Economics Intro Quiz

Why do people in all societies have to make choices about how to use resources?

• • Resource owners are greedy.

• Resources used in the production of goods and services are limited

• Consumers of resources are irrational

Answer explanation

This is one of the most fundamental points in economics. Regardless of its government or institutions, the total of peoples’ wants typically exceeds what can be provided – so choices have to be made, whether openly or implicitly.

A person who uses a new idea to bring out a product or service to the marketplace is known as:

• A manager.

• A bureaucrat

• An entrepreneur

Answer explanation

The word “entrepreneur” implies an element of creativity – a new solution coming to the marketplace.

For most people, the largest portion of their personal income comes from:

• Interest from stocks and bonds they own.

• Wages and salaries from their jobs

• rent paid to them from property they own.

Answer explanation

Labor income is the largest source of personal income in our economy.

When good weather in the Midwest increases the wheat harvest, the result is:

• Higher quantity and lower prices.

• Higher quantity and higher prices.

• Lower quantity and lower prices.

Answer explanation

The increased supply of wheat leads to a higher quantity, and the prospect of surpluses makes the price fall. At the lower price, buyers purchase the new higher quantity.

What word would apply if the general price level rises and each unit of currency buys fewer goods and services?

• Deflation

• Recession

• Inflation

Answer explanation

nflation is an increase in the overall price of goods and services. If total spending went up but the goods and services consumed stayed constant, the resulting rise in prices would be labeled as "inflation." It's sometimes referred to as "too much money chasing too few goods."

Think about the quantity of bananas and apples that people want to buy in a market. If the price of plums doubled and the price of apples stayed the same, what would happen to these quantities?

• bananas up apples down

• bananas up apples up

• both the same as before

Answer explanation

People tend to buy less of things when the price goes up (the "Law of Demand") and they buy more of things that have become relatively less expensive.

If in an emergency the government sets a limit on the price that can be charged for gasoline (price ceiling), what is the most likely result?

• • There will be more gasoline available than people want to buy.

• There will be less gasoline available than people want to buy

• The amount of gasoline available will be equal to the amount people want to buy

Answer explanation

People may be demanding more gasoline because of the emergency but the maximum price makes it unprofitable to bring in enough gasoline to meet the amount people are demanding.

If a government restricts the imports of sugar into a nation, who is likely to benefit?

• • Consumers of products that use sugar.

• the nations sugar producers

• producers that use sugar as a raw material

Answer explanation

With less competition, they will easily be able to sell their sugar, usually at a higher price.

Economics is the study of

• buisiness

• the US and world economies

• people and the choices they make in acquiring goods and services in a world of scarcity

Answer explanation

How people try to satisfy their needs and wants by making choices.

IT IS THAT SIMPLE AS THAT

Which of the following would reduce inequality of income in the United States?

• • Increased use of technology that makes professionals more productive.

• Improvement of schools serving lower-income populations

• Increased international trade in manufactured goods

Answer explanation

One force that makes inequality more pronounced in the United States is the lack of human capital (knowledge, skills and abilities) among lower-income populations. Schools with better programs would promote acquisition of human capital and the higher income that goes with it.
It is an equality of opportunities not a guarantee of outcomes.