Economics Practice Questions

Which statement best describes the production possibilities curve between shoes and shoelaces:

• The maximum possible combinations of shoes and laces that society can produce

• A graph showing all combos of shoes and laces that make society happiest

• Society can produce the max quantities of shoes and laces over a set time

• All of these

• None of these

If income increases and demand for a good decreases the good is called:

• A complement

• A normal good

• A substitute

• An inferior good

• None of the above

Determinants of demand include

• Change in price

• Change in technology

• Producers bringing more goods to market

• A and C

• None of the above

An increase in quantity demanded (not demand) could be caused by

• An increase in the price of a substitute good

• An increase in income

• A decrease in the price of a complement good

• A change in price

Which of the following would increase the supply of a good?

• An increase in the cost of making the good

• Improvements in technology of production of the good

• An increase in the price of a good

• None of the above

If Joe can make 300 bows or wrap 200 gifts and Audrey can make 500 bows or wrap 300 gifts,

• Audrey has the absolute and comparative advantage in both bows and gifts

• Joe has the absolute and comparative advantage in both bows and gifts

• Audrey has the absolute advantage in bows and gifts but the comparative advantage only in bows

• Audrey has the absolute advantage in bows and gifts but the comparative advantage only in gifts

If the technology of making chocolates improves, and a study publishes that eating chocolate makes you live longer,

• The equilibrium price and quantity of chocolate will increase

• The equilibrium price and quantity of chocolate will decrease

• The equilibrium price will increase and quantity is indeterminate

• The equilibrium price will be indeterminate and quantity will increase

If the elasticity of demand is elastic we know that a 1% change in price leads to a ______ change in quantity supplied

• Greater than 1%

• Less than 1%

• Exactly 1%

• We cannot tell

Producer Surplus can be described as

• The difference between the price that the producer receives and their costs

• The difference between WTP and the cost to the producer at some quantity

• The amount by which Qs exceeds Qd at the current price

• The amount by which Qd exceeds Qs at the current market price.

The elasticity of supply can be defined as:

• The percent change in supply given a percent change in price of a good

• The change in supply given a change in the price of the good

• The percent change in Qs given a percent change in the price of the good

• The change in the Qs of a good given a change in the price of the good

• None of these