Economics Midterm Practice 1

Economics is the study of:

• money

• using human psychology to manipulate the human mind

• buying things

• using limited resources to fulfill unlimited wants

Trade is an exchange of goods, money, or services for:

• goods

• money

• services

• time

What do individuals/businesses decide in a capitalist economy?

• what products will be legal to produce

• what to sell

• how much to produce

• the price of their products

Which of the following is a way businesses can compete?

• price

• demand

• quality

• convenience

What is demand?

• how rare a product is

• the cost of the materials used to produce a product

• the amount of a product that is produced

• how much people want a product

What tax structure taxes everyone at the same percentage regardless of income?

• flat income tax

• tariffs

• graduated income tax

• rich tax

What is a substitute product?

• a product that is often purchased with another product

• a similar product that is higher quality

• a similar product that is cheaper or more readily available

• a product whose demand does not match its price

How can population affect demand?

• As population increases demand for products increases

• As population increases demand for products decreases

• As population decreases demand for products increases

• As population decreases demand for products decreases

How can people's income affect their demand for products?

• As people's income goes up, their demand for luxury goods goes up

• As people's income goes up their demand for luxury goods goes down

• As people's income goes down their demand for luxury goods goes up

• As people's income goes down their demand for luxury goods goes down

What tax structure taxes the wealthy at a higher rate?

• flat income tax

• tariffs

• graduated income tax

• rich tax