Week 1 Economics Review

Which of the following best distinguishes macroeconomics from microeconomics?

• Macroeconomics studies individual markets, while microeconomics studies the economy as a whole

• Microeconomics looks at the overall economic trends, while macroeconomics focuses on individual businesses

• Macroeconomics deals with aggregate economic variables, while microeconomics focuses on individual and business decisions

• Microeconomics involves the study of national income, while macroeconomics involves the study of supply and demand at the firm level

The main concept of economics boils down to:

• Abundance

• Wealth

• Scarcity

• Banking

In one hour, John can wash 2 cars or mow 1 lawn, while Drew can wash 3 cars or mow 1 lawn. Who has the comparative advantage in car washing, and who has the relative advantage in lawn mowing?

• Neither in washing, Drew in mowing

• Neither in washing, John in mowing

• John in washing, Drew in mowing

• Ron in washing, John in mowing

A fundamental idea in economics is that:

• Individuals have limited desires with ample resources

• Individuals have endless desires but limited resources

• Governments should fulfill people's needs

• Governments should always stay out of market operations

The concept of opportunity cost refers to:

• The estimated cost by the government

• What you forgo to obtain an item

• Typically less than the item's monetary value

• The monetary value of the item

A supply curve ascends because:

• Total production costs decrease as more is produced

• Higher input prices lead to increased supply

• The quantity supplied of most goods and services grows over time

• Higher prices motivate producers to supply more

When the price of a product rises, it will:

• Boost demand

• Lower demand

• Raise quantity demanded

• Lower quantity demanded

The statement, “Other things being equal, when the price of a good increases, the quantity demanded decreases, and when the price decreases, the quantity demanded increases” is known as:

• Market equilibrium

• The law of demand

• The supply-demand relationship

• The definition of a normal good

The driving forces of market economies are:

• Work and rest

• Politics and faith

• Supply and demand

• Taxes and government expenditures

The quantity demanded of a product represents the amount buyers are:

• Willing to buy

• Willing and able to buy

• Willing, able, and needing to buy

• Able to buy