Intro to Economics Quiz

The opportunity cost of a new public high school is the

• money cost of hiring teachers for the new school

• cost of constructing the new school at a later date

• change in the annual tax rate to pay for the new school

• other goods and services that must be given up for the new school.

Which one of the following do economists consider to be an example of capital goods?

• Money in a bank

• Machines in an auto plant.

• Corporate bonds of an oil company.

• Common stocks in a computer business.

What is meant by the statement that every economic system faces the problem of scarcity?

• The additional benefits of goods and services are greater than their additional costs.

• There are times when some products can be purchased only at high prices.

• There are never enough productive resources to satisfy all human wants.

• All economies have recessions during which scarcities exist.

From an economic point of view, which approach to controlling pollution is most efficient?

• Abolish the use of toxic chemicals in all production.

• Use economic resources to eliminate all pollution.

• Adopt laws and regulations that prohibit economic activities that cause pollution problems.

• Reduce pollution as long as the additional benefits are greater than the additional costs.

The essential difference between a command economy and a market economy is that in a market economy

• shortages occur more often than surpluses.

• buyers and sellers determine resource allocation.

• central planning creates an effective incentive system for consumers and producers.

• the prices of products and resources are largely determined by government regulation of businesses.

Which is a basic economic question that must be answered by all economic systems?

• What will be the share of profits that go to businesses?

• What will be the amount of the minimum wage for workers?

• How will goods and services be produced?

• How will government collect income taxes?

Profits are equal to total

• revenue minus total cost.

• assets minus total liabilities.

• sales minus wages and salaries.

• sales minus taxes and depreciation.

If the government decides to reduce the payroll taxes on the wages and salaries of workers, then there will most likely be

• a decrease in saving.

• a decrease in investment.

• an increase in consumption.

• an increase in unemployment.

A high school student buys a sweatshirt from a store. The sweatshirt is on sale at a 20 percent discount off the regular price. In this exchange,

• the student and the store benefit.

• the student benefits, but the store does not.

• the store benefits, but the student does not.

• neither the student nor the store benefits.

If Nation A adopts public policies that restrict imports from another nation that is a major trading partner, then in Nation A

• the cost of producing products will decrease.

• job opportunities in export industries will increase.

• consumers will pay higher prices for products.

• saving and investment will increase.