Econ Chapter 1 - 3: No Terms: Multiple Choice

How will goods and services be produced?

13. Which is one of the five fundamental questions that need to be dealt with in any economic system? A. What makes the rate of unemployment low? B. Who will be the richest group in the economy? C. How will goods and services be produced? D. How high should the prices of goods and services be?

Which output will be produced

15. Consumer sovereignty and "dollar votes" guide the market system in dealing with which fundamental economic question? A. Which output will be produced? B. How is the output to be produced? C. How can the system accommodate change? D. Who is to receive the output?

Cost

19. Payments that a firm makes to obtain needed resources comprise its: A. Costs B. Profits C. Capital D. Revenues

Why should the goods and services by produced?

14. Which of the following is not one of the five fundamental questions that an economy must deal with? A. How will the goods and services be produced? B. Why should the goods and services be produced? C. Who is to receive the goods and services produced in the economy? D. In what ways will progress be promoted?

What is produced is ultimately determined by what consumers by

16. The term consumer sovereignty means that: A. Government is responsible for protecting consumers' interests B. What is produced is ultimately determined by what consumers buy C. There are no limits on what consumers may buy in a market system D. Producers have strong control over what consumers buy

Firms must match their production decisions to the consumers' choices

17. The market system is said to be characterized by "consumer sovereignty." This is because: A sovereign government determines which consumer goods will be produced B. The prices of consumer goods are regulated by a sovereign government C. Firms must match their production decisions to the consumers' choices D. Consumer goods are considered to be more important than capital goods

Consumers "vote" for certain products to be produced by how they spend their incomes

18. The term dollar votes in a market system means: A. Inflation will occur if consumers don't spend wisely B. Voters may be offered dollars to help elect certain political candidates C. Government is responsible for determining what will be considered legal tender D. Consumers "vote" for certain products to be produced by how they spend their incomes

At the individual, regional, and even international levels

2. Specialization is beneficial: A. At the individual firm level, but not at the national and international levels B. At the individual, regional, and even international levels C. Only if there are differences in the abilities of resources D. Only as long as money and capital goods are employed

Competition

20. In a market system, which of the following will eliminate high-cost producers, and allow only the low-cost producers to survive? A. Competition B. Money C. A sovereign government D. Specialization

Steel and cars

21. Which of the following pairs are not considered to be complementary goods? A. Steel and cars B. Digital cameras and memory cards C. Gasoline and motor oil D. Fertilizer and irrigation systems

Shift to the left

22. If the price of gasoline increases significantly, then we'd expect the demand curve for large trucks and SUVs to: A. Shift to the right B. Shift to the left C. Become upward-sloping D. Not shift, but there will be a movement along that demand curve

Substitute goods

23. An increase in the price of product B leads to an increase in the demand for product C. This indicates that products B and C are: A. Complementary goods B. Substitute goods C. Inferior goods D. Normal goods

Leftward shift in the current supply of corn

24. If farmers withhold some of their current corn harvest from the market because they anticipate a higher price of corn in the near future, then this would cause a(n): A. Rightward shift in the current supply of corn B. Movement up along the current supply curve of corn C. Leftward shift in the current supply of corn D. Movement down along the current supply curve of corn

A change in the prices of other goods that producers could be producing

25. Which of the following will not cause the supply curve to shift? A. A change in the costs of resources needed to produce the good B. A technological change in the production of the good C. A change in the price of the good D. A change in the prices of other goods that producers could be producing

A decrease in the wages of phone-company workers

26. Which would cause an increase in the supply curve of cell-phone services? A. A decrease in the wages of phone-company workers B. An increase in the price of cell-phone services C. An increase in the taxes paid by cell-phone service providers D. A decrease in a subsidy given to cell-phone service providers

Popularity of cranberry drinks

27. All of the following would affect the position of the supply curve for cranberries, except the: A. Popularity of cranberry drinks B. Price of agricultural land for cranberries C. Cost of fertilizers for cranberry production D. Development of a new pest control for cranberries

An increase in the costs of exploration and drilling for oil

28. A leftward shift of the supply curve for oil in the United States is most likely to result from: A. A decrease in the fees that oil companies must pay for drilling licenses B. An increase in the subsidy for oil exploration and drilling C. A decrease in the world price of oil D. An increase in the costs of exploration and drilling for oil

A person trades a desk for a box of tools

3. Which is an example of barter? A. A person trades a desk for a box of tools B. A person buys clothes at a used clothing store C. A gift of tuition money from parents to their children D. The purchase of stock on the New York Stock Exchange

Barter economy

4. An economic system in which money is not used is a: A. Planned economy B. Market economy C. Mixed economy D. Barter economy

A coincidence of wants

5. Which of the following is necessary to make a trade in a barter economy? A. Money B. Unlimited wants C. A medium of exchange D. A coincidence of wants

Fosters more specialization in production

6. The use of money for exchange and trade: A. Increases the importance of barter B. Fosters more specialization in production C. Reduces consumer sovereignty D. Raises the need for a coincidence of wants

Medium of Exchange

7. Anything that is generally acceptable in trading for goods and services is a: A. Medium of Exchange B. Capital good C. Store of value D. Token money

It requires a coincidence of wants

8. Which of the following is the main problem with the barter system of exchange? A. It encourages self-interest B. It fosters the division of labor C. It requires a coincidence of wants D. It undermines the right to bequeath

Often requires the exchange of currencies

9. International specialization and trade: A. Has to be done on a barter system B. Often requires the exchange of currencies C. Does not illustrate the division of labor D. Requires active government regulation

the horizontal sum of individual demand curves

Graphically, the market demand curve is: A. steeper than any individual demand curve that is part of it B. greater than the sum of the individual demand curves C. the horizontal sum of individual demand curves D. the vertical sum of individual demand curves

lower price increases the real incomes of buyers, enabling them to buy more

One reason the the quantity demanded of a good increases when its price falls is that the: A. price decline shifts the supply curve to the left B. lower price shifts the demand curve to the left C. lower price shifts the demand curve to the right D. lower price increases the real incomes of buyers, enabling them to buy more

Make consumers in the nation worse off

12. If a nation restricts trade with other nations, then the most likely effect is: A. Lower prices of goods and services in the nation B. Increased specialization of production C. Expanded economic wealth of the nation D. Make consumers in the nation worse off

Government

11. Which of the following is assumed to be most limited in scope under a market system? A. Entrepreneurship B. Self-interest C. Competition D. Government

Exchange and Trade

1. A required element for specialization to lead to an increase in the satisfaction of society's wants is: A. A capitalist economy B. Exchange and trade C. The use of money D. A central plan

Barter can enable two firms to trade when their cash flows are limited

10. Why might a company use barter rather than money to make a trade? A. Barter trade is generally more efficient than money-based trade B. Barter can enable two firms to trade when their cash flows are limited C. Money requires a coincidence of wants, barter is more direct D. Money is efficient only for large transactions, so barter is preferred for smaller transactions