Economics Midterm

As a factor of production, capital means a. Human-made resources used for business purposes b. Money used for business purposes c. Natural resources used for business purposes d. Stocks sold for business purposes

a. Human-made resources used for business purposes

I. Capitalism is the foundation of market economies. II. Competition should be limited to protect producers. III. Producers ultimately control what is produced. IV. Property rights are necessary to make markets work. Which of these statements about market economies are true? a. I and IV b. II and IV c. II and III d. III and IV

a. I and IV

A benefit that is offered to encourage people to act in a certain way is called a(n) a. Incentive b. Opportunity cost c. Trade off d. Utility

a. Incentive

The additional cost of using one more unit of a product is the a. Marginal cost b. Opportunity cost c. Trade off d. Utility

a. Marginal cost

What is the most important factor in an economic decision? a. Incentives b. Marginal costs and benefits c. Opportunity costs d. Trade offs

b. Marginal costs and benefits

If a government restricts the imports of sugar into a nation, who is likely to benefit? a. Consumers of products that use sugar. b. The nation's sugar producers. c. Producers that use sugar as a raw material. d. Don't know.

b. The nation's sugar producers.

Which of these terms describes the resources that people make and use to produce goods and services? a. Capital b. Entrepreneurship c. Labor d. Land

c. Labor

Which factor of production brings the other three factors together? a. Capital b. Entrepreneurship c. Labor d. Land

b. Entrepreneurship

Who decides what goods and services will be produced in Cuba and North Korea? a. Consumers b. Government c. Producers d. Workers

b. Government

When good weather in the Midwest increases the wheat harvest, the result is: a. Higher quantity and lower prices. b. Higher quantity and higher prices. c. Lower quantity and lower prices. d. Don't know.

b. Higher quantity and higher prices

The satisfaction received from using one more unit of a good or service is the a. Incentive b. Marginal benefit c. Opportunity cost d. Trade off

b. Marginal benefit

A person who uses a new idea to bring out a product or service to the marketplace is known as: a. A manager. b. A bureaucrat. c. An entrepreneur. d. Don't know.

c. An entrepreneur.

North Korea and Cuba are examples of command economies. In these countries, government does all ot the following EXCEPT a. Allocate resources for the common good b. Decide what to produce and how to produce it c. Frequently ask consumers what they want d. Own most of the means of production

c. Frequently ask consumers what they want

Which of the following terms means something very different from the others? a. Marginal cost b. Opportunity cost c. Trade off d. Scarcity

a. Marginal cost

Macroeconomics does NOT study a. Business cycles b. Consumer behavior c. The monetary system d. The public sector

b. Consumer behavior

Which of the following would reduce inequality of income in the United States? a. Increased use of technology that makes professionals more productive. b. Improvement of schools serving lower-income populations. c. Increased international trade in manufactured goods. d. Don't know.

b. Improvement of schools serving lower-income populations.

A person who lives downstream from a polluting factory may experience a a. Free ride b. Negative externality c. Positive externality d. Public transfer

b. Negative externality

Think about the quantity of plums and apples that people want to buy in a market. If the price of plums doubled and the price of apples stayed the same, what would happen to these quantities? a. Plums up, apples down. b. Plums down, apples up. c. Both plums and apples are the same as before. d. Don't know

b. Plums down, apples up.

Why do people in all societies have to make choices about how to use resources? a. Resource owners are greedy. b. Resources used in the production of goods and services are limited. c. Consumers of resources are irrational. d. Don't know.

b. Resources used in the production of goods and services are limited.

If in an emergency the government sets a limit on the price that can be charged for gasoline (price ceiling), what is the most likely result? a. There will be more gasoline available than people want to buy. b. There will be less gasoline available than people want to buy. c. The amount of gasoline available will be equal to the amount people want to buy. d. Don't know.

b. There will be less gasoline available than people want to buy.

Which of these statements is true about economic models? a. They are NOT based on assumptions. b. They do NOT use many variables. c. They do NOT include words, graphs, or equations. d. They do NOT simplify complex relationships

b. They do NOT use many variables.

For most people, the largest portion of their personal income comes from: a. Interest from stocks and bonds they own. b. Wages and salaries from their jobs. c. Rent paid to them from property they own. d. Don't know.

b. Wages and salaries from their jobs.

Which of these situations describes scarcity? a. A country has an unskilled labor force. b. Consumers want expensive products Consumers want expensive products. c. Human wants exceed available resources. d. Some desired things are in short supply.

c. Human wants exceed available resources.

I. Markets have economic incentives to create public goods. II. Freedom is a chief advantage of a market economy. III. Market economies ensure equal distribution of wealth. IV. The profit motive allocates resources efficiently. Which of these statements about market economies are NOT true? a. I and II b. I and III c. II and III d. I and IV

c. II and III

What word would apply if the total dollar value of spending in the United States went up but the goods and services consumed remained just the same? a. Deflation. b. Recession. c. Inflation. d. Don't know.

c. Inflation.

The value of what you give up in order to get something else you want is the a. Marginal benefit b. Marginal cost c. Opportunity cost d. Utility

c. Opportunity cost

All of the following are basic types of economic systems except a. Command economies b. Market economies c. Socialist economies d. Traditional economies

c. Socialist economies

The United States has a. Laissez-faire capitalism b. Laissez faire socialism c. A modified command economy d. A modified capitalist economy

d. A modified capitalist economy

In command economies, government decides a. What should be produced b. How it should be produced c. How much money people make d. All of the above

d. All of the above

Which of the following is not a factor of production? a. Capital b. Entrepreneurship c. Labor d. Production possibilities

d. Production possibilities

Government programs designed to protect people from economic hardships may be best described as a. Free ride b. Positive externality c. Public good d. Safety net

d. Safety net

One key difference between socialism and communism is that a. Communism allows private ownership b. Communism is a command economy c. Socialism grew from the writings of Karl Marx d. Socialism allows private ownership

d. Socialism allows private ownership

When economic decisions are made based on beliefs and customs handed down for generations, the economic system is known as a a. Command economy b. Market economy c. Mixed economy d. Traditional economy

d. Traditional economy

Scarcity is a problem because of the tension between limited resources and unlimited a. Choice b. Goods c. Needs d. Wants

d. Wants