Exam 1

1. Centralized decision-making is a key feature in a ________________ economy

1. traditional 
2. underground 
3. market
4. command 

2.  Which of the following is an example of a derived demand for labor?
  a decrease in car sales leads to a decrease in demand for car wax 
  An decreased demand for dogs leads to a decreased demand for dog groomers 
  the invention of self-check out stands leads to a decreased demand for cashiers 
  an increased demand for chips leads to an increased demand for dip

3. If the price of pancakes increase and the demand for syrup decreases, this is an example of 

1. normal goods 
2. complements
3. substitutes
4. inferior goods 

4.   Which of the following statements is an example of the law of diminishing marginal utility?

1. The satisfaction derived from consuming one more slice of pizza declines 
2.   The satisfaction derived from consuming one more slice of pizza increases
3. The satisfaction derived from consuming one more slice of pizza rises
4. The satisfaction derived from consuming one more slice of pizza is constant 

5.  When the supply of labor increases, what happens to wages and the quantity of labor?

1.  wages fall and the quantity of labor decreases
2. wages rise and the quantity of labor decreases
3. wages rise and the quantity of labor increases 
4. wages fall and the quantity of labor increases 

6.  A carpenter is faced with the following production possibility frontier:

What is the opportunity cost of moving production levels from B to C?

1. 9 tables
2. 10 bookcases
3. 3 bookcases
4. 4 tables

7. Which of the following statements is not true about the “Invisible Hand”?

1. consumers and producers are guided by self-interest 
2. Adam Smith advocated for little government intervention
3. consumers and producers are not guided by self-interest 
4. consumers and producers reach an efficient allocation of resources 

8.  If the demand for labor decreases, then wages ______________ and the quantity of labor _____________ 

1.  rise, decreases
2. fall, decreases
3. rise, increases
4. fall, increases 

9.   The assembly line is an example of 

1.  division of labor
2. specialization
3. economies of scale
4. production possibilities frontier 

10.    Which factor will cause a shift in the supply curve?

1. changes in preferences
2. changes in income
3. a change in the price of the good 
4. changes in input prices 

11.  Which of the following statements is true about the Law of Increasing Opportunity Cost?

1. As production of a good or service increases, the marginal opportunity cost of producing it decreases
2. As production of a good or service increases, the marginal opportunity cost of producing it increases 
3. As production of a good or service decreases, the marginal opportunity cost of producing it decreases 
4. As production of a good or service decreases, the marginal opportunity cost of producing it increases 
    

12     Unemployment occurs when 

1.  the demand for labor is equal to the supply of labor 
2. the supply of labor is less than the demand for labor
3. the supply of labor exceeds the demand for labor
4. the demand for labor exceeds the supply of labor 

13.   Karen has a weekly budget of $80, which she likes to spend on boba and massages. Boba costs $4 and massages cost $40. What is the maximum number of bobas she could buy in a week?

1.   2 bobas 
2. 10 bobas
3. 20 bobas
4. 4 bobas 

14.   Which statement is true about the Law of Demand?

1.  There is a positive relationship between price and quantity demanded
2. When the price of a good falls, quantity demanded falls
3. When the price of a good rises, quantity demanded rises 
4.   When the price of a good falls, quantity demanded rises 

15.  The unemployment rate is under 5%” is an example of a ________________ statement.

1. positive
2. normative
3. efficient
4. negative 

16.  When incomes rise and quantity demanded for a good falls, the good is 

1. a complement 
2. normal
3. a substitute
4. inferior 

17.    South Korea and England are examples of a _______________ economy.

1.  underground
2. market
3. command
4. traditional 

18.   Which of the following is true about a shortage?

1.  supply exceeds demand
2. There is excess supply
3. demand equals supply
4. There is excess demand 

19.    A point on the production possibilities frontier is 

1.  not feasible
2. not feasible, but efficient
3. feasible and efficient
4. feasible, but inefficient 
    

20.

The table above shows the demand and supply of burgers. If the price is $5.00 per burger, how much will the shortage or surplus be?

1. surplus of 50 burgers 
2. shortage of 30 burgers 
3. shortage of 50 burgers 
4. surplus of 30 burgers 

 
Question 21

In the market for labor, ______________ demand labor.

1. government 
2. firms 
3. households 
4. both firms and households

Question 22

When the supply curve decreases,

1. prices rise and quantity increases 
2. prices rise and quantity decreases
3. prices fall and quantity decreases
4. prices fall and quantity increases 

Question 23

Which of the following statements is not true about economics?

1. economics is a social science 
2. economics is the study of how individuals allocate limited resources
3. economists cannot run experiments to explain economic theory
4. economics is a physical science 

Question 24

Minimum wage creates a situation where 

1. the demand for labor exceeds the supply of labor
2. the demand for labor is equal to the supply of labor
3. the supply of labor is less than the demand for labor
4. the supply of labor exceeds the demand for labor 

Question 25

Which of the following is an example where technology acts as a complement to labor?

1. an increase in demand for solar panels leads to an increase in demand for solar panel installers 
2. self check out stands reduce the need for cashiers
3. online banking reduces the demand for bankers 
4. an increase in demand for coffee leads to an increase in demand for coffee baristas 

Exam 1 Answers