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Economics Final Exam Review

Total questions: 128

Worksheet time: 2hrs 36mins

Name
Class
Date
1.
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
2.
The downward slope of a demand curve
a)
represents the law of demand
b)
shows that as the price of a good rises, consumers increase the quantity they demand
c)
indicates how the quantity demanded changes when incomes rise and the good is a normal good
d)
indicates how demand changes when incomes rise and the good is a normal good
3.
The diagram represents a
a)
increase in demand
b)
decrease in demand
4.
If the price of Frozen Yogurt increased then the demand for ice cream will 
a)
increase
b)
decrease
5.

What is the relationship between the Price and Quantity Demanded?

a)

Positive Relationship

b)

Direct Relationship

c)

Inverse Relationship

d)

Mixed Relationship

6.

The desire to have some good or service and the ability to pay for it

a)

supply

b)

equilibrium

c)

demand

d)

quantity demanded

7.

Which of these best describes the law of demand?

a)

if prices go up, quantity demanded will fall and if prices go down, quantity demanded will go up

b)

if prices go up, quantity demanded will also go up and if prices go down, quantity demanded will also go down

c)

there is no law of demand, each situation is unique and demand and prices cannot be predicted

d)

prices will go up for certain goods when quantity demanded goes up and vice versa

8.

A change in the price of a good causes people to buy more or less of an item. This best describes the concept of

a)

the demand curve

b)

change in quantity demanded

c)

change in demand

d)

elasticity

9.

The quantity demanded of a good or service changes at all price levels best describes the concept of

a)

change in quantity demanded

b)

elasticity

c)

change in demand

d)

demand curve

10.

Which of these shows a decrease in the quantity demanded?

a)
b)
c)
d)
11.

Which of these shows an increase in the quantity demanded?

a)
b)
c)
d)
12.

When the price of good A rises, people start to drink good B. In this case, what is good B considered?

a)

luxury good

b)

complementary good

c)

substitute good

d)

normal good

13.

How is a decrease in the price of a good illustrated on a demand graph?

a)

The demand curve shifts to the right.

b)

The demand curve shifts to the left

c)

There is upward movement along the demand curve

d)

There is downward movement along the demand curve.

14.
When the demand for a product or service is higher than the supply this causes what?
a)
shortage
b)
consumer
c)
surplus
d)
equilibrium
15.
When there is a shortage the price will usually? 
a)
rise
b)
fall
c)
remain the same
d)
equilibrium
16.
How many cup holders are producers willing to supply at a price of $2.50?
a)
3,000
b)
4,000
c)
5,000
d)
7,000
17.
When the supply of a product or service goes up and the demand stays the same the Price will typically do what? 
a)
rise
b)
fall
c)
stay the same
d)
Consumer
18.
How Many cup holders are producers willing to supply at a price of $3.00?
a)
3,000
b)
4,000
c)
5,000
d)
7,000
19.
This part of the market determines SUPPLY
a)
buyers
b)
sellers
c)
consumers
d)
us
20.
The diagram represents a(n)
a)
increase in supply
b)
decrease in supply
c)
change in quantity supplied
d)
none of the above
21.
What does this curve represent?
a)
demand
b)
supply
c)
equilibrium
d)
shortage
22.
A decrease in the price of a good will
a)
increase supply.
b)
decrease supply.
c)
increase quantity supplied.
d)
decrease quantity supplied.
23.
What does this curve represent?
a)
supply
b)
equilibrium
c)
demand
d)
surplus
24.
Which way does a supply curve slope?
a)
down
b)
up
c)
both
d)
neither
25.
What happened to a supply curve when supply goes down?
a)
moves left
b)
moves rights
c)
moves up
d)
moves down
26.
Which graph below shows the SUPPLY CURVE?
a)
A
b)
B
c)
C
d)
D
27.
The Law of Supply states:
a)
as price increases, supply increases
b)
as prices decrease, supply increases
28.

When producers offer more of a good as its price increases and less as its price falls, this defines the

a)

law of demand

b)

law of supply

c)

change in demand

d)

change in supply

29.

The willingness and ability of a producer to make a product is referred to as

a)

quantity supplied

b)

quantity demanded

c)

supply

d)

demand

30.

Movement along a supply curve demonstrates

a)

a change in quantity supplied

b)

a change in quantity demanded

c)

a change in supply

d)

a change in demand

31.

A shift in a supply curve demonstrates

a)

a change in quantity supplied

b)

a change in quantity demanded

c)

a change in supply

d)

a change in demand

32.

Which of these demonstrates an example of a supply curve? (More than one answer)

a)
b)
c)
d)
33.

Which of the following supply curves demonstrates a decrease in the quantity supplied?

a)
b)
c)
d)
34.

A decrease in supply is demonstrated by which of the following?

a)
b)
c)
d)
35.

A hurricane wipes out an orange crop in Florida, sharply affecting the supply of oranges. Which chart demonstrates this concept?

a)
b)
c)
d)
36.

The prices for houses steadily increase, causing more people to want to sell their homes. Which of these demonstrates this concept?

a)
b)
c)
d)
37.

A popular musical act announces a concert at a 10,000 seat venue. Prices for tickets skyrocket so the venue announces that there will be 500 standing room only tickets offered. What concept does this demonstrate?

a)

elastic supply

b)

inelastic supply

c)

change in supply

d)

change in quantity supplied

38.
What does this graph show?
a)
Shortage
b)
Surplus
c)
Supply Table
d)
Equilibrium
39.
A decrease in the price of a good will
a)
increase supply.
b)
decrease supply.
c)
increase quantity supplied.
d)
decrease quantity supplied.
40.
The price ceiling
a)
causes a shortage of 45 units of the good.
b)
makes it necessary for sellers to ration the good.
c)
is not binding because it is set below the equilibrium price.
d)
Both orange and red are correct.
41.

What does this curve represent?

a)

Change in Demand

b)

Change in supply

c)

Change in Quantity Demanded

d)

Change in Quantity Supplied

42.
a)

Change in Quantity Supplied

b)

Decrease in Supply

c)

Increase in Supply

d)

Decrease in Supply and Decrease in Demand

43.

Auto Union Workers Agree to Wage Cuts

a)

Change in Resources/Inputs

b)

Change in Subsides or Taxes Government Policy

c)

Change in Income

d)

Change in Number of Producers

44.

Auto Union Workers Agree to Wage Cuts

a)
b)
c)
d)
45.

New robot increase efficiency for Autos

a)
b)
c)
d)
46.

Cost of Steel decreases

a)
b)
c)
d)
47.

Major Auto producer goes out of business

a)
b)
c)
d)
48.

Government gives Car producers Subsidies

a)
b)
c)
d)
49.

Price of Autos increase

a)

increase in supply

b)

increase in quantity supplied

c)

decrease in supply

d)

decrease in quantity supplied

50.

Cost of Steel decreases and effects autos

a)

increase in supply

b)

increase in quantity supplied

c)

decrease in supply

d)

decrease in quantity supplied

51.

Nationwide Auto workers strike

a)

Change in supply

b)

Change in quantity supplied

52.

Auto workers strike

a)

increase in supply

b)

increase in quantity supplied

c)

decrease in supply

d)

decrease in quantity supplied

53.

What is one reason that firefighter services are considered a public good?

a)

Everyone in the community benefits from it.

b)

Nobody in the community has to pay for it.

c)

Private firms make a profit from producing it

d)

Individual citizens pay directly for it.

54.

Public goods are examples of market failure, because producing these goods in the free market

a)

shows that the free enterprise system cannot distribute resources.

b)

helps entrepreneurs learn how to distribute public resources.

c)

does not allow for the efficient distribution of resources.

d)

encourages private businesses to distribute resources efficiently.

55.

Which of the following is an example of a negative externality resulting from an outdoor concert in the park?

a)

College students near by get to enjoy free entertainment

b)

An elderly woman in her apartment hears a song that she liked as a child.

c)

A pizza parlor stays open later and makes a bigger profit than most nights

d)

A traffic jam occurs as drivers hunt for parking spots near the concert.

56.

Which of the following explains why a city fireworks display on the Fourth of July is provided as a public good?

a)

Fireworks displays usually take place in a public area.

b)

Fireworks are a scarce resource.

c)

Nonpayers cannot be prevented from seeing the fireworks.

d)

Each consumer pays a fee to see the fireworks.

57.

What is critical in determining whether something is produced as a public good?

a)

whether the market has the resources to provide it

b)

whether the benefits to society are greater than the total cost

c)

whether the government needs to use tax money to provide it

d)

whether the benefits are limited to the poor

58.

What might be the economic benefit of the government providing a public good rather than the private sector?

a)

decreased prices for the good

b)

decreased cost for the good

c)

increased taxes needed to provide the good

d)

greater efficiency in providing the good

59.

Market failure occurs whenever

a)

free markets fail to distribute resources efficiently.

b)

goods fail to arrive at a market in a timely fashion.

c)

government builds infrastructure.

d)

voluntary exchange in a market fails to result in a sale.

60.

Use the image to answer the question:

What two qualities that work together to regulate the marketplace are present in this photo of two cellphone service providers?

a)

innovation and specialization

b)

efficiency and underutilization

c)

competition and self-interest

d)

opportunity and efficiency

61.

The goal of government welfare programs is to

a)

maintain a poverty threshold that matches the median income.

b)

eliminate the dependence of people on the welfare system.

c)

eliminate the income gap between the richest Americans and the poorest.

d)

raise the standard of living of certain less-fortunate members of society.

62.

What statement best explains why the government provides goods and services to its citizens?

a)

To provide benefits to small groups of people in certain areas of the country.

b)

To provide goods and services that would not be available if individuals had to provide them.

c)

To compete with businesses in the private sector.

d)

To make a large profit by providing certain goods and services to it's citizens.

63.

The government pays for public goods and services through —

a)

donations from wealthy politicians

b)

donations from foreign nations

c)

revenue from sales and income taxes

d)

revenue from the lottery

64.

What is one reason that local law enforcement is considered a public good?

a)

Everyone in the community benefits from it.

b)

Nobody in the community has to pay for it.

c)

Private firms make a profit from producing it.

d)

Individual citizens pay directly for it.

65.

What is the free rider problem?

a)

scarcity even when you pay for a good

b)

Reaping all the benefits without contributing

c)

Common goods that don't have a price

d)

none of the above

66.

If a student volunteers at a food pantry on Fridays after school, which of the following might be a negative externality?

a)

The student might learn a new skill.

b)

The student might make some new friends.

c)

The student's parents have to drive him or her to the food pantry.

d)

The student might decide to volunteer two days a week.

67.
If the production of a good generates a negative externality, which of the following is true at the private market equilibrium? 
a)
The private market equilibrium quantity is equal to the socially optimal quantity. 
b)
The marginal private cost is greater than the marginal social cost. 
c)
The price of the product equals the marginal social cost. 
d)
The private market equilibrium quantity is greater than the socially optimal quantity. 
68.
When consumption of a good generates a positive externality, which of the following must be true at the market equilibrium? 
a)
Marginal social benefit is less than marginal private cost. 
b)
Marginal social benefit is greater than marginal private benefit. 
c)
Marginal social cost is greater than marginal social benefit. 
d)
Marginal social cost is less than marginal private benefit. 
69.
Which of the following is true when there are negative externalities associated with the production of a good? 
a)
The market will adjust automatically to equate marginal social costs and marginal social benefits. 
b)
Marginal social costs will exceed marginal private costs unless businesses are forced to internalize the external costs. 
c)
Marginal private costs will exceed marginal social costs, but the government can correct the problem. 
d)
Producers should be subsidized so that they will produce more of the good. 
70.
The difference between what consumers are willing to pay for units of a good and the price consumers actually pay for units of the good is called:
a)
a positive externality 
b)
marginal utility
c)
consumer surplus 
d)
producer surplus
71.

Refer to the image. Given the position of the marginal social cost curve, one can conclude that

a)

production of good X creates a negative externality.

b)

private cost of producing good X exceeds the social cost of production at all levels of output.

c)

market quantity, Q3, is the socially optimal quantity.

d)

free market will produce too little of good X.

72.
Which of the following is true when there are negative externalities associated with the production of a good? 
a)
The market will adjust automatically to equate marginal social costs and marginal social benefits. 
b)
Marginal social costs will exceed marginal private costs unless businesses are forced to internalize the external costs. 
c)
Marginal private costs will exceed marginal social costs, but the government can correct the problem. 
d)
Producers should be subsidized so that they will produce more of the good. 
73.

Markets exhibiting negative externalities will

a)

under produce.

b)

over produce.

c)

be optimal.

74.

Driving a car on crowded highway produces

a)

a negative externality.

b)

a positive externality.

75.

Apartment dwellers who buy fire alarms or fire extinguishers generate a

a)

negative externality.

b)

positive externality.

76.

The market should produce the quantity where

a)

marginal social cost equals marginal social benefit.

b)

marginal private cost equals marginal social benefit.

c)

external cost equals external benefit.

d)

private cost is greater than social cost.

77.

Marginal Social Cost minus Marginal Private Cost equals

a)

internal cost.

b)

external cost.

c)

marginal cost.

d)

marginal revenue.

78.

A negative externality results due to firms

a)

being very, very , bad.

b)

not paying the full cost of production.

c)

firms internalizing production costs.

d)

firms not realizing they are polluting.

79.
A ______ Externality occurs when a cost of production or consumption falls on a 3rd Party.
a)
Negative
b)
Neutral
c)
Positive
80.

In which of the following situations is market failure least likely to occur? A situation where;

a)

externalities exist

b)

many producers compete in the market

c)

there is a sole producer in market

d)

there is a very uneven distribution of income and wealth

81.

Which of the following statements is true about externalities?

a)

When externalities exist, resources are allocated efficiently

b)

When positive externalities exist, efficiency is improved by taxing the product

c)

From society's point of view, the output of goods for which a positive externality exists is too low

d)

The price system overproduces goods with positive externalities

82.

When social costs are greater than private costs, there is a;

a)

positive externality

b)

negative externality

c)

less than socially optimal output

d)

socially optimal output

83.

The amount of stuff that is produced by firms and offered for sale.

a)

Supply

b)

Demand

c)

Equalibrium

d)

Disequalibrium

84.

The person or business that provides a good or service.

a)

Supplier

b)

Consumer

85.

High prices give businesses an incentive to produce. Low prices give producers a reason to reduce production.

a)

Law of Supply

b)

Equilibrium

c)

Disequalibrium

d)

Supply Curve

86.

Government increases rules which reduces supply.

a)

Technology

b)

Regulation

c)

Number of Sellers

d)

Supply Shock

e)

Education

87.

If suppliers believe a market will be strong they will make more products.

ex: smartphones and virtual reality.

a)

Technology

b)

Change in Producer Expectations

c)

Number of Sellers

d)

Supply Shock

e)

Education

88.

An increase or decrease in _______ can cause an increase or decrease in the supply of goods/services.

ex: fast food, apps

a)

Technology

b)

Change in Producer Expectations

c)

Number of Sellers

d)

Supply Shock

e)

Education

89.

Increases in human capital will increase the ability to produce.

ex: colleges, tech schools

a)

Technology

b)

Change in Producer Expectations

c)

Number of Sellers

d)

Supply Shock

e)

Education

90.

A sudden and unexpected shortage due to natural disaster or human mistake.

ex: earthquakes, fire, hurricane.

a)

Technology

b)

Change in Producer Expectations

c)

Number of Sellers

d)

Supply Shock

e)

Education

91.

The point of balance where demand and supply come together.

a)

Equilibrium

b)

Supply

c)

Demand

d)

Prices

e)

Disequalibrium

92.

When the quantity supplied is not equal to the quantity demanded.

a)

Equilibrium

b)

Supply

c)

Prices

d)

Disequalibrium

93.

What is an example of excess demand?

a)

Toilet Paper in 2020

b)

Christmas ornaments on sale in January.

94.

What is an example of QD<QS, or excess demand?

a)

Toilet Paper in 2020

b)

Christmas ornaments on sale in January.

95.

The price of any good adjusts to equilibrium is known as ___.

a)

Supply

b)

Demand

c)

Disequalibrium

d)

Law of Supply and Demand

96.

A binding maximum legal price in a market

a)

Price ceiling

b)

Price floor

97.

Who are price ceilings intended to benefit?

a)

Consumers

b)

Producers

c)

Government

d)

Employees

98.

Shortages, lower quality goods, and increased search costs, are all associated with

a)

Price ceilings

b)

Price floors

99.

Rent control, an attempt to make housing more attainable when prices rise too high is an example of a

a)

Price ceiling

b)

Price floor

100.

Which of the following is an argument in support of rent control?

a)

Lower rent prices discourage incentives to build additional housing.

b)

Housing prices in certain areas are rising faster than wages.

c)

Rent control can cause a shortage of housing.

d)

Quality of existing apartments will decrease.

101.

A binding legal minimum price in a market

a)

Price ceiling

b)

Price floor

102.

Price floors are intended to protect

a)

Sellers of a good or service

b)

Consumers of a good or service

103.

Binding price floors often result in a market

a)

Surplus

b)

Shortage

104.

When a price ceiling is in place keeping the price below the market price, which is true of the quantity demanded & quantity supplied?

a)

Quantity Demanded is greater

b)

Quantity Supplied is greater

c)

Quantity Demanded equals Quantity supplied

105.
At the price of 1.00 there is a 
a)
shortage of 200
b)
surplus of 200
c)
shortage of 400
d)
surplus of 400
106.
An effective price floor must be set above equilibrium, resulting in:
a)
a shortage
b)
a surplus
c)
limited choices
d)
None of the above
107.
If the government set the price at $700, would that be a price ceiling or floor?
a)
Price Ceiling
b)
Price Floor 
c)
Neither
108.
If the government set the price at $300, what would be the result?
a)
Surplus of 4,000
b)
Surplus of 2,000
c)
Shortage of 4,000
d)
Shortage of 2,000
109.
If the government creates a price floor of $80, which one of the following statements is correct?
a)
The quantity demanded = 60
b)
The quantity supplied = 180
c)
There is a shortage of 140
d)
There price floor is ineffective
110.
If the government creates a price ceiling of $30, which one of the following statements is correct?
a)
The quantity demanded = 60
b)
The quantity supplied = 160
c)
There is a surplus of 100
d)
There is a shortage of 100
111.

If the Market price is $50,, which of the following is True of Quantity Supplied and Quantity Demanded

a)

quantity demanded = 120

b)

quantity supplied = 120

c)

quantity demanded = 120 & quantity supplied =120

d)

quantity demanded = quantity supplied

112.
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
113.

What prevents firms from entering a monopoly?

a)

Barriers to Entry

b)

Technology

c)

Price

d)

Barriers to Travel

114.
Businesses can "Collude" or work together to set prices
a)
Oligopoly
b)
Monopoly
c)
Perfect Competition
115.
Choose the example that goes best with an oligopoly.
a)
apples
b)
cell phone providers
c)
utilities
d)
clothing
116.

Which of the following industries is an example of a monopoly?

a)

utilities/water

b)

department stores

c)

auto industry

d)

commercial airlines

117.
The jeans industry would fall into what type of market structure? ( jeans are similar but there are some differences in the product)
a)
monopoly
b)
oligopoly
c)
perfect competition
d)
monopolistic competition
118.

A market that has a few sellers of basically the same goods.

a)

Perfect Competition

b)

Pure Monopoly

c)

Monopolistic Competition

d)

Oligopoly

119.

Public utilities are an example.

a)

Perfect Competition

b)

Natural Monopoly

c)

Monopolistic Competition

d)

Oligopoly

120.

In this market, the producer is the least responsive to buyers' needs and wants.

a)

Perfect Competition

b)

Pure Monopoly

c)

Monopolistic Competition

d)

Oligopoly

121.

Which type of market structures has many producers (companies) and sell similar but different products from each other? These companies have a little control over the price and there are relatively low barriers to entry.

a)

perfect competition

b)

monopolistic competition

c)

oligopoly

d)

monopoly

122.
List the four market structures in order from least competitive to most competitive.
a)
Oligopoly, Monopoly, Perfect Competition, Monopolistic Competition
b)
Perfect Competition, Oligopoly, Monopoly, Monopolistic Competition
c)
Monopoly, Oligopoly, Monopolistic Competition, Perfect Competition
d)
Monopoly, Monopolistic Competition, Perfect Competition, Oligopoly
123.
How many firms are there in a perfect competition?
a)
1
b)
2-5
c)
Many
124.
Why does no one firm dominate in a perfect competition?
a)
No firm wants to
b)
Each firm sells to different people
c)
Each firm produces so little of the total supply that they cannot influence prices
d)
One firm will eventually dominate and make it a monopoly
125.
An industry that is dominated by a few large firms is 
a)
monopolistic competition.
b)
a monopoly.
c)
perfect competition.
d)
an oligopoly.
126.
Which is NOT a characteristic of a monopoly?
a)
Seller sets the market price
b)
Entry into the market is easy
c)
Firm sells a unique product
d)
One seller
127.
If Nike and Adidas merge, it would be a _____________ merger
a)
horizontal
b)
vertical
c)
insane
d)
ladder
128.
An oil driller, oil refinery, and gas company merge.... this is a ________________ merger
a)
horizontal
b)
vertical
c)
inappropriate
d)
monopolistic

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