Economics/Business/ Free Enterprise GA EOC Review

Opportunity cost means individuals

• pay sales taxes to make a purchase

• replace land and labor with capital resources

• make purchases that require them to consider the environmental impact.

• make decisions that require them to give up the next best alternative.

Consumers make rational decisions about what they purchase every day. For example, Esther went to the supermarket to buy apples to make two pies. She needed at least five apples for each pie. Golden Delicious apples cost 25 cents each; a bag of 16 Golden Delicious apples costs $3.25. She bought the bag of Golden Delicious apples, even though she would have six apples left after making the pies.

Which statement BEST describes Esther’s choice?

• Esther decided the marginal benefit of having six more apples exceeded the marginal cost of paying 75 cents extra.

• Esther decided the marginal benefit of having six more Golden Delicious apples did not exceed the marginal cost of paying 75 cents extra.

• Esther compared the price per apple and decided the most expensive apples would be the best to buy, so she bought the bag.

• Esther compared the prices of the individual apples and the bag of apples and bought exactly the number of apples she needed to make two pies.

A local grocery store has decided to charge customers for bags. Which statements describe how customers will MOST LIKELY respond to this change?

• Customers will shop at other grocery stores

• Customers will purchase more goods.

• Customers will exclusively use grocery delivery services.

• Customers will buy more goods in bulk.

Which of these describes a characteristic of a monopoly?

• few barriers of entry

• rarely affected by government regulations

• strong control over price

• face strong competition for customers

Juanita and Sarah made 100 T-shirts with a picture of their school’s basketball team to celebrate winning the division championship. They initially sold the T-shirts for $5 each. The T-shirts began selling quickly. Juanita and Sarah realized that $5 a shirt would not cover their costs, so they raised the price to $8 a shirt. As a result, sales declined and they had 20 unsold T-shirts at the end of the year.

Which term BEST describes what happened when Juanita and Sarah raised the price of the T-shirts?

• law of supply

• law of demand

• opportunity cost

• comparative advantage

In the U.S. economy, a few firms dominate the wireless telephone provider industry. Which type of market structure does this represent?

• oligopoly

• monopoly

• pure competition

• monopolistic competition

What benefit do households provide for businesses?

• They supply consumers and workers

• They dictate the supply of certain goods.

• They buy scarce resources for businesses to use.

• They help businesses save money by looking for bargains.

Which interaction illustrates the flow of services between a household and a business?

• A city operates and maintains public parks.

• A discount store establishes a clearance aisle.

• A disabled worker draws benefits from the government.

• A pizza business provides delivery for an additional fee.

Which statement BEST describes the role of the government in a mixed economic system?

• It dictates what is to be produced.

• It determines for whom goods are to be produced.

• It restricts the industrial purchases of raw materials

• It monitors the safety of goods and services through regulatory agencies.

Which statement BEST describes monetary policy and fiscal policy?

• Monetary policy reflects the Federal Reserve’s authority to change the money supply; fiscal policy reflects the government’s power to influence the economy through taxes, expenditures, and borrowing.

• Monetary policy reflects the Federal Reserve’s authority to change tax rates; fiscal policy reflects the government’s power to influence the money supply by lowering the discount rate for loans to banks.

• Monetary policy refers to the Federal Reserve’s influence in the economy through borrowing and creating a deficit; fiscal policy refers to the government’s authority to increase spending.

• Monetary policy refers to the Federal Reserve’s authority to increase spending; fiscal policy refers to the government’s authority to increase the discount rate for loans to banks.