AnswersMO-EconomicsUnit Test

Unit Test — Unit test Answers

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1
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Price controls on goods can be set by

A
consumers.
B
economists.
C
governments.
D
producers.
2
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Consumer demand is defined as

A
how frequently the prices change.
B
the willingness and ability people have to buy a good.
C
how frequently the people are willing pay for something.
D
how often people want something delivered.
3

If consumer sovereignty is considered greatest in a system of pure competition, why is sovereignty still limited?

A
Consumers still rely on producers’ set prices.
B
Few products are actually sold on the basis of pure competition.
C
Choices are driven by price when goods are identical.
D
Limited price variations restrict actual choice.
4

[BLANK]

A
debts
B
profits
C
expenses
D
costs
5

True or False? Higher opportunity costs equal a greater comparative advantage.

A
True
B
False
6

Which explains the connection between the law of demand and excess demand?

A
The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand.
B
The law states that increases in price increases leads to greater quantity demanded and limited supply, which occurs during excess demand.
C
The law states that decreases in price leads to greater supply and equilibrium, which occurs during excess demand.
D
The law states that increases in price leads to greater supply and equilibrium, which occurs during excess demand.
7

Read the scenario below and then answer the question. Sample scenario:Scientists have created a new grass seed that stops grass growth at a specific length, eliminating the need to mow the lawn. The price of this seed is high, but many consumers still want to use it. As a result, several different producers supply a large amount of this seed to consumers. In order to attract consumers to their product, some producers lower their prices and supply fewer bags of seeds. What is the best description of the grass seed that is described in this scenario?

A
a good with a low price
B
a good with a high price
C
a good with an inelastic supply
D
a good with an elastic supply
8

[BLANK]

A
demand curve
B
supply curve
C
equilibrium point
D
excess supply
9

Which best explains why the law of supply operates the way it does in a free enterprise economy?

A
Companies want to produce more goods than their rivals.
B
Companies want to reward loyal consumers with low prices.
C
Companies want to hire as many workers as possible.
D
Companies want to be as profitable as possible.
10

What is the difference between a price floor and a price ceiling?

A
A price floor is the minimum price allowed for a good. A price ceiling is the maximum price allowed for a good.
B
A price floor is the maximum price allowed for a good. A price ceiling is the minimum price allowed for a good.
C
A price ceiling below the equilibrium price has no effect.
D
A price floor above the equilibrium price has no effect.
11

The point of maximum profit is the point at which the marginal cost equals the

A
marginal revenue.
B
market price.
C
total revenue.
D
production cost.
12

Which is an example of a product that is considered a need?

A
breakfast food
B
music player
C
sports equipment
D
video game
13

In order to calculate marginal cost, producers must compare the difference in the cost of producing one unit to the cost of

A
purchasing a unit.
B
distributing that unit.
C
producing the next unit.
D
producing a different unit.
14

Which best explains why producers choose to specialize? Choose two answers.

A
to increase competition
B
to gain a comparative advantage
C
to decrease the amount of goods produced
D
to maintain market share
E
to increase efficiency
15

Which factors must a producer consider when deciding what good to supply? Check all that apply.

A
the appeal of the good to family members
B
the elasticity of a good being supplied
C
competition within the market
D
the ability to produce the good efficiently
E
the ability to produce a good of low quality
16

Which aspect of monopolistic competition gives consumers more choice?

A
Producers rely on consumer decisions to succeed.
B
Price is not an important factor.
C
Few barriers to market entry exist.
D
Producers are more concerned about selection than profits.
17

On a graph, an equilibrium point is where

A
a supply curve and a demand curve meet.
B
a supply curve is higher than a demand curve.
C
the supply and demand curves head up.
D
the supply and demand curves head down.
18

Which scenario is the best example of an opportunity cost?

A
A computer company issues a recall on its tablets.
B
A computer company produces fewer laptops to meet tablet demand.
C
A computer company reduces the price on last year’s models.
D
A computer company stops making computers with CD/DVD drives.
19

According to the law of demand, as prices decrease, the quantity demanded

A
decreases.
B
increases.
C
stays the same.
D
disappears.
20

Carmen wants to open her own coffee shop. She has narrowed down a list of wholesale retailers and their cost per pound of coffee beans. Whole Sale Company Cost per lb.Café con Leche$8.50Beans Brothers$7.50Colombian Co.$11.25Turkish Coffee Company$6.25Which company has the comparative advantage in cost per pound of coffee?

A
Café con Leche
B
Beans Brothers
C
Colombian Co.
D
Turkish Coffee Company

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