Econ Midterm

B. if other market factors remain constant.

"Ceteris paribus" means demand will change when price changes A. no matter what other factors may influence the market. B. if other market factors remain constant. C. only if the supply also does not change. D. only in the short-term.

B. The best resources for producing grapes are least suited to making hats.

A country has two main products: hats and grapes. The country decides to start making more and more hats and fewer and fewer grapes. Why does the opportunity cost of making hats increase as more and more hats are produced? A. Grapes can be grown more efficiently than hats can be manufactured. B. The best resources for producing grapes are least suited to making hats. C. Increasing the country's production of hats maximizes its output of goods and services. D. Producing more hats and fewer grapes shifts the production possibilities frontier to the left.

B. factor market

A government hiring freeze would directly impact what aspect of the circular flow model of a mixed economy? A. businesses B. factor market C. product market D. transfer payments

A. consumers will buy less pizza.

According to the law of demand, when the price of pizza goes up, A. consumers will buy less pizza. B. consumers will save more money. C. pizza restaurants will stop making pizza. D. pizza restaurants will make more money.

A. efficiency

An economy that maximizes its scarce resources and can deliver the right goods in the right quantity to the right people at the right price has achieved which economic goal? A. efficiency B. freedom C. security D. equity

B. takes risks in order to acquire profits

An entrepreneur can BEST be characterized as someone who A. tries to persuade officials to pass favorable laws. B. takes risks in order to acquire profits. C. signals businesses what and how much to produce. D. seeks to engage in a voluntary exchange.

C. governments are more able than firms to meet some needs and wants of society.

Government involvement in a modern economy is generally defended because A. the marketplace always meets the needs and wants of society's members. B. the marketplace has many incentives to create public works such as parks. C. governments are more able than firms to meet some needs and wants of society. D. free market principles do not encourage economic growth.

A. by protecting a patent holder's right to profit from his or her creativity

How do patents act as an incentive to technological innovation? A. by protecting a patent holder's right to profit from his or her creativity B. by protecting the government's right to patent creative works C. by protecting a business's right to profit from someone else's creativity D. by protecting unpatented creative works

B. They work together to regulate supply, demand, and prices.

How do self-interest and competition affect free markets? A. They work together to keep prices high. B. They work together to regulate supply, demand, and prices. C. They represent the opposing interests of consumers and producers. D. They help level the playing field between efficient and inefficient producers.

B. by introducing new goods and services that create new markets

How does innovation promote economic growth? A. by reinforcing traditional values in a society B. by introducing new goods and services that create new markets C. by ensuring people's freedom to make their own choices D. by rewarding the development of efficient technology

C. GDP indicates whether the nation's economy is expanding or contracting.

How is gross domestic product used to monitor the business cycle? A. GDP indicates whether a business is expanding or contracting. B. GDP indicates whether a city's economy is expanding or contracting. C. GDP indicates whether the nation's economy is expanding or contracting. D. GDP indicates whether the world's economy is expanding or contracting.

A. Both suffered from severe economic problems as a result of central planning.

How were the Soviet Union and communist China similar? A. Both suffered from severe economic problems as a result of central planning. B. Both eventually became free market economies. C. Both were more successful in developing a thriving agriculture than in developing thriving industry. D. Both states turned away from communism and were able to avoid collapse.

D. The production possibilities frontier shifted to the right.

In 1991, for a short time, Iraq invaded Kuwait and seized its oil fields. During that time, what impact, if any, did the invasion have on Iraq's production possibilities frontier? A. The production possibilities frontier remained stable. B. The production possibilities frontier reached its maximum. C. The production possibilities frontier shifted to the left. D. The production possibilities frontier shifted to the right.

A. consumers have the power to decide through their actions what goods and services get produced.

In a free market system, the concept of consumer sovereignty means that A. consumers have the power to decide through their actions what goods and services get produced. B. producers are in an ongoing struggle with consumers over control of the marketplace. C. government must intervene to ensure fair competition between consumers and producers. D. consumers are not bound to accept the positive incentives offered by producers.

C. economic efficiency, economic freedom, economic growth, and variety of goods.

Key advantages of free market economic systems include A. rising prices, specialization, negative incentives, and multiple markets. B. online markets, producer sovereignty, self-interested consumers, and low prices. C. economic efficiency, economic freedom, economic growth, and variety of goods. D. positive incentives, negative incentives, specialized consumers, and efficient labor.

A. free markets fail to distribute resources efficiently.

Market failure occurs whenever A. free markets fail to distribute resources efficiently. B. goods fail to arrive at a market in a timely fashion. C. government builds infrastructure. D. voluntary exchange in a market fails to result in a sale.

C. mixed economy

Private property ownership and some government regulation of the economy are basic characteristics of which economic system? A. command economy B. free enterprise system C. mixed economy D. traditional economy

A. protect Americans' private property rights.

The due process clauses of the Constitution A. protect Americans' private property rights. B. ensure all Americans the opportunity to compete. C. eliminate barriers to women in the workplace. D. give Congress the right to set direct taxes on incomes.

C. make sure their firm is operating at its highest level of efficiency.

The profit motive drives business owners to A. protect the private property rights of those who consume their goods. B. see that the principle of open opportunity applies to all Americans. C. make sure their firm is operating at its highest level of efficiency. D. develop incentives for their employees to work fewer hours each week.

D. It requires strict obedience from its citizens.

What distinguishes an authoritarian government from a democratic one? A. It respects individual rights. B. It pursues capitalist economic policies. C. It discourages a strong central government. D. It requires strict obedience from its citizens.

B. lack of economic efficiency

What is a disadvantage of central planning? A. no emphasis on economic equity B. lack of economic efficiency C. too much individual freedom D. overreliance on profit incentive

D. They ensure that consumers can make informed buying decisions.

What is the main economic benefit of public disclosure laws? A. They guarantee that businesses can make legally binding contracts. B. They protect employees from potential dangers in the workplace. C. They cut into the profits of highly regulated industries. D. They ensure that consumers can make informed buying decisions.

A. equity

Which basic economic goal is most easily achieved in a traditional economy? A. equity B. innovation C. growth D. efficiency

A. to support retired people

Which is an example of why the U.S. government makes transfer payments? A. to support retired people B. to limit economic freedom C. to create a command economy D. to suppress the factor market

B. The government requires manufacturers to issue warnings that come with new microwave ovens.

Which of the following BEST illustrates the involvement of the U.S. government in the marketplace today? A. The government takes over an industry in order to control production. B. The government requires manufacturers to issue warnings that come with new microwave ovens. C. The government hires new workers to help deliver government services to the public. D. The government encourages formation of consumer and business interest groups.

C. Seek training in the latest technology related to a type of work they enjoy.

Which of the following courses of action makes the MOST sense in today's world for manual laborers who have been replaced by robots? A. Look for work in farming, fishing, or hunting. B. Write to members of Congress to complain about their former employer. C. Seek training in the latest technology related to a type of work they enjoy. D. Open their own manufacturing plant that employs manual laborers, not robots.

D. Specialization leads to efficient use of capital, land, and labor.

Which of the following describes the benefits of specialization in a free market? A. Specialization leads to higher prices. B. Specialization leads to decreased competition among producers. C. Specialization leads to lower overall output. D. Specialization leads to efficient use of capital, land, and labor.

C. Nonpayers cannot be prevented from seeing the fireworks.

Which of the following explains why a city fireworks display on the Fourth of July is provided as a public good? A. Fireworks displays usually take place in a public area. B. Fireworks are a scarce resource. C. Nonpayers cannot be prevented from seeing the fireworks. D. Each consumer pays a fee to see the fireworks.

C. Self-interest, competition, and incentives promote smoothly running markets.

Which of the following is an explanation of what Adam Smith called the "invisible hand" of the marketplace? A. Advertising causes consumers to desire products that they otherwise would not want. B. Government regulations influence the decisions of consumers and producers in the market. C. Self-interest, competition, and incentives promote smoothly running markets. D. Unforeseen events disturb supplies of goods and services and affect prices in the marketplace.

C. government control

Which of the following is typical of a centrally planned economy? A. competition among producers B. consumer sovereignty C. government control D. private property

B. Socialism may allow some free market practices; communism does not.

Which of the following represents a difference between socialism and communism? A. Socialism requires central control of all productive resources; communism does not. B. Socialism may allow some free market practices; communism does not. C. Socialism emphasizes the equal distribution of wealth; communism does not. D. Socialism depends on authoritarian government; communism does not.

D. zoning laws

Which of these is an example of restrictions that government places on the use of business property? A. corporate income taxes B. regulation of competition C. providing for security D. zoning laws