If the demand curve for product A moves to the right, and the price of product B increases, it can be concluded that: A. A and B are substitute goods; B. A and B are complementary goods; C. A is an inferior good, and B is a superior good; D. Both goods A and B are inferior.
1. If the
A. A and B are substitute goods;
B. A and B are complementary goods;
C. A is an inferior good, and B is a superior good;
D. Both goods A and B are inferior.
2. If a point falls inside the
A Resources are over utilized
B Resources are under utilized
C There is employment in the economy
D Both (b) and (c)
3. In which type of economy do consumers and producers make their choices based on the market forces of demand and supply?
(a) Open Economy
(b) Controlled Economy
(c) Command Economy
(d) Market Economy
4. In a free market economy, when consumers increase their purchase of a goods and the level of _______ exceeds _______ then prices tend to rise
A Demand, Supply
B Supply, Demand
C Prices, Demand
D Profits, Supply
5) Scarcity requires that people must
A) cooperate.
B) compete.
C) trade.
D) make choices.
6. Which of the following is a
A) The reasons why Kathy buys less orange juice.
B) The reasons for a decline in average prices.
C) The cause of why total employment may decrease.
D) The effect of the government budget deficit on inflation.
7. Which of the following is NOT a factor of production?
A) the water used to cool a nuclear power plant.
B) the effort of farmers raising cattle.
C) the wages paid to workers.
D) the management skill of a small business owner.
8. When the government chooses to use resources to build a dam, these sources are no longer available to build a highway. This choice illustrates the concept of
A) a market mechanism.
B) macroeconomics.
C) opportunity cost.
D) a fallacy of composition.
9. Any point on a production possibilities frontier (PPF) itself is
A) efficient.
B) unattainable.
C) inefficient.
D) equitable.
13. When the price of a good falls, ceteris paribus, the income effect for a normal good implies that people buy
A) less of that good because the relative price of the good has fallen.
B) more of that good because the relative price of the good has risen.
C) less of that good because they cannot afford to buy all the things they previously bought.
D) more of that good because they can afford to buy more of all the things they previously bought.
14. Pizza is a normal good. When the price of a pizza decreases from $12 to $10,
A) the income effect means people buy less pizza.
B) the income effect means people buy more pizza.
C) the quantity demanded of pizza will not change.
D) None of the above answers is correct.
15. The ABC Music club charges a price of $16 for a CD and $8 for a cassette. Both CDs and cassettes are normal goods. If the ABC Music club increases the price of a CD to $18, everything else remaining the same,
A) the substitution effect induces club members to buy more cassettes and fewer CDs.
B) the income effect induces club members to buy fewer CDs.
C) the substitution effect induces club members to buy more CDs and fewer cassettes.
D) Both answers A and B are correct.
16. When
A) quantity definitely decreases.
B) quantity definitely increases.
C) price definitely increases.
D) price definitely decreases.
17. If a technological improvement takes place in the computer industry, then the
A) fall; increase.
B) fall; decrease.
C) rise; increase.
D) rise; decrease.
18. A President of the United States promises to simultaneously produce more defense goods without any decreases in the production of other goods. This promise can be valid
A) if the United States is producing at a point on its production possibilities frontier.
B) if the United States is producing at a point inside its production possibilities frontier.
C) if the United States is producing at a point beyond its production possibilities frontier.
D) only if the production possibilities frontier shifts rightward.
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