1)Economics does not study correct or incorrect behaviors, but rather it assumes that economic agents make the best decisions given their knowledge of the costs and benefits. What term best describes this behavior? A. equitably B. selfishly C. emotionally D. rationally
2) By definition, what is economics the study of? A. how to make money in the stock market. B. supply and demand. C. the choices people make to attain their goals, given their scarce resources. D. how to make money in a market economy.
3) What is the term in economics by which a group of buyers and sellers of a product come together to trade? A. market B. trade-off C. collective D. cooperative
4) Which of the following statements describes the actions of producers in the circular flow model? A. hire resources sold by households in the factor market. B. spend earnings from resource sales on goods and services in the product market. C. sell goods and services in the input market. D. and households spend earnings from resource sales on goods and services in the factor market.
5) If a commercial dairy farm wants to raise funds to purchase feeding troughs, in which market does it do so? A. factor market. B. dairy products market. C. output market. D. product market.
6) Which of the following is not a critical function of the government in facilitating the operation of a market economy? A. ensuring an equal distribution of income to all citizens. B. enforcing contracts. C. protecting private property. D. enforcing property rights.
7) If demand is inelastic, the absolute value of the price elasticity of demand is A. greater than one. B. greater than the absolute value of the slope of the demand curve. C. one. D. less than one.
8) Economists in general A. Do not believe that people's tastes determine demand and therefore they ignore the subject of tastes. B. Incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements. C. Do not try to explain people's tastes, but they do try to explain what happens when tastes change. D. Believe that they must be able to explain people's tastes in order to explain what happens when tastes change.
9) A demand curve which is ________ represents perfectly inelastic demand, and a demand curve which is ________ represents inelastic demand. A. vertical; downward sloping B. upward sloping; horizontal C. downward sloping; vertical D. horizontal; downward sloping
10) A decrease in the price of GPS systems will result in A. a decrease in the demand for GPS systems. B. an increase in the supply of GPS systems. C. a smaller quantity of GPS systems supplied. D. a larger quantity of GPS systems supplied.
11) At a product's equilibrium price A. the product's demand curve is the same as the product's supply curve. B. the product's demand curve crosses the product's supply curve. C. the quantity of the product demanded is less than the quantity of the product supplied. D. the quantity of the product demanded is greater than the quantity of the product supplied.
12) If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until A. the quantity demanded exceeds the quantity supplied. The market will then be in equilibrium. B. quantity demanded equals quantity supplied. The market price will then equal the equilibrium price. C. all consumers will be able to afford the product. D. quantity demanded equals quantity supplied. The equilibrium price will then be lower than the market price.
13) Marginal revenue product of labor for a competitive seller is A. the change in total product from hiring one more worker. B. the marginal revenue of the product multiplied by the output price. C. the output price multiplied by the quantity sold. D. equal to the marginal product of labor multiplied by the output price.
14) Let MP = marginal product, P = output price, and W = wage, then the equation that represents the condition where a competitive firm would hire another worker is A. P × MP = W. B. P × W > MP. C. P × MP > W. D. P × MP < W.
15) Marginal revenue product for a perfectly competitive seller is equal to A. the output price multiplied by the total product of labor. B. the marginal cost of production. C. the change in total revenue that results from hiring another worker. D. the output price multiplied by the number workers hired.
16) An individual's labor supply curve shows A. the maximum wage rates offered to that individual by various potential employers. B. the relationship between the quantity of hours worked and total income earned by that individual. C. the relationship between wages and the quantity of labor that a firm is willing to employ. D. the relationship between wages and the quantity of labor that she is willing to supply.
17) A firm's demand for labor curve is also called its A. marginal revenue product of labor curve. B. marginal benefit of labor curve. C. marginal valuation curve. D. marginal factor cost of labor curve.
18) A decrease in the wage rate causes A. a decrease in labor's productivity. B. an increase in the quantity of labor demanded. C. a rightward shift of the firm's labor demand curve. D. a leftward shift of the firm's labor demand curve.
19) Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption? A. common resources B. public goods C. private goods D. quasi-public goods
20) Which of the following is an example of a quasi-public good? A. crime prevention B. cable television C. organic apples D. stock of knowledge in the public domain
21) Which of the following displays these two characteristics: rivalry and nonexcludability? A. a common resource B. a public good C. a private good D. a quasi-public good
22) A monopoly is a seller of a product A. without a well-defined demand curve. B. with many substitutes. C. without a close substitute. D. with a perfectly inelastic demand.
23) The key characteristics of a monopolistically competitive market structure include A. sellers have no incentive to advertise their products. B. many small (relative to the total market) sellers acting independently. C. all sellers sell a homogeneous product. D. barriers to entry are strong.
24) A characteristic found only in oligopolies is A. products that are slightly different. B. break even level of profits. C. interdependence of firms. D. independence of firms.
25) The Philippines and Vietnam have roughly the same size population. Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion. You should conclude A. a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines. B. a typical person in Vietnam is 10 times as well off as the typical person in the Philippines. C. it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information. D. a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines.
26) Gross domestic product understates the total production of final goods and services because of the omission of A. intermediate goods. B. the underground economy. C. exports. D. inflation.
27) Gross domestic product is calculated by summing up A. the total quantity of goods and services produced in the economy during a period of time. B. the total quantity of goods and services in the economy. C. the total market value of final goods and services produced in the economy during a period of time. D. the total market value of goods and services in the economy.
Economics MCQ 1-27
