EEO Preliminary Mock Test 1

Economics is the study of how society manages its

• Limited wants and unlimited resources.

• Unlimited wants and unlimited resources.

• Limited wants and limited resources.

• Unlimited wants and limited resources.

What is the European Central Bank’s main task?

• To manage European governments’ finances

• To watch birds, particularly hawks and doves

• To keep prices stable

• To set the value of the euro in relation to other currencies, such as the US dollar and the Japanese yen

Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that:

• Trade can make everyone better off.

• People face trade-offs.

• Rational people think at the margin.

• People respond to incentives.

What must be given up to obtain an item is called

• Out-of-pocket cost.

• Comparative worth.

• Opportunity cost.

• Absolute value.

When the price of a good is low, selling the good is profitable, and so the quantity supplied is large.

• True

• False

In general, elasticity is a measure of

• The extent to which advances in technology are adopted by producers.

• The extent to which a market is competitive.

• How firms’ profits respond to changes in market prices.

• How much buyers and sellers respond to changes in market conditions.

For a good that is a necessity,

• Quantity demanded tends to respond substantially to a change in price.

• Demand tends to be inelastic.

• The law of demand does not apply.

• All of the above are correct.

Germany's concentration of resources devoted primarily to the automobile industry is an example of what?

• Bartering

• Focusing

• Specialization

• GDP

Which of the following is not correct?

• Economists have two roles: scientist and policy adviser.

• As scientists, economists develop and test theories to explain the world around them.

• Economic policies rarely have effects that their architects did not intend or anticipate.

• As policy advisers, economists use their theories to help change the world for the better.

In a competitive market free of government regulation,

• Price adjusts until quantity demanded is greater than quantity supplied.

• Price adjusts until quantity demanded is less than quantity supplied.

• Price adjusts until quantity demanded equals quantity supplied.

• Supply adjusts to meet demand at every price.