Econ 111 - Refresher
A refresher for the upcoming test for Economics
Questions and Answers
- 1.
Economics is the study of the allocation of free goods.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Economics is the study of the allocation of SCARCE goods.Rate this question:
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- 2.
Which of these is NOT a factor of production?
- A.
Event
- B.
Land
- C.
Labor
- D.
Capital
Correct Answer
A. Event -
- 3.
Which BEST defines equity in the definition of economics?
- A.
Is the allocation of resources based on the need.
- B.
Is the equal allocation of resources to both poor and rich.
- C.
Everyone is a common recipient of the resources of the society.
- D.
All human beings are subject to same amount of resources.
Correct Answer
A. Is the allocation of resources based on the need.Explanation
Equity in the definition of economics refers to the allocation of resources based on the need. This means that resources are distributed in a way that takes into account the varying needs of individuals or groups. It ensures that those who require more resources due to their circumstances or disadvantages are given priority in resource allocation. This approach aims to achieve fairness and reduce inequality by addressing the specific needs of different individuals or groups in society.Rate this question:
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- 4.
Identify the economic system in this situation:The governement of Soseqsui controls all the resources and has the capacity to manipulate these resources, and the government has the capacity to allocate it on what they deem just.
Correct Answer
Socialism
Command Economy
Command Economy
Command EconomyExplanation
In this situation, the government of Soseqsui controls all the resources and has the power to manipulate and allocate them as they see fit. This indicates a command economy, where the government has centralized control over the allocation and distribution of resources. Additionally, the government's ability to determine what is considered just aligns with the principles of socialism, which aims to achieve economic equality and social justice through government intervention and control.Rate this question:
- 5.
Identify the economic system in this situation:Vyanaira owns a bakeshop and she also has a coffee shop. Marcus runs his own chain of restaurants. Eyricka works as a chemical engineer on a meat processing shop. No one forced them to do these things.
Correct Answer
Capitalism
Market EconomyExplanation
The given situation describes a capitalist economic system, specifically a market economy. In this system, individuals like Vyanaira, Marcus, and Eyricka are free to own and operate their businesses without any external force or coercion. They have the autonomy to make their own decisions and compete in the market to meet the demands of consumers. This system emphasizes private ownership, profit motive, and free market competition.Rate this question:
- 6.
Identify the economic system in this situation:The government of Natpretti is giving the people of Fhackhers their own area of land, the inhabitants of Fhackers has the liberty to do what they want with it.
Correct Answer
Mixed
Mixed Economy
Mixed EconomyExplanation
The situation described indicates that the government of Natpretti is allowing the people of Fhackhers to have their own area of land and the liberty to do what they want with it. This suggests that there is a combination of government intervention and individual freedom in the economic system. Therefore, the correct answer is a mixed economy, where there is a mix of private and public ownership and control of resources.Rate this question:
- 7.
The etymology of the word economics means "household management".
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The word "economics" is derived from the Greek word "oikonomia" which means "household management". This etymology suggests that economics originally referred to the management of a household's resources and finances. Over time, the field of economics has expanded to encompass the study of broader economic systems and the allocation of resources on a larger scale. Therefore, the statement that the etymology of the word economics means "household management" is true.Rate this question:
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- 8.
It is the cost of something which you give up to get it.
Correct Answer
Opportunity CostExplanation
Opportunity cost refers to the value of the next best alternative that is foregone when making a decision. In other words, it is the cost of choosing one option over another. This concept recognizes that resources are limited and that choosing to allocate them towards one option means sacrificing the benefits that could have been gained from the alternative option. Therefore, the answer "Opportunity Cost" accurately describes the cost of giving up something in order to obtain something else.Rate this question:
- 9.
Two scopes of economics include microeconomics and;
Correct Answer
macroeconomicsExplanation
Microeconomics and macroeconomics are two branches of economics that study different aspects of the economy. Microeconomics focuses on individual economic agents such as households, firms, and markets, analyzing their behavior and decision-making processes. On the other hand, macroeconomics examines the overall behavior and performance of the economy as a whole, including factors like inflation, unemployment, and economic growth. Therefore, the correct answer is macroeconomics, as it completes the statement by identifying the other scope of economics alongside microeconomics.Rate this question:
- 10.
On a normal day, Racelle spends 3 gold bars for breakfast and 5 gold bars for lunch and she goes home for dinner. On one day Racelle's mother said she must eat dinner outside the house so she spends 6 gold bars for dinner that day. How much is the marginal cost?
Correct Answer
6 gold barsExplanation
Marginal cost is the additional cost at the expense of normal expenditures or budgets.Rate this question:
- 11.
Inflation is the increase of the individual level of price.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Inflation is the increase of the AGGREGATE levels of prices.Rate this question:
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- 12.
Identify the analysis used in the observation:The economic status of Crimea as of today is at its critical levels, for they lost connection to Kiev, Crimea's lifeline to the Ukraine economy.
Correct Answer
Positive AnalysisExplanation
The given observation states that the economic status of Crimea is at critical levels because it lost connection to Kiev, which was its lifeline to the Ukraine economy. Positive analysis involves the objective examination of facts and data without any personal bias or value judgments. In this case, the observation is presenting a factual statement about the current economic situation in Crimea without expressing any subjective opinions or evaluations. Therefore, the analysis used in this observation is positive analysis.Rate this question:
- 13.
Identify the analysis used in the observation:The Crimean people immediately chose to side with Russia because the Crimean inhabitants are attracted to the promises given by the Russian government.
Correct Answer
Normative AnalysisExplanation
The given observation states that the Crimean people chose to side with Russia because they are attracted to the promises made by the Russian government. This statement is an example of normative analysis. Normative analysis involves making judgments and evaluations based on opinions, values, and subjective criteria. In this case, the observation is presenting a subjective opinion about why the Crimean people made their choice, rather than providing objective facts or evidence.Rate this question:
- 14.
In a Circular Flow Diagram the one that provides resources to the INPUT MARKET is the:
- A.
Household
- B.
Firm
- C.
Output Market
- D.
Input Market
Correct Answer
A. HouseholdExplanation
In a Circular Flow Diagram, the household is the entity that provides resources to the input market. This includes factors of production such as labor, land, and capital. The household supplies these resources to the input market, which in turn distributes them to firms for production purposes. Therefore, the household is responsible for supplying the necessary resources for the production process to take place.Rate this question:
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- 15.
In a Circular Flow Diagram the one that provides resources to the OUTPUT MARKET is the:
- A.
Firm
- B.
Household
- C.
Output Market
- D.
Input Market
Correct Answer
A. FirmExplanation
In a Circular Flow Diagram, the firm is the entity that provides resources to the output market. This is because the firm is responsible for producing goods and services, which are then sold in the output market. The firm hires labor and purchases other inputs from the input market, and uses these resources to produce output. Therefore, the firm plays a crucial role in supplying resources to the output market.Rate this question:
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- 16.
The inferior goods are known as giffen goods, the status symbol goods are known as
Correct Answer
Veblen GoodsExplanation
Veblen goods are a type of luxury goods that are considered status symbols. They have an upward-sloping demand curve, meaning that as the price of the goods increases, the demand for them also increases. This is because consumers perceive these goods as being more desirable and exclusive when they are more expensive. In contrast, inferior goods are those for which demand decreases as consumer income increases. Giffen goods are a specific type of inferior goods for which demand increases as the price increases, but they are not the same as Veblen goods.Rate this question:
- 17.
Is the number of consumers' want that they can afford
Correct Answer
DemandExplanation
Demand refers to the quantity of a product or service that consumers are willing and able to purchase at a given price and time. It is influenced by various factors such as consumers' preferences, income levels, and affordability. The statement "Is the number of consumers' want that they can afford" aligns with the concept of demand, as it implies that demand is determined by the desires of consumers that they can actually afford to fulfill.Rate this question:
- 18.
Demand Curve and Supply Curve are graphical illustrations and Demand Schedule and Supply Schedule are tabular illustrations.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because demand and supply curves are typically represented graphically, showing the relationship between price and quantity demanded or supplied. On the other hand, demand and supply schedules are presented in tabular form, listing the various quantities demanded or supplied at different price levels. Graphical illustrations provide a visual representation of the relationship, while tabular illustrations present the same information in a more organized and structured format.Rate this question:
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- 19.
It is the sum of all individual demands
Correct Answer
Market DemandExplanation
The given answer is correct because market demand refers to the total quantity of a product or service that all consumers in a particular market are willing and able to purchase at a given price. It is calculated by summing up the individual demands of all consumers in the market. By considering the demands of all consumers, market demand provides a comprehensive view of the overall demand for a product or service in the market.Rate this question:
- 20.
If the price of a product increases the demand;
Correct Answer
decreasesExplanation
When the price of a product increases, it becomes more expensive for consumers to purchase. As a result, the demand for the product decreases because fewer people are willing or able to afford it. This is a basic principle of economics known as the law of demand, which states that as the price of a product rises, the quantity demanded decreases. Therefore, the correct answer is that the demand decreases when the price of a product increases.Rate this question:
- 21.
If a price of a veblen good increases the demand;
Correct Answer
increasesExplanation
When the price of a Veblen good increases, the demand for it also increases. This is because Veblen goods are luxury items that are associated with status and prestige. As the price rises, the perceived value of the good also increases, making it more desirable for individuals who wish to display their wealth and social standing. Therefore, the higher price leads to an increase in demand as consumers are willing to pay more to obtain the Veblen good and signal their high social status.Rate this question:
- 22.
If the price of a giffen good decreases the demand;
Correct Answer
decreasesExplanation
The answer is that when the price of a giffen good decreases, the demand for it also decreases. This is because giffen goods are rare exceptions to the law of demand, where the quantity demanded of a good decreases as its price increases. Giffen goods are inferior goods that have no close substitutes and are considered necessities. When their price decreases, consumers have more purchasing power and can afford to buy more of other goods, leading to a decrease in demand for the giffen good.Rate this question:
- 23.
If the income of the person increases the demand for the inferior product;
Correct Answer
decreasesExplanation
When a person's income increases, their purchasing power also increases. As a result, they are more likely to switch from purchasing inferior products to higher quality alternatives. This is because inferior products are generally considered to be of lower quality and less desirable. Therefore, the demand for inferior products decreases when income increases.Rate this question:
- 24.
If the price of the complement decreases, the demand for the product;
Correct Answer
decreasesExplanation
When the price of a complement decreases, it means that the complementary product has become more affordable. This leads to an increase in the demand for the complementary product, which in turn decreases the demand for the original product. This is because consumers are more likely to purchase the complementary product when it is cheaper, reducing their need for the original product. Therefore, the demand for the product decreases when the price of the complement decreases.Rate this question:
- 25.
It is the number of the producers' willingness to produce.
Correct Answer
SupplyExplanation
Supply refers to the quantity of goods or services that producers are willing and able to offer for sale at various prices in a given market. It represents the producers' willingness to produce and sell their products. The higher the price, the more willing producers are to supply a larger quantity of goods or services. Conversely, if the price decreases, producers may be less willing to supply as much. Therefore, the correct answer is "Supply."Rate this question:
- 26.
If the cost of production decreases the supply;
Correct Answer
increasesExplanation
If the cost of production decreases, it becomes more affordable for producers to produce goods. This leads to an increase in the supply of goods in the market. As the cost of production decreases, producers are able to offer their products at lower prices, attracting more buyers and increasing the quantity of goods supplied. Therefore, a decrease in the cost of production results in an increase in the supply of goods.Rate this question:
- 27.
If the price of the substitute increases, the demand for the product;
Correct Answer
increasesExplanation
When the price of a substitute product increases, it becomes more expensive for consumers to purchase the substitute. As a result, consumers are more likely to choose the original product instead, leading to an increase in demand for the product. This is because the substitute has become less attractive in comparison, making the original product a more desirable option. Therefore, when the price of the substitute increases, the demand for the product increases as well.Rate this question:
- 28.
If the price of the product increases the supply;
Correct Answer
increasesExplanation
When the price of a product increases, it incentivizes producers to supply more of that product in order to maximize their profits. This is because higher prices mean higher revenues for producers, which can offset any additional costs associated with increasing production. As a result, the quantity of the product supplied in the market increases. Therefore, the answer is that the supply increases when the price of the product increases.Rate this question:
- 29.
The Production Possibilities Frontier is used to detect trades that are better off and ineffiecencies.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The Production Possibilities Frontier (PPF) is a graphical representation of the maximum output combinations that an economy can produce given its resources and technology. It shows the different trade-offs between producing two goods. By analyzing the PPF, we can identify points that are considered efficient, where resources are allocated optimally, and points that are inefficient, where resources are not fully utilized. Therefore, the PPF is indeed used to detect trades that are better off (efficient) and inefficiencies, making the statement "True."Rate this question:
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- 30.
David Ricardo's Comparative Advantage looks at a producer's ability to produce the same good with fewer resources.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Adam Smith's Absolute Advantage looks at a producer's ability to produce the same good with fewer resources.
David Ricardo's Comparative Advantage looks at the producer's ability to produce at a lower opportunity cost.Rate this question:
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- 31.
Tydings Company is willing to spend up to 700 diamond stones to purchase IGACOS. It turns out that IGACOS' Current Market Price is only 200. What is the consumer surplus?
Correct Answer
500 diamond stonesExplanation
The consumer surplus is the difference between the maximum price a consumer is willing to pay for a product and the actual price they pay. In this case, Tydings Company is willing to spend up to 700 diamond stones to purchase IGACOS, but the current market price is only 200 diamond stones. Therefore, the consumer surplus would be the difference between these two values, which is 500 diamond stones.Rate this question:
- 32.
Price/Products (10-9/5) (8-9/4) (7-8/3) (6-7/2) (5-6/1)Given the data above what is the producer surplus given that the current market price is 7?
Correct Answer
3Explanation
Producer Surplus - PS
At 10-9 the PS is 5 x 1 = 5
At 8-9 the PS is 4 x 1 = 4
At 7-8 the PS is 3 x 1 = 3
At 6-7 the PS is 2 x 1 = 2
At 5-6 the PS is 1 x 1 = 1
total PS of 15
at 7 the PS excluded above the graph is 12
so the PS at 7 is 3
15-12 = 3Rate this question:
- 33.
It is the sum of the consumer surplus and the market surplus.
Correct Answer
Total SurplusExplanation
Total Surplus refers to the overall economic welfare gained from a transaction or market. It is calculated by adding the consumer surplus, which represents the difference between what consumers are willing to pay and what they actually pay, and the producer surplus, which represents the difference between the price producers receive and the minimum price they are willing to accept. By considering both the benefits to consumers and producers, the total surplus provides a measure of the overall efficiency and welfare generated in a market.Rate this question:
- 34.
If price floor is the minimum amount to which below transaction allowed, the maximum amount to which above transaction is not allowed is called.
Correct Answer
Price CeilingExplanation
A price ceiling is a maximum limit set by the government on the price of a particular good or service. It is the opposite of a price floor, which sets a minimum limit. In this scenario, the question is asking for the term that refers to the maximum amount to which an above transaction is not allowed. This aligns with the concept of a price ceiling, as it restricts prices from going above a certain level. Therefore, the correct answer is price ceiling.Rate this question:
- 35.
The current equilibrium is at 3, the current price ceiling is 5.If the price ceiling is change to 2, the price ceiling is binding.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
It is binding because it will force the equilibrium point to move down.Rate this question:
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- 36.
If the current equilibrium is a 3, and the price floor is at 2If I raise the price floor to 2.5, the price floor is binding.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
It is not binding for it will not force the equilibrium point to change.Rate this question:
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- 37.
If the price floor is moved up above the equilibrium point it will cause the equilibrium point to go upwards but in this situation the price will change and the quantity will change causing a;
Correct Answer
SurplusExplanation
Because if the minimum amount of the product is increased the producers are willing to produce more of the product.Rate this question:
- 38.
If the price ceiling is moved below the equilibrium, it will force the equilibrium to go downwards, in this situation the price and the quantity will change causing a;
Correct Answer
ShortageExplanation
It is because when the maximum amount of selling price is lower than normal the producers will cease to create more products.Rate this question:
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Mar 21, 2023Quiz Edited by
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Jul 10, 2014Quiz Created by
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