VirtualSC Economics Honors Summer Course Exam Review

If gas prices increase 20% and demand remains the same, demand for gas is considered _____ .

inelastic

When price levels rise, the economy is experiencing _____ .

inflation

The branch of economics that deals with the economy as a whole is called _____ .

macroeconomics

Match the terms with the descriptions. Choose the letter of the correct answer. -the additional cost of producing one unit -the next best alternative given up when a decision is made -evaluating the costs and benefits of additional units -giving up one thing for another -the added benefit from adding one unit

marginal cost opportunity cost thinking at the margin trade-off marginal benefit

Which market structure is defined by a single producer?

monopoly

A government may be able to reduce structural unemployment by _____ .

offering job training programs

As a consequence of scarcity, _____ .

producing more of one good means producing less of another good

A graph showing all the combinations of goods and services that can be produced if all of society's resources are used efficiently is called which term?

production possibilities curve

Equilibrium is reached when what occurs?

quantity supplied equals quantity demanded

A decline in real GDP that lasts at least two quarters or more is called a _____ .

recession

A customer service representative loses his job because his company bought new software that does most of his job automatically. This is an example of ____ .

structural unemployment

When workers are replaced by machines or computer systems, _____ occurs.

structural unemployment

Changes in fiscal policy would involve changes to _____ .

tax rates

If you wanted to understand the relationship between households, businesses, and resources, you would study _____ .

the Circular Flow model

All of the following are considered automatic stabilizers except _____ .

the lottery

The equilibrium price is determined by _____ .

the market

Monopolies are considered harmful to consumers because _____

they can charge high prices for their goods.

Which of the following products has inelastic demand?

Cancer medication

Concerns about _____ has led to growth in careers in renewable energy.

Climate change

Which of the following is not one of the things that determine supply?

Consumer tastes and preferences

Which of the following shows the benefits and costs of a choice?

Cost-benefit analysis

Having trouble reading the graph? This description will help. Reach out to your teacher if you need more help. -Good Y is along the vertical axis. -Good X is along the horizontal axis. -Points A, B, D, and F are on the curve line. -Point C is inside the curve line. -Point E is outside the curve line. Use the PPC above to answer the following three questions. What does Point E represent? What does Point D represent? What does Point C represent?

Impossible Efficiency Inefficiency

Which of the following is NOT an example of barriers to entry?

In some countries, laws require liquor stores to not open until 10:00 a.m.

Match the type of resource with the definition. Time spent making pizza at a restaurant A bulldozer A River

Labor Capital Land

What is the additional cost of the use of consumption of a good or service?

Marginal cost

Which of these statements describes a disadvantage of a traditional economy?

New ways of doing things are discouraged.

Which statement describes a disadvantage of a command economy?

Nothing stops the government from producing things people don't need.

The movement of American jobs overseas is called _____ .

Outsourcing

Which market structure provides the lowest prices for consumers?

Perfect competition

Which part of the market determines supply?

Producers

According to the Law of Supply, which of these would happen to an item as its price goes up?

Producers (sellers) would make more of it.

Which country is an example of a capitalist economy?

South Korea

_____ is harder to fix since it occurs with a change in technology or the market reduces the demand for certain types of products and workers.

Structural unemployment

There is always some degree of government involvement in a mixed economy.

True

Which of the following is NOT a form of unemployment that is counted by the government?

Under employment

Which of the following is an example of capital?

A factory

In which of these systems is the government most likely to provide people with goods and services they could not otherwise afford?

A market economy

Scarcity is best defined as which of the following?

A society's wants and needs are unlimited and material resources are limited.

Which of the following would shift the short-run supply curve for strawberries?

A strike by all farmworkers

In the economic term oligopoly, the word part olig- means _____ .

"few"

Suppose that GDP is $12 million, where consumer spending is $4 million, investment spending is $1 million, Government spending is $4 million and exports are $3 million. How much is spending on imports?

$0

Quantity of Oranges Total Revenue Total Costs 0 0 10 10 40 30 20 80 40 30 120 60 40 160 90 50 200 130 60 240 180 70 280 240 80 320 310 The table above shows data for the production of oranges for an individual firm operating in a perfectly competitive market. Given this data, what are this firm's profits if it chooses to produce 80 oranges?

$10

Jasmine works at BMW. She did such a good job last year that she received a 5% raise. Inflation this year was 3%, how much has her real income increased?

2%

An oligopoly can be described as an industry in which _____ .

3-5 companies produce most of the output

Consider the term marginal utility. Which word is the best synonym for marginal?

Additional

Which of the following will cause an outward shift of the production possibilities curve?

An increase in skilled workers

China decides to build an aircraft carrier. What is the opportunity cost of the aircraft carrier?

Any other good or service that China cannot provide because of resources used to build the aircraft carrier.

Your school decides to build a new performing arts center. What is the opportunity cost of constructing the new performing arts center?

Any other goods and services that now cannot be provided due to the resources used for the performing arts center.

John Maynard Keynes thought that the only group big enough to influence spending was the _____ .

government

The formula for calculating GDP is _____ .

C + G + I + XN

Having trouble reading the graph? This description will help. Reach out to your teacher if you need more help. -Soap is along the horizontal axis. -Robots are along the vertical axis. -The curve formed between Points (X1, Y1) shifts outward to a curve between Points (X2, Y2). Answer the question below using the PPC curve to answer this question. What does the outward shift of the curve represent?

Economic Growth

How are transactions shaped in a traditional economy?

Elders and ancestors make certain that things are done in specific ways.

When calculating Nominal GDP, inflation is taken into account.

False

Which of the following is a characteristic of a monopolistic market?

Firms set the price they charge.

_____ unemployment occurs when workers are in-between jobs. It is usually the shortest term type of unemployment.

Frictional unemployment

Which of the following is a characteristic of a perfectly competitive market?

Goods and services offered for sale are identical.

Which of the following statements is NOT an example of a market economy?

Government ownership of the factors of production.

Changes in the population have created a significant demand in which of the following career fields?

Health care

The demand for _____ may outpace supply, mainly due to low pay.

Home healthcare workers

_____ are opportunity costs of a decision (foregone benefits) that is not defined in money.

Implicit costs

The Law of Demand states that price and quantity demanded have an inverse relationship (when one increases the other decreases).

True

The Law of Supply states that price and quantity supplied have a direct relationship (when one increases the other increases).

True

Economic growth causes the production possibilities frontier to contract (move to the left).

False

Marginal analysis is of no benefit to a store owner considering whether to sell an item with the promotion "buy one, get one half off."

False

The salary for the same type of job is the same in the United States and the developing world.

False

According to the law of diminishing marginal utility, which of the following is true when consuming marshmallows?

The additional satisfaction received from consuming extra marshmallows decreases as you eat more marshmallows.

The CDC has just issued a report warning consumers about possible E. coli in beef in US grocery stores. Which of the following changes in the beef market is most likely to occur as a result?

The demand curve will shift to the left, decreasing the price of beef.

In economics, the term capital goods refers to which of the following?

The equipment and structures used to produce goods and services.

In a mixed economy, which of the following is true?

The government owns some of the factors of production.

Pieces of Cake Total Utility 0 0 1 8 2 12 3 19 4 23 5 25 The chart shows the total utility a typical consumer receives for eating pieces of cake.Which of the following is correct for this individual?

The marginal utility of the 4th slice is 4.

Economics is best defined as the study of how societies deal with which of the following?

The problem scarcity

Which of the following best refers to the market equilibrium price?

The quantity demanded is the same as the quantity supplied.

Which of these is a major advantage of a market economy?

There is a high degree of individual freedom.

Scarcity in economics means:

This is not having enough resources to produce all the goods and services we want.

Having trouble reading the graph? This description will help. Reach out to your teacher if you need more help. -Soap is along the horizontal axis. -Robots are along the vertical axis. -Points B, D, and C are on the curve line. -Point A is inside the curve line. -Point X is outside the curve line. Use the PPC above to answer the following questions. What does moving from Point B to D represent? What does Point X identify? What does Point B identify? What does Point A identify?

Trade-off Impossible use of resources Efficient use of resources Under utilized resources

When deciding how to use resources, you need to evaluate the costs and benefits of each choice to decide which meets your criteria. What are these called?

Trade-offs

Economic growth is an increase in a nation's output of goods and services over time.

True

Equilibrium price and quantity is often referred to as the market clearing price and quantity.

True

Marginal analysis can help a company determine pricing strategies.

True

Marginal analysis can help a company determine the "sweet spot" (or ideal amount) of HOW MUCH to produce.

True

Marginal analysis could be useful to a parent deciding whether to return to the workforce after the birth or adoption of a child, or a student deciding what plans to make after graduating high school.

True

Scarcity is an economic problem with which all societies are faced.

True

The hallmark of President Ronald Reagan's administration was supply-side economic policies.

True

In a command economy, prices may be determined by _____ .

a central planning committee

Which of the following will not cause the demand for video games to change (which one is not a shifter of the demand curve)?

a change in the price of video games

Need help reading the graph? Read this description. The demand curve is in a fixed position and crosses the supply curves. The supply curve shifts inward, to the right. Use the supply and demand curves above to answer the question. The graph above shows _____ .

a decrease in supply

An example of a finished good calculated into the GDP for the year would be _____ .

a new car sold to a consumer

A right, outward shift of a demand curve (an increase in demand) for avocados (a normal good) might be caused by _____ .

a news report stating that avocados are associated with good health

If the demand for potatoes increases whenever a person's income increases, then potatoes are an example of _____ .

a normal good

An oligopoly refers to _____ .

a small number of interdependent firms, high barriers to entry, and significant pricing power

Which of the following would result in a change in the production possibilities frontier in the mythical country Alpha? new technology many workers from other countries move in the discovery of a new natural resource all of the above

all of the above

Which of the following would cause the supply curve for notebook computers to shift to the right?

an increase in the number of firms producing notebook computers

Which of the following will cause the demand curve for peanut butter to shift to the right?

an increase in the price of lunch meat, a substitute for peanut butter

A inward, left shift in the supply curve (a decrease in supply) for pianos could be caused by _____ .

an increase in the price of piano parts

What do low prices signal buyers to do?

buy more

Contractionary fiscal policy is when the government _____ .

cuts spending and increases taxes

When the price of something increases, the quantity demanded _____ .

decreases

Assuming Ramen noodles are an inferior good, a decrease in income will shift the _____ .

demand curve for Ramen noodles outward, to the right

The study of economics involves _____ .

explaining how people deal with scarcity