Economics Quiz

Economics is the study of how society manages its

• Unlimited wants and unlimited resources

• Limited wants and unlimited resources.

• Unlimited wants and limited resources

• Unlimited wants and limited resources

Which of the following is an example of a positive, as opposed to normative, statement?

• When the minimum wage is increased, unemployment is a predictable consequence.

• The income tax rate should be increased to offset the budget deficit.

• Increasing government spending is the best way to help the economy move out of a recession

• More than one of the above are positive statements

Which of the following is not an example of a positive, as opposed to normative, statement?

• Higher gasoline prices will reduce gasoline consumption.

• Equality is more important than efficiency

• Trade restrictions lower our standard of living.

• If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money

In a given market, how are the equilibrium price and the market-clearing price related?

• There is no relationship

• They are the same price.

• The market-clearing price exceeds the equilibrium price.

• The equilibrium price exceeds the market-clearing price.

Which of the following events must cause equilibrium quantity to fall?

• demand increases and supply decreases

• demand and supply both decrease

• demand decreases and supply increases

• demand and supply both increase

Which of the following events must cause equilibrium quantity to rise?

• demand increases and supply decreases

• demand and supply both decrease

• demand decreases and supply increases

• demand and supply both increase

Which of the following events must cause the equilibrium price to fall?

• demand increases and supply decreases

• demand and supply both decrease

• demand decreases and supply increases

• demand and supply both increase

The demand and supply functions of a commodity are as follows: (D): Q = 140 - P; (S): Q = 2P + 20 The equilibrium price is:

• P = 40

• P=50

• P=30

• P=10

The demand and supply functions of a commodity are as follows: (D): Q = 140 - P; (S): Q = 2P + 20 The equilibrium quantity is:

• Q=100

• Q=80

• Q=40

• Q=120

The demand and supply functions of a commodity are as follows: (D): Q = 140 - P; (S): Q = 2P + 20 If the price on the market is 60, then

• there will be a shortage of 60 units

• there will be a surplus of 60 units

• there will be neither shortage nor surplus