WorksheetsMidterm review
Total questions: 20
Worksheet time: 21mins
The Scarcity Principle states that
people don't have enough money to buy what they want.
society will eventually run out of resources.
with limited resources, having more of one thing means having less of another.
some countries have fewer resources than others.
The Scarcity Principle tells us ______, and the Cost-Benefit Principle tells us ______.
that choices must be made; how to make good choices
that good choices eliminate scarcity; how to make good choices
how to make choices; that choices must be made
how to make good choices; that choices involve costs and benefits
The marginal cost of an activity is the
total cost of the activity divided by the change in the level of the activity.
total cost of the activity divided by the level of the activity.
change in the level of the activity divided by the change in the cost of the activity.
change in the total cost of the activity that results from carrying out an additional unit of the activity.
If a country’s economic decisions are made by an individual or small number of individuals, then it has a
centralized economy.
free-market economy.
capitalist economy.
open economy.
Suppose that when the price of oranges is $3 per pound, the quantity demanded is 4.7 tons per day and the quantity supplied is 3.9 tons. In this case
excess demand will lead the price of oranges to rise.
excess supply will lead the price of oranges to fall.
excess demand will lead the price of oranges to fall.
excess supply will lead the price of oranges to rise.
A demand curve is ______ sloping because ______.
downward; of increasing opportunity costs
upward; people prefer to purchase high-quality consumer goods
downward; reservation prices tend to fall over time
downward; fewer people are willing to buy an item at higher prices
The price elasticity of demand for a good measures the responsiveness of
demand to a 1 percent change in price of that good.
price to a 1 percent change in the demand for that good.
quantity demanded to a 1 percent change in price of that good.
price to a 1 percent change in the quantity demanded of that good.
If 20 percent increase in the price of a good leads to a 60 percent decrease in the quantity demanded, then what is the price elasticity of demand?
30
3
1/3
1/6
If the quantity demanded of a good is Q when the price for the good is P, the price elasticity of demand for that good at that point is
Q × P × (1/slope).
(P/Q) × (slope).
(Q/P) × (1/slope).
(P/Q) × (1/slope).
Diet Coke is a close substitute for Diet Pepsi. When Coca-Cola introduced Diet Coke in 1982, the price elasticity of demand for Diet Pepsi ______ and PepsiCo's ability to raise revenues through price increases ______.
increased; was reduced
increased; increased
decreased; was reduced
had no effect; was reduced
A rational seller will sell another unit of output
whenever the seller is earning a profit.
if the cost of making another unit is less than the revenue gained from selling another unit.
as long as the quantity demanded is greater than zero.
if the seller can charge more than the equilibrium price.
The primary objective of most private firms is to
maximize revenue.
maximize profit.
minimize cost.
maximize output.
An imperfectly competitive firm is one that
has at least some influence over the market price.
charges any price it wants.
seeks to maximize revenue.
faces a perfectly inelastic demand curve.
A fixed factor of production
is fixed in the long run but variable in the short run.
is fixed only in the short run.
is fixed in both the short run and the long run.
is common in large firms but rare in small firms.
A pure monopoly exists when
many firms produce a good with no close substitutes.
a single firm produces a good with no close substitutes.
only a single firm is present in the market.
a single firm produces a good with many close substitutes.
If a firm operates in an oligopoly, it is
one of a large number of firms that produce goods that are either close or perfect substitutes.
the only firm that produces a good with no close substitutes.
one of a small number of firms that produce goods that are either close or perfect substitutes.
one of a large number of firms that produce a good with no close substitute.
A monopolistically competitive firm is one
that behaves like a monopolist.
of many firms that sell products that are close but not perfect substitutes.
of many firms that all sell the exact same product.
of a small number of firms that sell products that are close but not perfect substitutes.
The three elements of a game are
the firm, the consumers, and the profit.
the players, the strategies, and the payoffs.
the model, the graph, and the costs.
the costs, the revenue, and the profit.
A dominant strategy exists if
a player has a strategy that yields the highest payoff regardless of the other player's choice.
both players have the highest payoff when they make the same choice.
both players make the same choice.
one strategy yields the highest possible payoff.
A prisoner's dilemma illustrates situations in which:
resources with the lowest opportunity cost should be used first.
everyone does best when each person specializes in the activities in which he or she has a comparative advantage.
efficiency is an important social goal.
there is a conflict between the narrow self-interest of individuals and the broader interests of a group.
