Midterm exam
Question 1 of 20
Economics is the study of:
A. increasing the level of productive resources
so there is maximum output in society.
B. increasing the level of productive resources
so there is a minimum level of income.
C. how people, institutions, and society make
choices under conditions of scarcity.
D. the efficient use of scarce resources paid
for at the minimum level of cost to consumers and businesses.
Question 2 of 20
Which of the following is not a central focus of the
“economic perspective”?
A. Scarcity and choice.
B. The scientific method.
C. Purposeful behavior.
D. Marginal analysis.
Question 3 of 20
The satisfaction or pleasure one gets from consuming a good or
service is:
A. price.
B. utility.
C. consumption.
D. preferences.
Question 4 of 20
The private ownership of property resources and use of
prices to direct and coordinate economic activity is characteristic of:
A. a command system.
B. a market system.
C. communism.
D. socialism.
Question 5 of 20
Which statement best describes a capitalist economy?
A. The production of goods and services is
determined primarily by markets, but the allocation of goods and services is
determined primarily by government.
B. The production of goods and services is
determined primarily by government, but the allocation of goods and services is
determined primarily by markets.
C. The production and allocation of goods and
services is determined primarily through markets.
D. The production and allocation of goods and
services is determined primarily through government.
Question 6 of 20
Capitalism is an economic system that:
A. produces more capital goods than consumer goods.
B. produces more consumer goods than capital
goods.
C. gives the government the right to tax
individuals and corporations.
D. private individuals and corporations the
right to own productive resources.
Question 7 of 20
In a market system, well-defined property rights are
important because they:
A. reduce unnecessary investment.
B. limit destructive economic growth.
C. create economic problems.
D. encourage economic activity.
Question 8 of 20
If two goods are complements:
A. they are consumed independently.
B. an increase in the price of one will increase
the demand for the other.
C. a decrease in the price of one will increase
the demand for the other.
D. they are necessarily inferior goods.
Question 9 of 20
When the price of a product is increased 10 percent, the
quantity demanded decreases 15 percent. In this range of prices, demand for
this product is:
A. elastic.
B. inelastic.
C. cross-elastic.
D. unitary elastic.
Question 10 of 20
Demand can be said to be inelastic when:
A. an increase in price results in a reduction
in total revenue.
B. a reduction in price results in an increase
in total revenue.
C. a reduction in price results in a decrease in
total revenue.
D. the elasticity coefficient exceeds one.
Question 11 of 20
Economic growth is shown by a shift of the production
possibilities curve outward and to the right.
A. True
B. False
Question 12 of 20
The four factors of production are land, labor, capital, and
government services.
A. True
B. False
Question 13 of 20
If demand increases and supply simultaneously decreases,
equilibrium price will rise.
A. True
B. False
Question 14 of 20
Property rights have a positive effect in a market economy
because they encourage owners to maintain their property.
A. True
B. False
Question 15 of 20
In the price range where demand is inelastic, a decrease in
price will result in a decrease in total revenue.
A. True
B. False
Question 16 of 20
Price elasticity of supply decreases the longer the time
period.
A. True
B. False
Question 17 of 20 4.35 Points
Toothpaste and toothbrushes are substitute goods.
A. True
B. False
Question 18 of 20
A government-set price ceiling will lower equilibrium price
and quantity in a market.
A. True
B. False
Question 19 of 20
Under what elasticity conditions would the following be
true?
Question 20 of 20
The market for gasoline has changed in a couple significant ways
over the last few years: new technologies have decreased the costs associated
with producing gasoline, and automobiles are becoming more fuel efficient.
Describe how these changes affect the supply of and demand for gasoline. What
is the overall effect on equilibrium price?
