1-1 Quiz

Economics is best defined as the study of

• how the government can stop the harm from unchecked self-interest.

• how to predict inflation, unemployment, and stock prices.

• how society manages its scarce resources.

• how to run a business most profitably.

Your opportunity cost of going to a movie is

• the price of the ticket.

• the price of the ticket plus the cost of any soda and popcorn you buy at the theater.

• the total cash expenditure needed to go to the movie plus the value of your time.

• zero, as long as you enjoy the movie and consider it a worthwhile use of time and money.

Adam Smith’s “invisible hand” refers to

• the subtle and often hidden methods that businesses use to profit at consumers’ expense.

• the ability of free markets to reach desirable outcomes, despite the self-interest of market participants.

• the ability of government regulation to benefit consumers, even if the consumers are unaware of the regulations.

• the way in which producers or consumers in unregulated markets impose costs on innocent bystanders.

Governments may intervene in a market economy in order to

• protect property rights.

• correct a market failure due to externalities.

• achieve a more equal distribution of income.

• All of the above.

If a nation has high and persistent inflation, the most likely explanation is

• the central bank creating excessive amounts of money.

• unions bargaining for excessively high wages.

• the government imposing excessive levels of taxation.

• firms using their monopoly power to enforce excessive price hikes.

Write answer!

_______________– the study of how society manages its scare resources.

A change in which of the following will NOT shift the demand curve for hamburgers?

• the price of hot dogs

• the price of hamburgers

• the price of hamburger buns

• the income of hamburger consumers

An increase in ________ will cause a movement along a given demand curve, which is called a change in ________.

• supply, demand

• supply, quantity demanded

• demand, supply

• demand, quantity supplied

Movie tickets and film streaming services are substitutes. If the price of film streaming increases, what happens in the market for movie tickets?

• The supply curve shifts to the right

• The demand curve shifts to the left

• The supply curve shifts to the left

• The demand curve shifts to the right

The discovery of a large new reserve of crude oil will shift the ________ curve for gasoline, leading to a ________ equilibrium price.

• supply, higher

• supply, lower

• demand, higher

• demand, lower