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WorksheetsUnit 2 Review
Total questions: 75
Worksheet time: 1hrs 14mins
Name
Class
Date
1.
Which of the following best represents a positive externality?
a)
Purchasing a pass for an amusement park
b)
Being disturbed by neighboring construction noise
c)
Dumping waste on someone else’ s property
d)
Enjoying watching birds at a neighbor’s bird feeder
2.
A ______ Externality occurs when a cost of production or consumption falls on a 3rd Party.
a)
Negative
b)
Neutral
c)
Positive
3.
A ______ Externality occurs when a benefit of production or consumption falls on a 3rd Party.
a)
Negative
b)
Neutral
c)
Positive
4.
Getting a flu shot is an example of a ________ Externality
a)
Negative
b)
Neutral
c)
Positive
5.
Receiving drain on your lawn from a neighbor's sprinkler system is an example of a
a)
negative externality
b)
miracle
c)
positive externality
d)
merger
6.
unwanted harm, cost, or inconvenience suffered by a third party because of the actions of others
a)
positive externality
b)
product differentiation
c)
price-fixing
d)
negative externality
7.
Pollution caused by automobiles is an example of
a)
an innefficient allocation of resources.
b)
a positive externality.
c)
a negative externality.
d)
the public sector.
8.
Driving a car on crowded highway?
a)
Negative externality
b)
Positive externality
9.
•Apartment dwellers who buy fire alarms or fire extinguishers?
a)
Negative externality
b)
Positive externality
10.
•Neighbor playing loud music while you study?
a)
Negative Externality
b)
Positive Externality
11.
•New landscaping in neighbor’s yard?
a)
Negative externality
b)
Positive externality
12.
Which of the following is the best example of a pure public good?
a)
Electricity from a public utility
b)
Mail delivery service by the post office
c)
Social Security payments
d)
National defense
13.
Public or Private?
a)
Public
b)
Private
14.
Public or Private?
a)
Public
b)
Private
15.
Public or Private?
a)
Public
b)
Private
16.
Public or Private?
a)
Public
b)
Private
17.
Public or Private?
a)
Public
b)
Private
18.
Public or Private?
a)
Public
b)
Private
19.
Public or Private?
a)
Public
b)
Private
20.
Public or Private?
a)
Public
b)
Private
21.
Public or Private?
a)
Public
b)
Private
22.
Public or Private?
a)
Public
b)
Private
23.
Public or Private?
a)
Public
b)
Private
24.
A market failure is best described as
a)
The idea that market forces of supply and demand always provide the maximum benefit for society
b)
The idea that market forces of supply and demand do not always provide the maximum benefit or efficiency for society
c)
The concept that a decision made by one party can have negative effects on another party
d)
The concept that a decision made by one party can have positive effects on another party
25.
A situation in which the market, on its own, doesn’t distribute resources effectively or efficiently.
a)
Monopoly
b)
Public Good
c)
Market Failure
26.
Which of the following best describes the Law of Demand?
a)
As price goes down, demand goes down. (and vice versa).
b)
As price goes down, demand goes up (and vice versa).
c)
As demand goes down, supply goes up.
d)
As demand goes up, price becomes elastic.
27.
Consider the market for cars in Hong Kong. If the price of gasoline increases then the Demand for cars will
a)
increase
b)
decrease
28.
An decrease in demand for iPhones in HK could be caused by a(n)
a)
increase in price for Samsung Galaxy
b)
increase in population in HK
c)
the price for iPhones is expected to increase next week
d)
the price of iPhone apps increased
29.
A new study has shown that avocados are extremely healthy. The demand for avocados has increased due to a change in
a)
market size
b)
price of a substitute good
c)
price of a complementary good
d)
tastes and preferences
30.
If the price of Frozen Yogurt increased then the demand for ice cream will
a)
increase
b)
decrease
31.
The law of demand states that as the price increases then
a)
quantity demanded increases
b)
quantity demanded decreases
c)
demand increases
d)
demand decreases
32.
The price of petrol/gas is expected to increase next week. Then today the demand for petrol/gas will
a)
increase
b)
decrease
33.
The diagram represents a
a)
increase in demand
b)
decrease in demand
34.
What factor could have caused the demand to decrease?
a)
incomes increased
b)
expectation that prices will increase
c)
a decrease in the price of a substitute
d)
increase in market size
35.
A good that is always used with another good
a)
Complement
b)
Inferior
c)
Normal
d)
Substitute
36.
What does it mean when the demand for a product is inelastic
a)
People will not buy any of the product when the price goes up
b)
A price increase does not have significant impact on buying habits
c)
Customers are sensitive to the price of the product
d)
There are very few satisfactory substitutes for the product
37.
What is a basic principle of the law of demand
a)
The higher the price, the more people will want the good
b)
Everyone has a limited income that they will spend
c)
When a good's price is lower, people will buy more of it
d)
Services are of interest in the same way that goods are
38.
A graphic representation of a demand schedule
a)
Demand
b)
Demand Curve
c)
Complement
d)
Substitute
39.
The price of movie tickets in a town has risen from $7 to $9. What is the most likely effect of the change in price?
a)
The demand curve for movie tickets will move right.
b)
The quantity demanded for movie tickets will increase.
c)
The demand curve for movie tickets will move left
d)
The quantity demand for movie tickets will decrease
40.
The phrase "a change in demand" most directly implies a
a)
movement along the curve
b)
movement along the price curve
c)
change in quantity demanded of a good
d)
shift in the demand curve
41.
To access Internet services, consumers must use a computer. If computer prices fall, what is the effect on the demand for Internet services
a)
the demand for Internet services increases
b)
the demand for Internet services decreases
c)
The demand for Internet services remains unchanged
d)
The demand for Internet services could increase, decrease, or stay the same depending on other factors
42.
What happened to a supply curve when supply goes down?
a)
moves left
b)
moves rights
c)
moves up
d)
moves down
43.
What is the perfect price for a supplier to sell a product & make sure it does not stay for long periods in the store?
a)
surplus
b)
shortage
c)
equilibrium price
d)
subsidy
44.
What is a government payment for certain actions?
a)
tax
b)
profit
c)
tariff
d)
subsidy
45.
Which of the following is the best example of the law of supply?
a)
a milling company builds a new factory to process flour for export
b)
a catering company buys a new dishwasher to make their work easier
c)
a food producer increases the number of acres of wheat he grows to supply a milling company
d)
a sandwich shop increases the number of sandwiches they supply every day when the price is increased
46.
When the selling price of a good goes up, what is the relationship to the quantity supplied?
a)
the cost of production goes up
b)
the profit made on each item goes up
c)
it becomes practical to produce more goods
d)
there is no relationship between the two
47.
The picture shown illustrates the:
a)
Law of DEMAND
b)
Law of SUPPLY
c)
Determinants of supply
d)
Determinants of demand
48.
What is the difference between a change in supply, and a change in quantity supplied?
a)
A change in price causes a change in quantity supplied. One of the determinants or shifter of supply causes a change in all of supply ( left or right)
b)
A change in price is caused by Supply
c)
Supply is not influenced by anything
d)
Prices of goods are set by the government authority in a mixed market economy
49.
Look at the movement of the supply curve. Which statement below could be a TRUE cause of this shift?
a)
Supply decreased because more sellers entered the market
b)
Supply increased because a substitute good became cheaper
c)
Supply increased because the cost of inputs for a good decreased
d)
Supply decreased because of new technology
50.
Which of the following statements could be a true reason why the supply curve shifted in the picture?
a)
Supply increased due to higher levels of education and human capital in the production of a good
b)
Supply decreased due to an increase in the number of complements
c)
Supply decreased due to new government regulations in the production of a good
d)
Supply increased because the cost of resources became cheaper
51.
Which of the following is NOT a government action that could change supply of new cars?
a)
New car prices drop because of a recession
b)
New laws go into effect that mandate extremely high levels of fuel efficiency for all new cars
c)
A new excise tax of 10% on all new car sales.
d)
The government gives a direct tax rebate of $2500 to all individuals who purchase a new car.
52.
The supply curve is?
a)
downward sloping
b)
level
c)
upward sloping
d)
irregular
53.
The elasticity on a item such as gas is:
a)
Very elastic
b)
Not inelastic
c)
Very responsive
d)
Inelastic
54.
Elasticity of demand describes the relationship between changes in a products price and the demand for that product.
a)
True
b)
False
55.
The market equilibrium price is the price at which
a)
surpluses depress the number of goods supplied
b)
shortages and surpluses will have no effect on the market
c)
the government will not intervene in the market
d)
the quantity demanded is the same as the quantity supplied
56.
What does this graph show?
a)
Shortage
b)
Surplus
c)
Supply Table
d)
Equilibrium
57.
A product is likely to have a price elasticity of demand when:
a)
Its price falls
b)
It is a necessity
c)
It has many close substitutes
d)
The percentage of income spent on it is low
58.
The demand for salt is:
a)
Elastic
b)
Inelastic
59.
The demand for Toyota automobiles is:
a)
Elastic
b)
Inelastic
60.
a person or company that makes, grows, or supplies goods to sell is called the?
a)
damand
b)
price
c)
producer
d)
shortage
61.
What is created when prices are too low?
a)
surplus
b)
shortage
c)
equilibrium price
d)
subsidy
62.
What is the difference between shortage and scarcity?
a)
A shortage is the lack of all goods and services, while scarcity deals with a single good or service
b)
A shortage results from rising prices while scarcity results from falling prices
c)
A shortage can be temporary or long term, but scarcity always exists
d)
There is no real difference between shortage and scarcity
63.
This happens when producers will not or cannot offer goods or services at current prices.
a)
want
b)
need
c)
scarcity
d)
shortage
64.
A ___ ___ keeps prices form going any lower than legally allowed
a)
surplus
b)
shortage
c)
price ceiling
d)
price floor
65.
A ___ ___ keeps prices form going any higher than legally allowed
a)
price ceiling
b)
surplus
c)
shortage
d)
price floor
66.
A price ceiling
a)
sets an upper limit on how much producers are allowed to purchase
b)
sets a minimum legal price for a product
c)
sets the maximum legal price for a product
d)
sets a lower limit on how much consumers are allowed to buy
67.
Price controls are
a)
market forces that move a market to equilibrium
b)
legally mandated maximum or minimum prices for a good or service
c)
limits on the amount a company is allowed to produce
d)
limits on the amount a consumer is allowed to purchase
68.
A price floor, such as minimum wage, is a
a)
legal maximum price for a good or service.
b)
market equilibrium price caused by a shortage.
c)
market equilibrium price caused by a surplus.
d)
legal minimum price for a good or service.
69.
Factors that make it difficult for new firms to enter a market are called
a)
Barriers to entry
b)
Factors of production
c)
Limited supply
d)
Monopolistic Outlook
70.
What prevents firms from entering a monopoly?
a)
Barriers
b)
Technology
c)
Price
d)
The government
71.
True or false: There is a variety of goods present in a monopoly.
a)
True
b)
False
72.
Which of the following is an example of a natural monopoly?
a)
Real estate in downtown NYC
b)
SMUD( Sacramento Municipal Utilities District)
c)
Airlines
d)
Levi Jeans
73.
A perfectly competitive firm is a price-taker because
a)
the government sets its price
b)
it produces a differentiated product
c)
a larger firm sets the price for the industry
d)
intense competition prevents it from influencing the market price
74.
Which of the following best describes an oligopolistic market?
a)
Many sellers with identical products and no barriers to entry
b)
No competition among sellers and high barriers to entry
c)
A few competing sellers with similar products and high barriers to entry
d)
A few competing sellers of identical products and no barriers to entry
75.
Which of the following statements correctly identifies a difference between perfect competition and monopolistic competition?
a)
In perfect competition there are no barriers to entry, but there are strong barriers in monopolistic competition.
b)
In perfect competition there are many firms, but in monopolistic competition there are only a few firms.
c)
In perfect competition the firms all sell products that are exactly the same, but in monopolistic competition each firm sells a slightly differentiated product.
d)
In perfect competition there are few consumers, but in monopolistic competition there are many consumers.
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