When More Is Less LAP Test

1. What is the amount of money for which an item sells in the competitive marketplace?

• 1. Market

• 1. Utility

• 1. Value

• 1. Price

1. How much a consumer is willing to pay for a product depends partly on the consumer’s opinion of the product’s

• 1. value.

• 1. production costs.

• 1. efficiency.

• 1. target market.

1. What is one factor that will determine how much a customer is willing to pay for a good or service?

• 1. Production costs

• 1. Buying power

• 1. Rationing

• 1. Incentive

1. Which of the following is a business comparing when it analyzes the cost of buying wood desks versus the cost of buying metal desks:

• 1. Incentives

• 1. Excess demand

• 1. Inflated price

• 1. Relative price

1. Which of the following is an example of a change in the relative price ratio when the original price of red apples is 60¢ per pound and the original price of green apples is 80¢ per pound:

• 1. Red apples @ 30¢ per pound; green apples @ 40¢ per pound

• 1. Red apples @ 90¢ per pound; green apples @ 80¢ per pound

• 1. Red apples @ 45¢ per pound; green apples @ 60¢ per pound

• 1. Red apples @ $1.20 per pound; green apples @ $1.60 per pound

1. How do producers answer the economic question of what to produce in a market economy?

• 1. They produce products that cost them the most to produce.

• 1. They produce products for which they have the most information.

• 1. They produce products that are the most profitable.

• 1. They produce products that provide the least incentives.

1. To be able to charge competitive prices in our economy, producers must combine resources and technologies to produce

• 1. more than consumers will buy.

• 1. items at the lowest cost possible.

• 1. limited quantities of goods.

• 1. items to sell at relative prices.

1. What do consumers, producers, and resource owners need to have to make economic decisions?

• 1. Economic incentives

• 1. Information about prices

• 1. Rationing skills

• 1. Limited liability

1. What are the incentives in our economy that encourage producers to change and reallocate their resources?

• 1. Stocks

• 1. Consumers

• 1. Profits

• 1. Expansions

1. How are prices used in our economy?

• 1. To ration limited resources

• 1. To provide equilibrium in the market

• 1. To encourage excess supply

• 1. To encourage excess demand