REVIEW EXAM   Multiple Choice Identify the letter of the choice that best completes the statement or answers the question.  

____. 1. Which of the following is NOT a basic economic question. a ____ 1. Which of the following is NOT a basic economic question? a. WHAT to produce b. WHEN to produce c. FOR WHOM to produce d. HOW to produce    

____. 2. The study of economics includes all of the following EXCEPT a ____ 2. The study of economics includes all of the following EXCEPT a. description. b. analysis. c. explanation. d. financing.    

____. 3. What is the fundamental problem of economics. a. scarcity b ____ 3. What is the fundamental problem of economics? a. scarcity b. capital c. the factors of production d. labor    

____. 4. Which of the following is NOT a capital good. a ____ 4. Which of the following is NOT a capital good? a. a bulldozer at a construction site b. a cash register at a clothing store c. an oven at a bakery d. a television set for sale at an appliance store    

____ 5. What is the best explanation of "There Is No Such Thing As A Free Lunch" (TINSTAAFL)? a. Businesses try to attract consumers with "free" offers that are really free. b. There is always a cost when something is produced. c. The factors of production are the means for a society to produce and distribute goods and services. d. Every society must answer the three basic economic questions.    

____ 6. Which of the following best describes the relationship between trade-offs and opportunity costs? a. Opportunity costs are incurred when trade-offs are made. b. Opportunity costs are the opposite of trade-offs. c. Trade-offs lower the opportunity costs of an economic decision. d. Trade-offs occur when there are no opportunity costs.    

____. 7. Imagine you decide to purchase a soccer ball for $35. 00 ____ 7. Imagine you decide to purchase a soccer ball for $35.00. Which of the following is an opportunity cost of your decision? a. the time spent deciding to spend your money on a soccer ball b. something else you wanted that could have been bought for $35.00 c. 35.00 in cash d. the time spent making the purchase and the tax paid on the ball    

____ 8. Which of the following is NOT a characteristic of a production possibilities frontier? a. It illustrates the concept of opportunity costs. b. It is based on full employment of all productive resources. c. It is used by economists as a tool for description and analysis. d. It indicates the ideal production levels for goods and services.    

____ 9. When a country that produces only two goods is producing on its production possibilities frontier, the decision to produce more of good A means that a. more of good B also will be produced. b. the same amount of good B will be produced. c. less of good B must be produced. d. there are no opportunity costs involved.    

____. 10. What term refers to the value of a trade-off. a ____ 10. What term refers to the value of a trade-off? a. production possibility b. opportunity cost c. choice d. frontier    

____. 11. For something to have value, it must a. cost a lot of money ____ 11. For something to have value, it must a. cost a lot of money. b. have utility. c. be on sale. d. never go out of style.    

____. 12. Which of the following is an example of a service. a ____ 12. Which of the following is an example of a service? a. hair spray b. a haircut c. scissors d. a blow dryer    

____. 13. Which of the following is an example of a good. a. a car b ____ 13. Which of the following is an example of a good? a. a car b. a tune-up c. a car wash d. an oil change    

____. 14. What is a free enterprise economy. a ____ 14. What is a free enterprise economy? a. an economy in which consumers and privately owned businesses make the majority of basic economic decisions b. an economy in which the government make the majority of basic economic decisions c. an economy that is free of markets d. an economy that is free from a circular flow of economic activity    

____. 15. Which of the following is NOT a strength of a market economy ____ 15. Which of the following is NOT a strength of a market economy? a. It can adjust to change over time. b. It gives producers and consumers a great deal of freedom. c. It has decentralized decision-making. d. It supports all of its people equally.    

____ 16. All of the following are weaknesses of a command economy EXCEPT that it a. requires a large decision-making bureaucracy. b. provides few incentives for people to work hard. c. lacks the flexibility to deal with minor problems. d. can change direction drastically in a short time.    

____ 17. Which of the following is likely to occur in a traditional economy? a. A new factory opens to produce computer chips. b. A father teaches his son how to clear land for crops. c. A new clothing fashion increases the profits of textile mills. d. A large government agency decides to build more warships.    

____ 18. What type of economy recently collapsed in the communist bloc countries of Eastern Europe and the former Soviet Union? a. a traditional economy b. a command economy c. a market economy d. a free enterprise economy    

____ 19. Who would you most likely find participating in a market economy? a. a government official deciding how much wheat to plant this season b. a teenage girl deciding how to spend the extra money she earned working overtime c. a hunter deciding where to hunt to provide his family with a meal that night d. a worker deciding to leave his job early because the production quota has been met    

____ 20. Which of the following is NOT a major economic and social goal of the United States? a. economic interdependence b. economic security c. economic growth d. economic efficiency    

____ 21. All of the following are characteristics of a free enterprise economy EXCEPT a. economic freedom. b. government control. c. voluntary exchange. d. private property.    

____. 22. Why are entrepreneurs important in a free enterprise economy ____ 22. Why are entrepreneurs important in a free enterprise economy? a. Entrepreneurs don't pay taxes. b. Entrepreneurs help define the seven economic and social goals. c. Entrepreneurs pay high wages to their employees. d. Entrepreneurs start new businesses.    

____ 23. How do consumers exercise their power in the American economy? a. by deciding what to purchase. b. by working for businesses. c. by becoming entrepreneurs d. by saving their money    

____ 24. The government plays all of the following roles in the American economy EXCEPT a. protector of consumers. b. regulator of business. c. central planner deciding what to produce. d. consumer of products.    

____. 25. The demand curve is always a. upward sloping. b ____ 25. The demand curve is always a. upward sloping. b. downward sloping. c. level. d. irregular.    

____ 26. All of the following must exist for there to be demand EXCEPT a. desire to buy a product. b. producers to sell a product. c. ability to buy a product. d. willingness to buy a product.    

____. 27. A demand curve shows that a ____ 27. A demand curve shows that a. more will be purchased at low prices than at high ones. b. less will be purchased at low prices than at high ones. c. approximately the same amount will be purchased at low prices than at higher prices. d. all people have the ability, desire, and willingness to pay.    

____ 28. Which of the following statements does NOT describe the demand curve? a. Prices are listed on the vertical axis. b. Quantities demanded are listed on the horizontal axis. c. The demand curve represents the various combinations of prices and quantities demanded that could occur in the market. d. It shows the demand for a project over time rather than at a given point in time.    

____ 29. Which of the following factors might cause an increase in supply? a. an increase in the cost of inputs b. a decrease of productivity c. the introduction of new technology d. fewer sellers in the marketplace    

____ 30. A change in the quantity supplied is a change in the amount offered for sale in response to a. greater demand. b. a change in price. c. an increase in productivity. d. new technology.    

____ 31. The supply curve is a. upward sloping. b. downward sloping. c. level. d. irregular.    

____. 32. Macroeconomics is primarily concerned primarily with a ____ 32. Macroeconomics is primarily concerned primarily with a. social choices made by the whole society c. both individual and social choices b. individual choices by members of the whole society d. scarcity of resources    

____. 33. Economics is one of the a. physical sciences c ____ 33. Economics is one of the a. physical sciences c. mathmatical sciences b. social sciences d. theological sciences    

____. 34. When a car is used to deliver pizzas, it is a a ____ 34. When a car is used to deliver pizzas, it is a a. consumer good c. capital good b. finished good d. dorkmobile    

____. 35. Which of the following could be a factor of production. a ____ 35. Which of the following could be a factor of production? a. sunlight c. department stores b. assembly-line workers d. all of the above  

REVIEW EXAM Answer Section MULTIPLE CHOICE. 1. B. 2. D. 3. A. 4. D. 5 REVIEW EXAM Answer Section   MULTIPLE CHOICE   1. B   2. D   3. A   4. D   5. B   6. A   7. B   8. D   9. C   10. B   11. B   12. B   13. A   14. A   15. D   16. D   17. B   18. B   19. B   20. A   21. B   22. D   23. A   24. C   25. B   26. B   27. A   28. D   29. C   30. B   31. A   32. A   33. A   34. C   35. D