Economics FINAL

Which of these terms is most closely related to tradeoffs? a. margin b. scarcity c. markets d. incentives

b. scarcity

The board of directors of a corporation is selected by and accountable to the a. chief executive officer. b. shareholders. c. stakeholders. d. founding entrepreneur.

b. shareholders.

In a voluntary exchange, why do people give something up? a. to allocate scarce resources fairly b. to get something they want more c. to comply with state requirements d. to increase their self-sufficiency

b. to get something they want more

Which scenario best illustrates the law of diminishing marginal utility? a. Someone who doesn't listen to music does not care about getting a new CD. b. A collector of china figurines is eager to get a new one. c. A new toy is less exciting to a child with many toys than to a child with just a few. d. A car breaks down more often as it gets older.

c. A new toy is less exciting to a child with many toys than to a child with just a few

Why is competition among restaurants in a big city an example of monopolistic competition? a. Restaurants often go out of business. b. All restaurants serve people, and one restaurant serves the most people. c. All restaurants serve food, and each restaurant is distinctive. d. Starting a restaurant is expensive.

c. All restaurants serve food, and each restaurant is distinctive.

Which is the best example of specialization? a. A surf shop lowers the price on swimsuits. b. A dry cleaner spends extra time on grease spots. c. An assistant in a tailoring shop only replaces zippers. d. An online clothing outlet offers customized monograms.

c. An assistant in a tailoring shop only replaces zippers.

How is the market-clearing price determined? a. It is calculated by economic analysts. b. It is set by a government commission. c. It is reached through trial and error. d. It is fixed by each manufacturer.

c. It is reached through trial and error.

How does the Commerce Clause promote economic interdependence? "The Congress shall have Power to . . . regulate Commerce . . . among the several States. — Article I, Section 8, U.S. Constitution" a. It discourages local markets. b. It puts pressure on states to increase production. c. It keeps states from creating trade barriers. d. It defines legislative powers vaguely.

c. It keeps states from creating trade barriers.

The equilibrium price is the price at which a. demand and supply curves intersect. b. producers' total revenue is highest. c. neither demand nor supply will shift. d. consumers start reducing demand.

a. demand and supply curves intersect.

Foundations and land trusts are examples of a. cooperatives. b. trade associations. c. nonprofit organizations. d. franchises.

c. nonprofit organizations.

What does Adam Smith's idea of an "invisible hand" represent? a. the divine oversight of human affairs b. the way that markets coordinate trade c. the concern of people for one another d. the economic role of governments

b. the way that markets coordinate trade

Right-to-work laws in many states prohibit employers from a. requiring workers to join a labor union. b. promoting only high-performing employees. c. laying off workers when business slows down. d. making prior experience a condition of employment.

a. requiring workers to join a labor union.

If a manufacturer introduces a new product with a successful advertising campaign and an artificially low introductory price, which of these will most likely result? a. shortage b. surplus c. equilibrium d. rationing

a. shortage

Which of these principles determines wage rates in a labor market? a. supply and demand b. collective bargaining c. risk and reward d. globalization

a. supply and demand

Quantity demanded moves along the demand curve in response to changes in a. expectations. b. price. c. income. d. preferences.

b. price.

People's wants are unlimited. This fact means that which of the following is always present? a. costs of production b. scarcity c. marginal utility d. shortages

b. scarcity

What is the law of unintended consequences? a. Actions often have unforeseen effects. b. Markets are always influenced by emotional factors. c. Economic booms are always followed by downturns. d. Attempts to intervene always backfire.

a. Actions often have unforeseen effects.

Which of the following questions would be most helpful in determining the market structure of a specific market? a. How similar are the products? b. How are the corporations organized? c. How far are goods shipped? d. How many people want to buy?

a. How similar are the products?

How does trade increase the value of an item? a. It transfers the item to someone who values it more. b. It provides work for storekeepers and truckers. c. It puts more different goods into competition. d. It makes the item more expensive to buy.

a. It transfers the item to someone who values it more.

Which is the best example of a transfer payment? a. Social Security check b. fee for renting a park facility c. police officer's paycheck d. moving expense reimbursement

a. Social Security check

Why do goods made in factories that cause pollution tend to be overproduced? a. Some costs are not charged to the producer. b. Some benefits are wanted by the community. c. Some stores stock more than they can sell. d. Some people may refuse to purchase the items.

a. Some costs are not charged to the producer.

Which of these is most likely to happen to demand for clothes in a clothing store when blizzards keep customers at home? a. The demand curve shifts to the left. b. The demand curve becomes flatter. c. The demand curve becomes steeper. d. The demand curve shifts to the right.

a. The demand curve shifts to the left.

Which of these best explains why gold and silver came to be regarded as money? a. They were rare and did not decay. b. They were easy to store in bank vaults. c. They could be shaped into jewelry. d. They came from mines owned by rulers.

a. They were rare and did not decay.

Which sentence best explains why the number of manufacturing jobs has declined? a. Training and technology have increased worker productivity. b. Older employees no longer have to retire at a certain age. c. More jobs are being taken by women and minorities. d. Fewer products are now made in the United States.

a. Training and technology have increased worker productivity.

What is the main reason Americans specialize more today than the early pioneers did? a. We have more access to markets. b. We live in less crowded conditions. c. We depend less on transportation. d. We have more vocational training.

a. We have more access to markets.

Which of these might best signal furniture makers to cut back production? a. a drop in the price consumers are willing to pay b. an increase in availability of skilled workers c. an introduction of competitors into the market d. a fall in the cost of essential raw materials

a. a drop in the price consumers are willing to pay

Which method of distribution is most commonly used by online bookstores? a. ability to pay b. first come, first served c. according to need d. equal distribution

a. ability to pay

Which event in Florida and California would most likely shift the supply curve for orange juice to the left? a. an early frost accompanied by ice storms b. an influx of new low-wage workers c. evidence that citrus fruit strengthens bones d. rise of mango juice as a popular breakfast drink

a. an early frost accompanied by ice storms

When you use a credit card, you are a. borrowing money from a bank. b. withdrawing from y our account. c. making a commercial loan. d. promising to pay the store later.

a. borrowing money from a bank.

In a market with perfect competition, how are prices determined? a. by supply and demand b. by cultural ideals of fairness c. by government regulation d. by agreement among producers

a. by supply and demand

Which of these is considered part of the money supply? a. checking accounts b. mutual funds c. municipal bonds d. credit cards

a. checking accounts

The law of demand states that as quantity demanded decreases a. wages decrease. b. price increases. c. production increases. d. quality decreases.

b. price increases.

Which of these is the main reason for national differences in comparative advantage in producing raw materials? a. differences in allocations of natural resources b. differences in local business practices c. differences in cultural traditions d. differences in monetary systems

a. differences in allocations of natural resources

Which of the following is a major reason the standard of living in Japan is much higher than in Nigeria? a. greater human capital b. fewer temporary shortages c. more foreign residents d. richer natural resources

a. greater human capital

Which kind of economy is most common today? a. mixed b. command c. market d. traditional

a. mixed

To expand their business, sole proprietorships most often depend on money from a. reinvesting their profits. b. soliciting charitable donations. c. selling stock. d. applying for grants.

a. reinvesting their profits.

What is the goal of affirmative action? a. to increase the presence of historically under-represented groups b. to promote new immigration from more parts of the world c. to raise wages for jobs that are considered to benefit the public d. to reverse the trend toward national dependence on imports

a. to increase the presence of historically under-represented groups

What is the main goal of a cooperative? a. to offer its members low-cost goods or services b. to earn its members a profit on investment c. to provide guaranteed employment for its members d. to expand by receiving royalties from its members

a. to offer its members low-cost goods or services

Which of these statements describes how economies of scale affect the market for electrical power in a community? a. Because putting up long-distance power lines is expensive, power plants are commonly built close to each community. b. Because it would cost much more for two companies to offer power within a community, there is usually only one. c. Because big power plants produce more power than small ones, a community near the plants risks serious air pollution. d. Because large communities are cheaper to supply with power than small towns, small communities typically lack service.

b. Because it would cost much more for two companies to offer power within a community, there is usually only one.

Why are U.S. dollars considered money? a. They are printed on paper or minted as coins. b. By law, they must be accepted as a means of payment. c. They are backed by government-owned gold or silver held in vaults. d. Their value rises and falls with the economy.

b. By law, they must be accepted as a means of payment.

Why did the Soviet Union experience many surpluses and shortfalls? a. The country depended on imports to obtain resources. b. Central planners could not manage every detail. c. The cold Russian climate made farming hard. d. The labor force was not well educated.

b. Central planners could not manage every detail.

What does it mean to say that Jen has a comparative advantage over Julian for weeding people's gardens? a. Jen's expertise at weeding is greater than Julian's. b. Jen's opportunity cost for weeding is lower than Julian's. c. Jen can charge more for weeding than Julian can. d. Jen weeds more quickly than Julian does.

b. Jen's opportunity cost for weeding is lower than Julian's.

Which period of U.S. history brought legislation most supportive to collective bargaining? a. Industrial Revolution b. New Deal c. post- Civil War d. post- World War II

b. New Deal

Why are tradeoffs necessary? a. People want different things. b. Resources are limited. c. Advertisers promote products. d. Every product has flaws.

b. Resources are limited. d. Every product has flaws.

Which of these is the best example of diminishing marginal utility? a. Bicycles become less useful as they get old and start to rust. b. Someone who has one bicycle will have less use for another. c. A shortage of bike paths makes bicycles less useful. d. People with cars have less use for bicycles than people without cars have.

b. Someone who has one bicycle will have less use for another.

Why doesn't the market system work to provide street lighting and other public goods? a. Too few of these services are available. b. There is no easy way to charge individual users. c. Voters put pressure on local governments. d. Important needs cannot be left to chance.

b. There is no easy way to charge individual users.

How have fringe benefits lowered wages in some industries? a. They complicate government regulation. b. They increase overall costs to employers. c. They make the jobs less desirable. d. They motivate workers to change jobs.

b. They increase overall costs to employers.

Which statement is true of all entrepreneurs? a. They work short hours. b. They take a risk. c. They hire employees. d. They earn a profit.

b. They take a risk.

How does division of labor increase productivity? a. Workers move often from job to job. b. Workers become expert at one task. c. Workers can be paid a lower wage. d. Workers require minimal training.

b. Workers become expert at one task.

Which of these people is part of the labor force? a. a retiree who worked 40 years in one place b. a laid-off carpenter looking for a job c. a career soldier stationed overseas d. a mother choosing to stay home with her kids

b. a laid-off carpenter looking for a job

Economists assume people choose something when its expected costs are less than its a. required maintenance. b. anticipated benefits. c. chief competitors. d. working life.

b. anticipated benefits.

As it becomes easier to start a new business in a market, that market a. increases transaction costs. b. becomes more competitive. c. attracts more consumers. d. offers higher-quality products.

b. becomes more competitive.

One advantage of a partnership over a sole proprietorship is that a partnership a. avoids double taxation. b. can get credit more easily. c. faces less regulation. d. has easier decision making.

b. can get credit more easily.

A limitation of using graphs to represent relationships is that they a. typically show the less important variables. b. omit factors other than those being graphed. c. are hard for anyone but economists to interpret. d. must be presented in a small space.

b. omit factors other than those being graphed.

Venture capitalists invest in new businesses in exchange for a. management jobs. b. ownership shares. c. interest payments. d. broad publicity .

b. ownership shares.

Why has much clothing manufacturing moved from the United States to other countries? a. American workers have a weaker work ethic today than in the past. b. Most of the market for textile products has shifted overseas. c. Nations with large, low-skilled workforces have a comparative advantage for assembly-line production. d. Education in this country has not kept up with the needs of the 21st-century economy.

c. Nations with large, low-skilled workforces have a comparative advantage for assembly-line production.

Why are economies most efficient when they have full employment? a. Wages are spent for consumer goods. b. Unemployment offices can be closed. c. No productive resources are left unused. d. No one person has to work too hard.

c. No productive resources are left unused.

What is the role of silent partners in a limited partnership? a. They take an active role in operations but have limited liability. b. They work for the company but do not make any investment. c. They contribute capital but are not involved in day -to-day operations. d. They have unlimited liability but do not have a voice in decisions.

c. They contribute capital but are not involved in day -to-day operations.

Which of these is the best example of an externality? a. You decide to stop snacking between meals. b. Your shoe store stops selling y our favorite style. c. You enjoy looking at y our neighbor's garden. d. Your new bicycle goes faster than you expected.

c. You enjoy looking at y our neighbor's garden.

Which of the following is not a market? a. a neighborhood garage sale b. a large appliance store c. a high school classroom d. an online auction site

c. a high school classroom

New Deal jobs programs offered employment during the Great Depression. In economic terms, such programs were designed to respond to a. an excess of services. b. a shortage of skills. c. a surplus of workers. d. a lack of incentives.

c. a surplus of workers.

Which of these is most likely to quickly become available in larger quantities as a result of a price increase a. airline service b. midsize cars c. baby sitters d. medical doctors

c. baby sitters

Which of these items is a measure of productivity? a. years of education b. dollars invested in new equipment c. bushels of corn per acre d. number of workers employed

c. bushels of corn per acre

The purpose of rationing during World War II was to ensure that a. products would go to those who valued them most. b. workers would have an incentive to get jobs. c. every one could get essential scarce goods. d. manufacturers could make a profit.

c. every one could get essential scarce goods.

What are the factors of production? a. wages, salaries, and profits b. risk and opportunity c. land, labor, and capital d. goods and services

c. land, labor, and capital

Ocean waves can be used to generate energy. Ocean waves are considered which type of resource? a. renewable b. nonrenewable c. perpetual d. capital

c. perpetual

The main function of a bank is to bring together a. officers and customers. b. risk and reward. c. savers and borrowers. d. cash and currency .

c. savers and borrowers.

Which form of business organization is most common? a. partnership b. corporation c. sole proprietorship d. business franchise

c. sole proprietorship

What does it mean to maximize utility? a. to strengthen a national infrastructure b. to strengthen the skills of a workforce c. to gain the most satisfaction possible d. to become as efficient as possible

c. to gain the most satisfaction possible

Outsourcing is the practice of a. hiring temporary workers without benefits. b. setting up factories in other countries. c. using outside contractors instead of staff. d. letting employees work from home.

c. using outside contractors instead of staff.

Which of these statements is an example of normative economics? a. "The bond market is in decline." b. "Speculation caused a recession." c. "Inflation is higher this year." d. "Taxes ought to be lowered."

d. "Taxes ought to be lowered."

What does it mean to say that free markets are efficient? a. Decisions are made quickly with little confusion. b. Everyone is assured of getting basic necessities. c. Information is communicated around the world. d. Buyers and sellers trade until both are satisfied.

d. Buyers and sellers trade until both are satisfied.

What is the advantage of investing in a mutual fund compared to buying a single stock? a. The government regulates mutual funds, but not stocks. b. Mutual funds guarantee principal. c. Mutual funds bring higher returns. d. Diversification reduces risk.

d. Diversification reduces risk.

What is the best title for the list below? -Innovator- -Strategist- -risk taker- a. Capitalist b. Investor c. Laborer d. Entrepreneur

d. Entrepreneur

What institution determines what fraction of deposits a bank must set aside to be available for customer withdrawals? a. Securities and Exchange Commission b. Federal Deposit Insurance Corporation c. New York Stock Exchange d. Federal Reserve System

d. Federal Reserve System

Why might some historians consider Adam Smith one of the most influential people in history? a. He argued for a larger role for the government in the economy. b. He taught that all people should be economic equals. c. He wrote the economic argument for American independence. d. He introduced a way of thinking about economic ideas.

d. He introduced a way of thinking about economic ideas.

What is the best test of an economic model? a. It has gone unchallenged for decades. b. It helps people make decisions more easily. c. It is accepted by both liberals and conservatives. d. It is useful for both explaining past events and predicting future ones.

d. It is useful for both explaining past events and predicting future ones.

How does personal saving help the economy grow? a. It results in individuals spending less. b. It motivates families to make a budget. c. It causes manufacturers to lower their prices. d. It provides funds for business investment.

d. It provides funds for business investment.

Which statement is the best example of thinking at the margin? a. Mary observes that the average cost of shoes is higher than last year. b. Jane wants to buy a car but decides she cannot afford the insurance. c. David decides to volunteer this summer instead of working for pay. d. John has six shirts and is trying to decide whether to buy a seventh.

d. John has six shirts and is trying to decide whether to buy a seventh.

What is the usual result of setting a price ceiling on rents? a. Houses are broken up into apartments to meet the demand. b. Construction jobs increase with the building of new apartment buildings. c. People can find apartments but cannot afford to rent them. d. More people want to rent apartments than are available to rent.

d. More people want to rent apartments than are available to rent.

Most retired people support themselves using Social Security, Company retirement plans, and ___________? a. Planning a budget b. Travel and recreation c. Medicare and Medicaid d. Personal savings

d. Personal savings

Which of these situations best illustrates market equilibrium? a. Every one who wants or needs soap can easily afford to buy it. b. Soap production ensures a good profit for the manufacturer. c. The price of soap does not vary much from week to week. d. The amount of soap made matches the amount of soap that people want to buy.

d. The amount of soap made matches the amount of soap that people want to buy.

According to the law of supply, what happens as price increases? a. The supply curve shifts to the left. b. The supply curve shifts to the right. c. The quantity supplied decreases. d. The quantity supplied increases.

d. The quantity supplied increases.

Which of these would most likely increase the supply of soccer balls? a. a government excise tax b. an increase in the supply of tennis balls c. a transportation strike d. a decrease in the price of raw materials

d. a decrease in the price of raw materials

In the summer picnic season, a sharp rise in the price of burgers may lead to an increase in demand for a. coleslaw. b. buns. c. relish. d. chicken.

d. chicken.

Which term best describes the fact that we depend on others to produce most of the goods and services we want? a. division of technology b. commercial productivity c. absolute advantage d. economic interdependence

d. economic interdependence

The degree to which the quantity demanded responds to changes in price is called a. utility. b. revenue. c. schedule. d. elasticity.

d. elasticity.

When Amy returns a good library book without finishing it so she won't have to pay a late fee, what is her opportunity cost? a. paying the fee b. reading a different book c. paying for something else d. finishing the book

d. finishing the book

Choose the best word to fill in the blank. The three fundamental economic questions are what to produce, ______________, and for whom. a. where b. why c. when d. how

d. how

The most important argument many economists make against price controls is that they are a. unfair. b. insecure. c. unstable. d. inefficient.

d. inefficient.

Which of these is a disadvantage of turning a partnership into a corporation? a. less management skill b. continuity issues c. expanded liability d. loss of control

d. loss of control

Many teenagers in a particular neighborhood work as baby sitters a few hours a week. They have different personalities and degrees of experience. What is the market structure for baby-sitting in that neighborhood? a. perfect competition b. monopoly c. oligopoly d. monopolistic competition

d. monopolistic competition

In which market structure do producers have the most market power? a. oligopoly b. monopolistic competition c. perfect competition d. monopoly

d. monopoly

One major reason women earn less than men on average is that women a. are more likely to look for manufacturing jobs. b. have become a majority of all paid workers. c. have less opportunity to learn basic job skills in entry-level jobs. d. more often lose experiences by interrupting their careers for family

d. more often lose experiences by interrupting their careers for family

Who are the primary customers of the Federal Reserve? a. governments b. businesses c. individuals d. private banks

d. private banks

Supply depends on the willingness and ability of a. donors to contribute. b. advertisers to promote. c. consumers to purchase. d. producers to produce.

d. producers to produce.

What would government do in a model free enterprise system? a. support entrepreneurs to encourage innovation b. ensure that prices remain reasonable c. stay out of economic activity altogether d. protect property rights and enforce contracts

d. protect property rights and enforce contracts

Which of these economic goals is most important in a traditional economy? a. efficiency b. freedom c. growth d. stability

d. stability

In the circular flow model, which of these is a factor payment? a. the check someone writes to buy groceries b. the credit card charge for ordering games online c. the monthly mortgage on a house d. the hourly wage a store pays to a clerk

d. the hourly wage a store pays to a clerk

Which of these is one reason young workers seek entry-level positions? a. to receive high pay right away b. to avoid expectations of hard work c. to enjoy more leisure with other workers d. to start building experience in a field

d. to start building experience in a field