Econ Midterm March 2022

Which of the following best describes how a free enterprise society answers the basic economic questions?

• Provide the State with ownership of all means of production.

• Follow customs and traditions in deciding what to produce. 

• Allow the market to set prices for goods and services. 

• Exchange goods by means of individual bartering.

Your high school diploma adds to which factor of production?

• Land 

• Physical capital

• Capital expenses 

• Human capital

The price of gas has increased and people are moving away from their old gas guzzlers to more fuel efficient cars. This is an example of

• complementary effect

• learning effect

• substitution effect

• income effect

If you were going to invest your money in a retirement plan, which would be the best choice for the investment because of tax advantages and possible employer matching funds?

• Certificate of Deposit

• 401K

• Mutual Fund 

• Savings Account

Land, labor, and capital are examples of what?

• Scarcity of Resources

• Opportunity Cost 

• Macroeconomics

• Factors of Production

…each of us, acting in our own self-interests, generates a demand for goods and services that compels 

others to deliver those goods and services in the most efficient manner so that they may be able to receive 

compensation from others and make a profit in doing so. In this process, resources are allocated in the most 

efficient manner, in contrast to a process that relies on a centrally planned system. 

-Tim Gieseke, 2010 

The author is describing the characteristic of a system that was first introduced by

• Karl Marx

• Friedrich Hayek 

• John Maynard Keynes 

• Adam Smith

Which of the following could be a demand determinant of cell phones? 

• Government increases regulations on cell phone manufacturers. 

• Japanese touch screen factories are destroyed in an earthquake.

• A new model of smart phones is released in the market. 

• Government increases taxes on cellular phone production.

A business owner should select which price for their goods to reach equilibrium?

• $3.00 

• $1.50

• $4.50

• $9.00 

Which of the following describes the process in the picture?

• Completing the FASFA 

• Filling out online income taxes 

• Applying for the SAT/ACT 

• Writing your college essay

[Without trade restrictions] the obvious and simple system of natural liberty establishes itself of its own accord. Every man...is left perfectly free to pursue his own interest in his own way.... The sovereign is completely discharged from a duty [for which] no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society. 

The Wealth of Nations 

The theory proposed by Adam Smith would most likely support which type of economy? 

• Traditional 

• Free Enterprise

• Mixed

• Command