Economics Practice Test 2

Front

What is a traditional economy primarily based on?

Back

Customs and traditions

Front

Which of the following is a disadvantage of a capitalist free economy? Equal distribution of wealth, Lack of competition, Income inequality, Centralized decision-making

Back

Income inequality

Front

How do free enterprises typically grow in a capitalist economy?

Back

By reinvesting profits

Front

What does an elastic supply curve indicate?

Back

Supply is highly responsive to price changes

Front

How is marginal revenue calculated?

Back

Change in total revenue divided by change in quantity sold

Front

In an economy, equilibrium occurs when: Supply exceeds demand, Demand exceeds supply, Supply equals demand, Prices are fixed by the government

Back

Supply equals demand

Front

What is the purpose of a price ceiling?

Back

To ensure prices do not rise above a certain level

Front

Which of the following is a cause of interest rates? Government subsidies, Inflation expectations, Fixed exchange rates, Trade deficits

Back

Inflation expectations

Front

What is a price floor?

Back

A minimum price set by the government

Front

Which of the following best describes how equilibrium price is determined in a market? By government intervention, By the intersection of supply and demand curves, By the highest bidder, By the lowest cost producer

Back

By the intersection of supply and demand curves