Semester 1 Test

Which economic system relies on customs and traditions to make economic decisions?

• Market economy

• Command economy

• Traditional economy

• Mixed economy

What is the primary goal of a market economy?

• To ensure equal distribution of wealth

• To maximize government control

• To allocate resources efficiently through supply and demand

• To eliminate competition

What does the law of supply state?

• As the price of a good increases, the quantity supplied decreases

• As the price of a good decreases, the quantity supplied increases

• As the price of a good increases, the quantity supplied increases

• The quantity supplied is independent of price

How does education typically affect earning potential?

• Higher education usually leads to lower earning potential

• Education level has no impact on earning potential

• Higher education usually leads to higher earning potential

• Education level only affects earning potential in certain fields

What is the substitution effect in the context of the law of demand?

• Consumers buy more of a good as its price rises

• Consumers buy less of a good as its price falls

• Consumers replace a more expensive item with a cheaper alternative

• Consumers replace a cheaper item with a more expensive alternative

What is market equilibrium?

• The point where supply exceeds demand

• The point where demand exceeds supply

• The point where supply equals demand

• The point where prices are highest

Which market structure is characterized by a single seller?

• Perfect competition

• Monopolistic competition

• Oligopoly

• Monopoly

Which of the following is a feature of a mixed economy?

• Complete government control

• No government intervention

• Combination of private and public sector involvement

• Only private sector involvement

How does a higher level of education typically affect unemployment rates?

• Higher education leads to higher unemployment rates

• Higher education leads to lower unemployment rates

• Education level has no impact on unemployment rates

• Higher education only affects unemployment rates in certain industries

What happens to the supply curve when there is an improvement in technology?

• It shifts to the left

• It shifts to the right

• It becomes vertical

• It becomes horizontal