Economics Practice Questions.docx

ECONOMICS PRACTICE QUESTIONS: Questions and Answers 1. What is the financial gain made in transactions? A. Profit B. Resource C. Scarcity D. Wage 2. If a person makes a necklace that only costs $2.00 to make, and then sells the necklace for $12.00, they made a $10.00 ____? A. Wage B. Demand C. Profit D. Equilibrium price 3. What is an economic or productive factor required to accomplish an activity? A. Specialization B. Resource C. Traditional system D. Wage 4. What is it called when you have limited quantities of resources used to meet unlimited wants? A. Profit B. Specialization C. Cartel D. Scarcity 5. What is the concentration of the productive efforts of individuals and firms on a limited number of activities? A. Socialism B. Specialization C. Factors of production D. Free enterprise 6. What is a social and political philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society? A. Captialism B. Socialism C. Traditional system D. Microeconomics 7.

What is an economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services? A. Capitalism B. Socialism C. Traditional system D. Barter system 8. What is a payment made my an employer to an employee? A. Profit B. Marginal C. Interest D. Wage 9. What is a formal organization of producers that agree to coordinate prices and production? Discuss A. Cartel B. Traditional system C. Command system D. Corporation 10. What are two goods that are bought and used together? A. Monopolistic competition B. Market system C. Complementary goods D. Efficiency 11. What is a legal entity owned by individual stockholders? A. Capital B. Free enterprise C. Specialization D. Corporation 12. What is the desire to own something and the ability to pay for it called? A. Demand B. Allocation C. Capital D. Opportunity cost 13. What is the measure of how consumers react to a change in price? A. Elasticity

B. Marginal C. Equilibrium price D. Scarcity 14. What is the point at which the quantity demanded and the quantity supplied are equal called? A. Elasticity B. Efficiency C. Equilibrium price D. Production possibilites 15. What is the study of economic behavior and decision making of small units, such as individuals, families, and businiesses called? A. Macroeconomics B. Microeconomics C. Economics D. Economic statistics 16. What is a market structure in which many companies sell products that are similar but not identical? A. Monopoly B. Traditional system C. Oligopoly D. Monopolistic competition 17. The KIA plant was built by which country? A. North Korea B. South Korea C. China 18. The machines and robots at the KIA plant are an example of what? A. Capital B. Economic technology C. Specialization 19. The KIA plant was built in what Georgia city? A. Middleton B. Atlanta C. West Point 20. Which country represents a substantial degree of socialism? A. Denmark

B. Canada C. United Kingdom 21. Corporations are in business for what? A. Profit B. Non-profit C. Stockholders 22. At full capacity, the KIA plant should produce how many vehicles per year? A. 250,000,000 B. 1 billion C. 300,000 23. When a state agrees to lower a tax rate for one corporation so that the corporation builds a plant or factory in that state, it is an example of what? A. Capitalism B. Monopolistic competition C. Incentive 24. How much did it cost KIA to build their plant in Georgia? Discuss A. $1 billion B. $2 billion C. $3 billion 25. What is financial compensation in exchange for labor? A. Profit B. Wage C. Capital 26. What is the hourly wage at KIA? A. $14-21/hr B. $15-25/hr C. $12-22/hr 27. When a consumer buys a car from a dealership, this is an example of what? A. Macroeconomics B. Microeconomics C. Home Economics

BASIC ECONOMIC QUIZ Questions and Answers 1. If the CPI in 2000 is 100 and the CPI in 2008 is 110, there has been: A. Slight inflation B. Slight deflation C. Extreme inflation D. Extreme deflation E. Stagflation 2. Why are transfer payments not a component of GDP? A. They are too large and would skew data B. They are negligible in size and scope C. They do not generate wealth D. They only measure a producer's impact on GDP E. They only measure the government's impact on GDP 3. What is the effect of a price ceiling in the long run? A. Equilibrium B. Shortages C. Surpluses D. Inflation E. Deflation 4. You are an artist. It always takes you an hour to produce one work of art. In other words, 1 work takes 1 hour, two works takes 2 hours, and so forth. Time is your only cost. This violates the principle of A. Demand B. Supply C. Ownership D. Equilibrium E. Diminishing marginal returns 5. Which of the following is not a component of demand? A. Consumer spending B. Investment C. Government spending D. Transfer payments E. Exports 6. Which of the following would cause a supply shift? A. A change in consumer tastes or preferences B. New technology

C. Consumer taxes D. Employment figures E. None of the above 7. You own a farm that generates $100 K per year. You discover it is sitting on top of an oil field that could generate $500 K per year. Your economic cost of continuing to farm on the land is: A. $100 K B. $400 K C. $200 K D. $500 K E. $1000 K ECONOMIC PRETEST Questions and Answers 1. For most people, the largest protion of their personal income comes from: A. Rent paid to them on their property B. Interest on stocks and bonds C. Wages and salries from their jobs D. The federal and state governments. 2. When a person rents an apartment, who benefits from the transaction? A. Only the person renting the apartment B. Only the landlord C. Both the renter and the landlord D. Mortgage companies 3. When deciding which of two items to purchase, you should always: A. Choose after comparing costs and benefits of both items B. Choose the item that costs less C. Chosse the item with the greatest benefits D. Choose the item that you want 4. If the price of beef doubled and the price of poultry stayed the same, people would most likely buy: A. Less poultry and more beef B. More poultry and less beef C. The same amount of pultry and beef D. Less poultry and beef 5. In the United States, who determines what goods and services will be porduced?

A. Producers and the government B. Government C. Consumers D. Producers, consumers, and government 6. Since the resources used in the production of goods and services are limited, society must: Discuss A. Reduce the use of those resources B. Try to get more resources C. Focus on their most abundant resource D. Make choices about how to use resources 7. A large increase in the cost of producing jeans is most likely to result in: Discuss A. Lower jean prices and more jeans bought B. Higher jean prices and fewer jeans bought C. No change D. Lower jean prices and fewer jeans bought 8. A person who starts a business to produce a new product is known in the marketplace as: Discuss A. A bureaucrat B. A manager C. An entrepreneur D. A Chief Executive Officer (CEO) 9. Which of the following would most likely accelerate innovation in the computer industry? A. Taxing all new inventions in the industry B. Investing more into research and development C. Increased government regulation of the industry D. Greater use of PCs by individuals 10. If interest rates charged by banks decreased, business would be most likely to: Discuss A. Increase investment spending B. Decrease the number of employees C. Increase their prices D. See an increase in their stock prices 11. The stock market is an example of an institution that exists to help people achieve their goals. The existence of the stock market:

Discuss A. Helps predict stock prices B. Helps predict corporate earnings C. Brings together buyers and sellers of stocks D. Generally increases the prices of stocks 12. Which of the following statements about money is true? Discuss A. It holds its value during times of inflation B. It makes saving more difficult C. It makes buying and selling easier D. It doesn't hold its value 13. Which of the following are most likely to be helped by inflation? A. Banks that loaned money at a fixed interest rate B. People living on fixed incomes C. People who borrowed money at fixed interest rates D. Businesses 14. Assume that one US Dollar is the same as 10 Japanese Yen. If the Dollar becomes worth 15 Yen, which of the following occurs? Discuss A. The price of all japanese goods increases B. Japan will import more goods into the US C. Americans in Japan will see that their dollar will buy more goods and services D. America will increase its exports to Japan 15. If your city sets a maximum amount that landlords can charge for rent, what is the most likely result? A. Available apartments will equal the number of people who want to rent them B. There will be fewer apartments than people who want to rent them C. There will be more apartments than people who want to rent them. D. No change. 16. Which of the following methods for reducing pollution would most economists support? A. Increased regulation on polluting companies B. Eliminating all air pollution

C. Reducing air pollution until the cost of further reductions outweighs the benefits D. Government sponsored "green" automobiles 17. If the United States stopped importing cars from Japan, who would most likely benefit? A. Japanese automakers B. American automakers C. American consumers D. Japanese consumers 18. If real Gross Domestic Product (GDP) has increased, which of the following has also definitely increased? Discuss A. The amount of final goods and services produced B. The number of resources used to produce goods and services C. Prices of final goods and services D. Demand for final goods and services 19. When a government's expenses for a year are higher than its revenue for that year, the difference is known a/an A. Surplus B. Shortage C. Budget deficit D. National debt