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WorksheetsEconomics: Chapters 4 & 5 Review
Total questions: 40
Worksheet time: 20mins
Name
Class
Date
1.
Generally speaking, the lower the price, the greater the quantity demand.
a)
True
b)
False
2.
Consumer wants are the same as consumer demand.
a)
True
b)
False
3.
The change in the relative price- the price of one good relative to the prices of other goods-causes the substitution effect.
a)
True
b)
False
4.
The law of demand helps explain why people buy more when the price decreases.
a)
True
b)
False
5.
The demand curve slopes upward, indicating that price and quantity are positively correlated.
a)
True
b)
False
6.
Elasticity of supply = Percentage change in quantity supplied ÷ percentage change in price
a)
True
b)
False
7.
A firm faces two kinds of costs in the short run: fixed cost and variable cost.
a)
True
b)
False
8.
Firms try to avoid diseconomies of scale.
a)
True
b)
False
9.
There would be no substitution effect of a price change if the prices of all other goods
a)
changed by the same percentage.
b)
remained unchanged.
c)
changed inversely.
d)
changed inversely by the same percentage.
10.
A higher price makes producers more willing and better able to increase quantity supplied.
a)
True
b)
False
11.
Profit= Total revenue - Total Cost
a)
True
b)
False
12.
Real income refers to
a)
how much money you actually earn.
b)
your income minus your taxes.
c)
how much your income can buy.
d)
your income minus taxes and benefits.
13.
Which situation shows the law of diminishing marginal utility at work?
a)
you are willing to pay more for every succeeding slice of pizza you purchase.
b)
you are willing to pay the same price for every succeeding lsice of pizza you purchase.
c)
You will only purchase succeeding slices of pizza if they cost less.
d)
Each slice of pizza you buy gets smaller.
14.
Which of the following cannot happen to a firm's total revenue when it lowers it prices?
a)
Total revenue will grow if many additional products are sold.
b)
Total revenue will grow if many fewer products are sold.
c)
Total revenue will remain unchanged if there is a proportional increase in the number sold.
d)
Total revenue will fall if few additional products are sold.
15.
Which of the following parts of a consumer budget would be most price elastic?
a)
housing
b)
cable
c)
telephone
d)
automobile
16.
As money income increases, what happens to the demand for inferior goods?
a)
it increases
b)
it stays the same
c)
it decreases
d)
it is eliminated
17.
One of the reasons consumers choose substitutes is that
a)
no one can tell the difference.
b)
they are relatively cheaper.
c)
they are made in Japan.
d)
they are the same price and there are more of them.
18.
What accounts for the variety of popular music today?
a)
There are a lot of musicians.
b)
Consumers have different tastes.
c)
Some people have no talent.
d)
There are many different instruments.
19.
If suddenly, a large population increase occurred, what impact would it have on the housing market?
a)
prices would remain constant.
b)
There would be a surplus of homes on the market.
c)
It would shift the demand curve to the left.
d)
It would shift the demand curve to the right.
20.
The downward slope of a demand curve reflects the fact that, other things constant, price and quantity demanded are
a)
negatively related
b)
positively related
c)
elastic
d)
inelastic
21.
Which item would provide you with the least marginal utility?
a)
a second copy of the daily newspaper.
b)
a second drink of water when you're thirsty.
c)
a second pair of sneakers.
d)
a second car.
22.
The market demand curve shows
a)
the demand of an individual consumer.
b)
the number of markets in a specified area.
c)
the total number of markets.
d)
the total quantity demanded per period by all consumers at various prices.
23.
Elasticity, in economic terms, is another word for
a)
adaptability
b)
adjustment
c)
responsiveness
d)
reconciliation
24.
The demand for products or services for which there are no substitutes tends to be
a)
somewhat elastic
b)
unit elastic
c)
quite inelastic
d)
perfectly elastic
25.
Which of the following is a variable resources for a firm?
a)
warehouse size
b)
assembly line equipment
c)
labor
d)
mortgage owed on a building
26.
A firm's profit-maximizing level of output occurs where
a)
marginal revenue equals total cost
b)
marginal revenue equals marginal cost
c)
average revenue equals average cost
d)
total revenue equals marginal cost
27.
The law of supply states that the quantity of a good supplied is usually directly related to its
a)
opportunity cost
b)
total cost
c)
price
d)
elasticity
28.
The term quantity supplied refers to
a)
the entire supply schedule
b)
the total amount supplied by all producers in the market
c)
the amount offered for sale at a specific price
d)
the number of individual producers
29.
When price decreases, a producer becomes ___ to supply the good.
a)
more willing but less able
b)
less willing but more able
c)
more willing and more able
d)
less willing and less able
30.
Elasticity of supply indicates
a)
how quickly producers can provide a product.
b)
how responsive producers are to a change in price.
c)
how much the product costs.
d)
how many products are in stock.
31.
Which of the following elasticities represents inelastic supply?
a)
1.2
b)
0.5
c)
1.0
d)
2.1
32.
Which of the following is NOT a determinant of supply?
a)
producer expectations
b)
technology used to make the good
c)
consumer expectations
d)
the number of sellers in the market
33.
What does a leftward shift of a supply curve indicate?
a)
an increase in supply
b)
a decrease in quantity supplied
c)
an increase in quantity supplied
d)
a decrease in supply
34.
Imagine that a firm hired a 3rd worker, and total production increases by 12 units. The firm hires a 4th worker, and total production increases by 10 units. This illustrates
a)
economies of scale
b)
the law of diminishing returns
c)
profit maximization
d)
a change in supply
35.
In a competitive market, if price exceeds marginal cost, the firm will likely
a)
supply additional units
b)
maintain current supply
c)
decrease units supplied
d)
go out of business
36.
The satisfaction you derive from an additional unit of a product is called your
a)
marginal utility
b)
tastes
c)
total revenue
d)
demand
37.
The demand for a(n) ___ increases as money income increases- that is, the demand curve shifts rightward when consumer income increases.
a)
normal good
b)
inferior good
c)
superior good
d)
declining good
38.
Products that can be used in place of each other are called ____.
a)
substitutes
b)
complements
c)
tastes
d)
inferior goods
39.
____ is the total output of the firm per period.
a)
Total product
b)
market supply
c)
total revenue
d)
marginal revenue
40.
A(n) ___ cost is one that does not change in the short run, no matter how much is produced.
a)
fixed
b)
variable
c)
total
d)
elastic
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