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WorksheetsPRACTICE Economics Exam 2021
Total questions: 80
Worksheet time: 3hrs 8mins
The situation in which some necessities have little value while some non-necessities have a much higher value is known as
Paradox of Value
Trade-offs
Opportunity Cost
Economic Interdependence
Manufactured goods needed to produce other goods and services are called
nondurable goods
Gross Domestic Product (GDP)
capital goods
consumer goods
To arrive at an economic decision, a decision-making grid may be used to evaluate
productivity
alternative choices of action
only durable goods
only capital goods
Study the graph. Suppose this nation starts with producing all military goods. It then decides to produce a mix of civilian and military goods represented by point B. What represents the cost in military goods given up?
the vertical distance between point X and point Y
the horizontal distance between point Y and point Z
the horizontal distance between point Z and point E
the vertical distance from point A to point X
In this production possibilities frontier, what could cause production to move from point "A" to point "E"?
factories that are available but idle
the availability of additional resources
increased productivity
economic growth
Which of the following choices best describes what this production possibilities frontier is depicting?
alternative possibilities
cost of idle resources
opportunity cost
economic growth
What factor of production do these images illustrate?
Labor
Capital
Land
Entrepreneurship
Who plays one of the most important roles in the free enterprise system by starting new businesses?
Entrepreneurs
Workers
Government
Consumers
Unlike a general partnership, in a limited partnership
all partners share equal financial responsibility for the firm's decisions
the inactive partner has limited liability for the business's debts
the partners must pay special business taxes
the business does not end with the death of a partner
A merger of corporations involved in different steps of manufacturing or marketing is known as a
Multinational merger
Vertical merger
Horizontal merger
Conglomerate
An advantage of a corporation is that
owners pay fewer taxes than owners of other forms of business
the business is subject to little government regulation
owners have limited liability for debt
owners have direct and immediate control over daily management of the business
What form of business organization does this organizational chart depict?
partnership
corporation
sole proprietorship
joint venture
The money that households spend would best be represented from ____ to ___
Households to Factor Market
Households to Product Market
Product Market to Households
Businesses to Product Market
Economics
the study of how to meet unlimited, competing wants with limited resources
the study of how people need to budget their money
the study of people and how they spend their money
the study of how to meet limited wants with limited resources
A popular model used to illustrate the concept of opportunity cost is
Productions Possibilities Frontier
Paradox of Value
Entrepreneurship
Factors of Production
The purpose of government in a command economy is to
ensure the availability of consumer goods
encourage entrepreneurs
make major economic decisions
promote economic freedom
The concept of voluntary exchange means
that no money was exchanged
people freely and willingly engage in market transactions
only workers will benefit from the exchange
neither buyers nor sellers make a profit
Which letter represents the proper location on the diagram for “unlimited liability”?
T
V
W
Y
What type of merger does the illustration depict?
horizontal merger
diagonal merger
vertical merger
conglomerate
While many grocery stores offer BOGOs (Buy 1 Get 1) specials, the reality is that both items have a cost. What economic term explains this principle?
scarcity
specialization
capital
TINSTAAFL
The decision making process forced by scarcity is referred to as
rational decision
diminishing marginal return
cost-benefit analysis
utility
The means by which a society answers the three basic economic questions is known as
Production analysis
Scale
Economic systems
Group economics
What do business organizations receive from the Product Market in the Circular Flow of Economic Activity
Good & Services
Revenue
Wages
Factors of Production
If you were to graph this demand schedule, the demand curve would
Slope upward from left to right
Be horizontal
Slope downward from left to right
Be vertical
Based on this graph, how many Beanie Babies™ were demanded at a price of $6 before they became a fad?
100
200
300
400
The movement in the graph shows that the quantity demanded of butter decreased because the
Price of butter increased
Price of margarine decreased
Price of margarine increased
Price of butter decreased
What does the movement shown on this graph represent?
A change in demand
Inverse
The inverse relationship between price and quantity demanded
Diminishing marginal utility
Study the illustration. At a price of $25, how much more of the product is demanded on curve D'D' than on curve DD?
2 units
3 units
1 unit
4 units
Based on the table, what is the market demand for burritos at a price of $5?
2
3
6
8
An increase in the price of milk causes a decrease in the demand for cereal. The two products are
Substitute goods
Complement goods
Unrelated goods
Demand Elastic
Advertising, fashion trends, and new product introductions serve to
Create consumer needs
Increase income effectiveness
Create consumer demand
Minimize the income effect
A demand schedule shows
An upward-sloping curve that illustrates the positive relationship between price and quantity demanded
A listing of the various quantities demanded of a particular product at all prices that might prevail in the market
The fluctuations in demand that occurred over a specified period of time
The fluctuations in demand scheduled to occur over the following year
Which of the following will cause the market supply curve to shift?
A change in the price of the product
A change in the number of consumers
A change in the numbers of sellers offering the product
A change in demand for the product
When the rate of increase in total production is starting to slow down, the firm is operating
In Stage I of production
In Stage II of
production
In Stage III of
production
As much as it
possibly can
According to this supply curve, 400 movie videos will be supplied at what price?
$10
$12
$14
$16
When producers offer fewer products for sale at each and every price,
The supply curve has shifted to the right
The supply curve has shifted to the left
The price per unit decreases
They expect subsidies
What does the movement shown on this graph represent?
A change in supply
A change in quantity supplied
The law of diminishing returns
A shift in the market supply curve
Which of the following choices could cause the movement shown in the graph?
technology improves
production
inputs become cheaper
the number of firms
increases
taxes increase
Assume that ABC Corp. and XYZ Corp. are the only two firms that supply soccer balls. Based on the graphs, what would be the market quantity of soccer balls supplied at a price of $20?
3
6
9
10
According to the table, the company must hire at least how many workers to earn a profit?
1
2
3
4
In a market economy, a high price is a signal for
producers to supply more and consumers to buy less
producers to supply less and consumers to buy more
government to intervene to protect consumers
producers to supply less and consumers to buy less
At a given price, a surplus occurs when
the quantity demanded is more than the quantity supplied
the quantity demanded is the same as the quantity supplied
the quantity supplied is less than the quantity demanded
the quantity supplied is greater than the quantity demanded
In the table, market equilibrium will occur at what price?
$20
$16
$14
$10
If a competitive market is at equilibrium, and if there is a sudden increase in demand, then a temporary
surplus will occur and the price will increase
shortage will occur and the price will fall
surplus will occur and the price will fall
shortage will occur and the price will increase
Suppose the demand curve shifts from D1 to D2, as shown on the graph. How do the quantity supplied and quantity demanded change at the new equilibrium price?
Quantity supplied increases and quantity demanded decreases
Quantity supplied decreases and quantity demanded increases
Both quantity supplied and quantity demanded increase
Both quantity supplied and quantity demanded decrease
Output-Expenditure Model
GDP = Consumer C + Investment I + ? + Exports & Imports (X-M)
Demand - D
Taxes - T
Product - P
Government - G
The largest sector of the macroeconomy is the
investment sector
government sector
foreign sector
consumer sector
Gross domestic product after adjustments for inflation is known as
Real GDP
GDP Per Capita
National GDP
Current GDP
A U.S. business buys new computers for its office workers from a U.S. computer manufacturer. The value of the transaction would be included in which category in the graph?
Consumer sector
Investment sector
Government sector
Net Exports
GDP = C + I + G + (X-M)
In this model, the “(X-M)” represents the
Total of the dollar value of goods sent abroad and goods purchased from abroad
Difference between the dollar value of goods sent abroad and goods purchased from abroad
Total investments in the United States by foreign nationals
Total investments in other nations by US citizens
Unemployment that is directly related to swings in the business cycle is
frictional
unemployment
structural
unemployment
cyclical
unemployment
seasonal
unemployment
Inflation in excess of 500 percent per year is called
demand-pull
inflation
cost-push inflation
stagflation
hyperinflation
A statistical series used to measure price changes for a representative sample of frequently used household items is called the
producer price index
composite index of leading economic indicators
consumer price index
implicit GDP price deflator
Changes in technology and changes in consumer tastes can cause
frictional unemployment
structural unemployment
cyclical unemployment
seasonal unemployment
The first step to take in measuring inflation is to
convert the dollar cost of representative goods to an index value
find the percentage change in the monthly price level
select a market basket
find the average price of representative goods
The situation of workers between jobs is called
frictional
unemployment
structural
unemployment
cyclical
unemployment
seasonal unemployment
Which consumer category in the table experienced the greatest inflation between 1999 and 2001?
Food
Clothing
Housing
Medical
Based on the table, in which category could consumers buy more with their money in 2001 than they could in 1999?
Food
Clothing
Housing
Medical
In the table, what does the figure for the year 2000 say about the average price of goods and services in that year?
The average price has
risen 172.2% since 1999
The average price has
risen 72.2% since 1999
The average price has
risen 72.2% since the base year
The average price has
risen 172.2% since the base year
Which letter on the graph represents a contraction in the business cycle?
W
X
Y
Z
Which letter on the graph represents a trough in the business cycle?
W
X
Y
Z
A booming economy. Record-low unemployment. A blizzard of pink slips [a note stating that a person has been fired].
What’s wrong with this picture? The fact is, even in the best of times hundreds of thousands of people lose their jobs through no fault of their own.... You might not get any advance warning, so don’t be caught off guard. Have an up-to-date resume and networking system.... You want to be able to launch your job search soon after you get the bad news.
Source: Kiplinger’s Personal Finance Magazine, September 1998.
What type of unemployment does this passage describe?
cyclical
structural
seasonal
frictional
For the year shown in the table, suppose that 130 million people were in the labor force. How many people were unemployed?
63.7 million
6.37 million
637 million
637,000
Tariffs and quotas are designed to
promote third-world development
decrease prices consumers pay for goods
protect domestic industry
increase trade deficits
The North American Free Trade Agreement proposed free trade between the United States and
Central American
countries
Brazil and Mexico
the European Union
Canada and Mexico
Based on the data in the illustration, for which product or products (if either) would the U.S. have an absolute advantage?
walnuts
computers
both walnuts and computers
neither walnuts nor computers
The Trump administration renegotiated NAFTA with Mexico and Canada. President Trump's renegotiated free trade agreement is called
YMCA
USMCA
NAFTA 2.0
NASCAR
A policy in which a nation does not try to limit imports or exports by enacting tariffs (taxes on imports) or subsidies (money to assist an industry so prices can remain low).
Free Trade
Trade War
Goods and Services
Supply and Demand
What is an exchange rate?
The rate at which goods are exchanged between two countries
The price of one nation's currency in terms of another's
How many US dollars you can exchange for RMB at Travelex
The price of goods in terms of a foreign currency
According to the table, what is the USD equivalent of 1 Australian?
0.97 USD
1.32 USD
1.28 USD
1.03 USD
If the US $ were to appreciate in relation to the Euro, what effect would this have?
European consumers would have more purchasing power in US
US consumers can buy more European goods and services for fewer $$
US consumers can buy more English goods and services for fewer $$
European tourists to the US will spend more $$
Perfect competition is characterized by
large number of buyers and sellers
diverse products
sellers acting together to set prices
uninformed buyers and sellers
A monopoly that is based on the ownership or control of a manufacturing method, process, or other scientific advance is a
geographic monopoly
government monopoly
natural monopoly
technological monopoly
What letter on the graph represents the proper location for the market structure “oligopoly”?
W
Y
X
Z
What market structure does the letter “R” in the table represent?
perfect competition
pure monopoly
oligopoly
monopolistic competition
Under perfect competition,
products are similar but not identical
numerous restrictions prevent firms from entering the market
no seller can sell a product above the prevailing market price
a single seller can affect price
A market structure in which one firm has a monopoly because of its location is a
natural monopoly
technological monopoly
geographic monopoly
government monopoly
On an average shopping trip, a consumer’s eye lingers on a product for only about 2.5 seconds. In order to stay competitive, companies experiment with new formulas, along with the color and size of the product’s packaging. These research and development costs can range from $100,000 for adding a new color to an existing product line to millions of dollars for the creation of a new product.
According to the passage, companies are trying to compete through
economies of scale
collusion
price-fixing
non-price competition
