the chart represent?
A) capital B) financial C) human D) natural
The United States government is LEAST LIKELY involved in the nation's economy as a (B)
A) consumer of goods and services. B) planner deciding what to produce. C) protector against false advertising and environmental hazards. D) regulator charged with preserving competition in the marketplace.
Why is the consumer considered "king" in a capitalist economy? (D)
A) consumers own the productive resources B) consumers contribute to the factor market C) consumers vote for elected government officals D) consumers determine what products will be produced
Investment in education, training, and skill development has been linked to (C)
A) declining job satisfaction. B) growing financial instability. C) increasing earnings for workers. D) decreasing political participation.
urope was hurt by the financial crisis in 2008. High unemployment hit all areas of the population. However, the group that was hit the hardest were young people, ages 18-25 years of age. Many of these young people ended up leaving and moving to other areas looking for work. Many new initiatives and educational programs in the European Union are aimed at young people to give them better educational and vocational skills. What is the European Union making an investment in to help improve the lives of the young people? (A)
A) human capital B) entrepreneurship C) capital resources D) capital investments
An investment in improving the skill level of labor is considered an investment in (A)
A) human capital. B) entrepreneurship. C) improved technology. D) capital improvements
Which of these is the MOST likely way long-term economic growth takes place? (C)
A) increases in interest rates B) increases in overall price level C) increases in labor productivity growth D) increases in labor force participation ra
According to the graph, (B)
A) initially, all workers have relatively the same annual earnings. B) workers with some college have a higher annual income than workers with a high school diploma. C) workers with a high school diploma have a higher annual income than workers with advanced degrees. D) at retirement, workers with a Doctoral degree earn relatively more than workers with a Professional degree.
Which example of productive resources is matched correctly? (B)
A) land and surgeon B) capital and oil rig C) labor and telephone wire D) entrepreneurship and rice field
One of the BEST measures of success for businesses and their entrepreneurs is (B)
A) loss. B) profit. C) marginal cash. D) marginal revenue.
In early America, a traditional market structure existed when (C)
A) merchants purchased goods from England. B) farmers sold produce in markets in towns. C) people bartered goods they produced for goods they needed. D) people set up guilds to regulate specific industries, like masons.
Canada has a universal healthcare system, providing government-funded medical services to all citizens. However, the vibrant private sector helps to push an economy that is one of the world's most successful. Intense and frequent trade with the United States provides the country with great wealth. These facts provide evidence that Canada has a
A) mixed economy. B) market economy. C) command economy. D) traditional economy.
What are two advantages that a market economy has over a mixed economy? (D)
A) more limits on profits B) more control over prices and wages C) more security and equity for producers and consumers D) more freedom and efficiency for producers and consumers
The production possibilities curve assumes all of the these EXCEPT (GRAPH) (A)
A) opportunity costs are constant. B) scarcity requires economic choices. C) production of more defense goods means fewer consumer goods. D) the quantities of the technology and production techniques do not change.
When the amount of output produced by a given amount of inputs increases, the MOST LIKELY result is (A)
A) overall productivity rises. B) economic interdependence rises. C) consumer spending on productive resources increases. D) business spending on productive resources increases.
An economy experiencing high levels of unemployment would most likely be producing at which point? (GRAPH) (C)
A) point A B) point B C) point C D) point D
Countries that invest more in human capital usually have higher GDP rates than countries that do NOT because (C)
A) population rates and family size is larger so they have more workers. B) people are expected purchase stocks and bonds for the company they work for. C) more money is spent on education and training so people produce more and make a higher wage. D) more money is spent in only using human intelligence and technology and computers are limited.
As one of the factors of production/productive resources, capital can be defined as (D)
A) the goods and services a business produces. B) the supply of labor needed to produce goods. C) the people that purchase goods and services. D) the equipment and factories needed to produce goods.
The opportunity cost of a move from point A to point B is (GRAPH) (D)
A) the increased production of D. B) the increased production of C. C) the decreased production of good X. D) the decreased production of good Y.
A government that operates in a market economy MIGHT become involved in the economy (D)
A) to increase the profits of a specific company. B) to eliminate income inequality among its citizens. C) to make sure all products are produced the same way. D) to provide public goods and services to its citizens.
David wants to buy a pizza and go to the movies. However, he only has enough money to do one or the other. In order to decide what to spend his limited money on, what must David do? (D)
A) visit a bank B) apply for interest C) hire a financial adviser D) engage in a rational decision making process
"Human wants are greater than the resources that are available to satisfy them." This implies the need for (D)
A) working harder. B) asking for less. C) leaving decisions to fate. D) making choices to allocate resources.
Which of these would BEST satisfy a human need?
Which of these would BEST satisfy a human need? A) automobile B) bread C) iPod D) newspaper
