Econ- Chapter 1-3 Test

Which of the following philosophers argued that a free market would regulate itself with little government involvement? a) Karl Marx b) Adam Smith c) Vladimir Lenin d) Friedrich Engels

b) Adam Smith

Which of these is found in a mixed economy but not a free market system? a) product market b) factor market c) voluntary exchange d) business regulations

d) business regulations

Which of these economic goals is concerned with using resources wisely and reducing waste? a) economic security b) economic equity c) economic freedom d) economic efficiency

d) economic efficiency

What was the trade-off of the Soviet Union's focus on heavy industry? a) everyone became poor b) it was a better investment c) it created fewer jobs d) fewer consumer goods were produced

d) fewer consumer goods were produced

Which of the following lists of factors of production would an economist categorize as land? a) factories, office buildings, assembly lines, workers b) farm fields, tractors, pesticides, fertilizers c) dams, bridges, rock quarries, oil wells d) iron ore, natural gas, fertile soil, water

d) iron ore, natural gas, fertile soil, water

What is one of the most important advantages of a free market? a) it distributes goods equally b) it protects the less fortunate c) is is easy to regulate d) it encourages growth

d) it encourages growth

The government of a country must make a decision between increasing military spending and subsidizing wheat farmers. This is an example of a) a guns or butter issue b) decision-making at the margin c) underutilization of resources d) the law of increasing costs

a) a guns or butter issue

Which of the following is the best example of a public good? a) a highway system b) a shopping mall c) a country club d) a movie theater

a) a highway system

Education programs make the economy more productive by a) adding to human capital and labor productivity b) providing more jobs to educators c) reducing payments to unemployed people d) reducing injuries on the job

a) adding to human capital and labor productivity

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

a) capital and land

Working where we want to is an example of which economic goal? a) economic freedom b) economic security c) economic growth d) economic equity

a) economic freedom

Which of the following might be a positive aspect of centrally planned economies? a) low unemployment due to guaranteed jobs b) high levels of consumer satisfaction c) quick adjustment to changing conditions d) incentives for workers to be innovative

a) low unemployment due to guaranteed jobs

Health insurance for the elderly, the poor, and the disabled is provided by a) medicare and medicaid b) the unemployment insurance program c) worker's compensation d) TANF

a) medicare and medicaid

The physical capital used by a woodworker to make furniture would include a) saws and drills b) trees and oil c) hard work and time d) a workshop and money

a) saws and drills

What is the difference between a shortage and scarcity? a) scarcity always exists b) scarcity results from falling prices c) scarcity concerns a single item d) there is no real difference

a) scarcity always exists

What is one way the government encourages people and businesses to give to charity? a) through cash grants b) by redistributing taxes c) by subsidizing donations d) by lowering taxes for people who donate

a) through cash grants

Why has the federal government passed laws requiring businesses to disclose product information to the public? a) to make buyers more knowledgeable and safer b) to make it hard for businesses to make an excess profit c) to make it easier for consumers to own property d) to make it easy for businesses to have good information

a) to make buyers more knowledgeable and safer

When does market failure occur? a) when the free market does not distribute resources efficiently b) when businesses do not follow public disclosure laws c) when the free enterprise system does not work d) when buyers and sellers engage in voluntary exchange

a) when the free market does not distribute resources efficiently

In which of the following lists of mixed economies does the free market system dominate? a) France, Canada, South Africa, United Kingdom b) United States, United Kingdom, Singapore, Hong Kong c) Cuba, Greece, China, United States d) Russia, Peru, France, Canada

b) United States, United Kingdom, Singapore, Hong Kong

Which of the following is an example of using physical capital to save time and money? a) hiring more workers to do a job b) building extra space in a factory to simplify production c) switching from oil to coal to make production cheaper d) lowering workers' wages to increase profits

b) building extra space in a factory to simplify production

What does "consumer sovereignty" mean in a free market economy? a) the customer is always right b) customers have the power to decide what gets produced c) people with the most money are treated like royalty d) producers of goods are also customers

b) customers have the power to decide what gets produced

When the government provides a safety net, which economic goal is it meeting? a) economic equity b) economic security c) economic growth d) economic innovation

b) economic security

Every decision involves trade-offs because... a) everyone has to make decisions b) everyone's resources are limited c) some people have more money than others d) some decisions are made for business, others for society

b) everyone's resources are limited

All goods and services are scarce because a) some goods cost more than others b) resources are limited c) things are either needs or wants d) greedy people want too many goods

b) resources are limited

Which is a positive externality of a new high school? a) more traffic on the roads b) student purchases at nearby stores c) a rise in property taxes d) more noise in the neighborhood

b) student purchases at nearby stores

Making a decision at the margin is possible only in situations where a) the available opportunity costs are unclear or complicated b) the available alternatives can be divided into increments c) there are more than three different types of alternatives to consider d) there are differences in the amount of time each alternative will consume

b) the available alternatives can be divided into increments

Which of the following describes a centrally planned economy? a) the central government follows laissez-faire policies b) the central government makes all economic decisions c) the central government lets factories se their own goals d) the central government lets the market set wages for jobs

b) the central government makes all economic decisions

Human capital includes a) the salary paid to an accountant b) the knowledge a taxi driver has of the city streets c) the machinery run by a seamstress to weave cloth d) the equipment used by a doctor to cure a patient

b) the knowledge a taxi driver has of the city streets

The community of Desertville traditionally produces a large number of tires and a small amount of kiwi fruit. Kiwis are becoming increasingly popular, and Desertville has decided to expand kiwi cultivation and decrease tire manufacturing. According to the law of increasing costs, a) the opportunity cost of producing tires will increase b) the opportunity cost of producing kiwis will increase c) the opportunity cost of producing tires will decrease d) the opportunity cost of producing kiwis will decrease

b) the opportunity cost of producing kiwis will increase

Why does the government protect inventors and authors by offering them patents and copyrights? a) to encourage free trade b) to promote innovation c) to regulate the business cycle d) to strengthen American culture

b) to promote innovation

The main difference between the economies of China and North Korea is that a) North Korea does not have a centrally-planned economy b) North Korea has begun to introduce free market practices c) China is privatizing state-run businesses d) China does not allow ownership of private property

c) China is privatizing state-run businesses

Which of the following is part of communism but not socialism? a) central planning b) government controlled services c) authoritarian government d) government controlled resources

c) authoritarian government

In a free enterprise system, what is the most common way that consumers make their desires known to businesses? a) emailing or texting the companies b) protesting and boycotting products c) buying or not buying products d) hiring lobbyists to speak for them

c) buying or not buying products

Which of the following is a characteristic of a public good? a) the private sector could provide it more efficiently b) its benefits are greater for government than for society c) it is shared by the public but is provided by the government d) taxpayers demand that the private sector provide it

c) it is shared by the public but is provided by the government

The law of increasing costs means that as production shifts from one item to another, a) the cost of production gets cheaper and cheaper b) the cost of producing an item says the same no matter how many are produced c) more and more resources are necessary to increase production of the second item d) the land costs of increasing production rise much more steeply than do the labor cost

c) more and more resources are necessary to increase production of the second item

Which economy is efficient? a) one that makes fewer goods because workers are laid off b) one that uses fewer resources than are available c) one that makes the most goods and services possible d) one that wastes fuel when making goods

c) one that makes the most goods and services possible

Which of the following is an example of a firm trying to increase its human capital? a) building a company cafeteria b) hiring more part-time workers c) paying for employees' education d) leasing cars for employees

c) paying for employees' education

An economy in which all the boys become farmers when they are adults, just as their fathers and grandfathers did, would be an example of a a) free market economy b) command economy c) traditional economy d) centrally planned economy

c) traditional economy

You will still be able to get a public broadcasting channel even though you did not contribute to its fundraising campaign. This is an example of a) an in-kind benefit b) a market failure c) a negative externality d) a free-rider problem

d) a free-rider problem

A production possibilities curve shows the relationship between the production of a) farm goods and factory goods b) two types of farm goods c) two types of factory goods d) any two categories of goods

d) any two categories of goods

The United States economy is a mixed economy a) based on a traditional economy, but allowing some government intervention b) based on a centrally planned economy, but limiting government intervention c) based on a free market, allowing no government intervention d) based on a free market, but allowing some government intervention

d) based on a free market, but allowing some government intervention

How is the US government involved in the factor market? 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

d) it pays wages to government employees

Which of the following is a characteristic of a traditional economy? a) it encourages innovation and change b) is it usually based on light industrial production c) it has a high standard of living d) it revolves around the family unit

d) it revolves around the family unit

What is the product market? a) the market in which income is received for supplying land, labor, or capital b) the market in which governments collect taxes from firms and consumers c) the market in which firms purchase the factors of production from households d) the market in which households purchase the goods and services that firms produce

d) the market in which households purchase the goods and services that firms produce

When a theater owner considers whether to install another row of seating, she is a) underutilizing her resources b) experiencing a shortage c) using human capital d) thinking at the margin

d) thinking at the margin

Which of the following is a summary of the three key economic questions? a) who will buy which goods and services, and how much will they pay? b) how, when, and from whom should consumers get what they want? c) when, where, and by whom should goods and services be produced? d) what goods and services should be produced, how, and for whom?

d) what goods and services should be produced, how, and for whom?