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ACADEC ECON Unit 1 Review

Total questions: 100

Worksheet time: 1hrs 12mins

Name
Class
Date
1.
What does this graph show?
a)
Shortage
b)
Surplus
c)
Supply Table
d)
Equilibrium
2.
What is the Equilibrium Price?
a)
1
b)
2
c)
3
d)
4
3.
Goods that are bought and used together are 
a)
complementary goods
b)
substitute goods
c)
income goods
d)
unrelated goods
4.
The diagram represents a(n)
a)
increase in supply
b)
decrease in supply
c)
change in quantity supplied
d)
none of the above
5.
The diagram represents a
a)
increase in demand
b)
decrease in demand
c)
change in quantity demand
d)
none of the above
6.
Assume the image is showing the market for apples.  Which of the headlines could indicate the pictured shift is occurring in the market?
a)
Pesticides on apples linked to mouth cancer.
b)
Storms destroy apple orchards.
c)
An apple a day really does keep the doctor away.
d)
New genetic strain leads to apple trees that produce twice as many apples.
7.
The Law of Demand says that price and quantity have a(n)
a)
direct relationship
b)
inverse relationship
c)
marginal utility
d)
diminishing utility
8.
This part of the market determines DEMAND
a)
buyers
b)
sellers
c)
suppliers
d)
store owners
9.
This part of the market determines SUPPLY
a)
buyers
b)
sellers
c)
consumers
d)
us
10.
For the law of demand, as price rises, what happens to quantity demanded?
a)
it goes up
b)
it goes down
c)
it stays the same
d)
it is not effected
11.
For the law of supply, as price rises, what happens to quantity supplied?
a)
it goes up
b)
it goes down
c)
it stays the same
d)
it is not effected
12.
When quantity supplied and quantity demanded is equal
a)
surplus
b)
shortage
c)
equilibrium
d)
law of demand
13.
If a price is above equilibrium price, it creates a...
a)
shortage
b)
surplus
c)
market price
d)
demand
14.
If a price is below the equilibrium price it creates a...
a)
shortage
b)
surplus 
c)
market price 
d)
supply
15.
What does this curve represent?
a)
demand
b)
supply
c)
equilibrium
d)
shortage
16.
What does this curve represent?
a)
supply
b)
equilibrium
c)
demand
d)
surplus
17.
Jennifer Lopez is seen wearing a new short and sleek dress. People now want this dress. Which demand determinant is this most likely to fall under?
a)
Change in Consumer Income
b)
Change in Consumer Tastes
c)
Change in Price of Substitute Good
d)
Change in Consumer Price Expectations
18.
Oreo cookies are now extremely expensive to purchase. Instead of buying Oreo cookies, I now want to buy Chips Ahoy. What determinant of demand does this likely fall under?
a)
Change in Price of Complementary Good
b)
Change in Price of Substitute Good
c)
Change in Consumer Price Expectations
d)
Change in Number of Consumers in the Market
19.
The government is giving every individual 18 and above an extra $1,000.00 this year. What determinant of demand does this likely fall under?
a)
Change in Consumer Tastes
b)
Change in Consumer Price Expectations
c)
Change in Number of Consumers in the Market
d)
Change in Consumer Income
20.
I know that the iPhone 8 is coming out next year but really need a phone badly. I'm thinking about buying an iPhone 7 when the new iPhone comes to the market because it will be much cheaper than today's price. What determinant of demand does this suggest?
a)
Change in Price of Complementary Good
b)
Change in Consumer Price Expectations
c)
Change in Number of Consumers in the Market
d)
Change in Consumer Income
21.
McDonald's is having a special on their Big Mac purchases this week. Every Big Mac is $3 cheaper! When burger prices go down, this means you can buy more fries and a drink. What demand factor does this relate to?
a)
Change in Consumer Tastes
b)
Change in Price of Substitute Good
c)
Change in Price of Complementary Good
d)
Change in Number of Consumers in the Market
22.
Labor costs are rising through the roof! Minimum wages are now at $25 an hour. This means even the basic item will need to cost more to keep up with rising costs. What determinant of supply does this most relate to?
a)
Change in Technology
b)
Change in Number of Sellers in the Market
c)
Change in Cost of Factors of Production
23.
A brand new machine cooks, cleans, and never messes up a fast food order. This means we can sell more fast food than ever before, leading to producers cutting cost of fast food. Which supply factor does this most likely relate to?
a)
Change in Technology
b)
Change in Profit Opportunities Producing other Products
c)
Change in Producers' Price Expectations
24.
I foresee gas prices rising tremendously in the next summer. I as a gas supplier, want to cut my supply now so gas prices continue to rise. What supply factor does this best relate to?
a)
Change in Technology
b)
Government Action
c)
Change in Producers' Price Expectations
25.

This image best represents:

a)

An increase in demand

b)

A decrease in demand

c)

A decrease in quantity demanded

d)

An increase in quantity demanded

26.

# of sellers

a)

supply

b)

demand

27.

government action

a)

supply

b)

demand

28.

price/availability of resources (inputs)

a)

supply

b)

demand

29.

expectations of future profit

a)

supply

b)

demand

30.

technology

a)

supply

b)

demand

31.

tastes & preferences

a)

supply

b)

demand

32.

income

a)

supply

b)

demand

33.

# of consumers (population)

a)

supply

b)

demand

34.

price of related goods

a)

supply

b)

demand

35.
The picture illustrates
a)
an increase in demand
b)
a decrease in demand
c)
an increase in quantity demanded
d)
a decrease in quantity demanded
36.
The picture illustrates
a)
an increase in demand
b)
a decrease in demand
c)
an increase in quantity demanded
d)
a decrease in quantity demanded
37.
The picture illustrates
a)
an increase in supply
b)
a decrease in supply
c)
an increase in quantity supplied
d)
a decrease in quantity supplied
38.
The picture illustrates
a)
an increase in demand
b)
a decrease in demand
c)
an increase in quantity demanded
d)
a decrease in quantity demanded
39.
The picture illustrates
a)
an increase in supply
b)
a decrease in supply
c)
an increase in quantity supplied
d)
a decrease in quantity supplied
40.
Auto workers agree to wage cuts. 
a)
Supply shifts left
b)
Supply shifts right
c)
No change in supply
41.

Choose all of the statements that are TRUE regarding scarcity.

(Select all answers that apply.)

a)

We have unlimited wants, but our resources are limited.

b)

The goods and services we want exceed our ability to produce them.

c)

Scarcity forces consumers, producers, and governments to make difficult choices.

d)

Scarcity is defined as the ability to satisfy all wants at the same time. All resources and goods are unlimited.

42.

Resources are factors of production that are used in the production of goods and services. Select all examples of resources.

a)

production

b)

capital

c)

supply

d)

natural

e)

human

43.

Which term below is a selection of an item or action from a set of possible alternatives?

a)

opportunity cost

b)

choice

c)

production

d)

consumption

44.

Which term below is what is given up when a choice is made (the second-best alternative)?

a)

opportunity cost

b)

choice

c)

production

d)

consumption

45.

Which term below is the using of goods and services?

a)

opportunity cost

b)

choice

c)

production

d)

consumption

46.

Which term below is the combining of human, natural, capital, and entrepreneurship resources to make goods or provide services?

a)

opportunity cost

b)

choice

c)

production

d)

consumption

47.

What are the three basic questions of economics? (Select 3.)

a)

How will it be produced?

b)

When will it be produced?

c)

Why will it be produced?

d)

For whom will it be produced?

e)

What will be produced?

48.

Which of the following statements are TRUE regarding a traditional economy?

(Select 2.)

a)

Economic decisions are based on supply and demand.

b)

Economic decisions are based on custom and historical precedent.

c)

People often perform the same type of work as their parents and grandparents, regardless of ability or potential.

d)

People choose their careers based on skills and preferences.

49.

Which of the following are characteristics of a

free market economy?

(Select all answers that apply.)

a)

private ownership of property and resources

b)

profit motive and competition

c)

consumer sovereignty and individual choice

d)

lack of consumer choice

e)

minimal government involvement in the economy

50.

Which of the following are characteristics of a

command economy?

(Select all answers that apply.)

a)

profit motive

b)

consumer choice

c)

central ownership of property and resources

d)

centrally-planned economy with little consumer choice

e)

competition

51.

Which of the following are characteristics of a

mixed economy?

(Select all answers that apply.)

a)

In the private sector, individuals and businesses are the owners and decision makers.

b)

In the public sector, individuals and businesses are the owners and decision makers.

c)

In the public sector, the government is the owner and decision maker.

d)

Most economies today, including the U.S. economy, are mixed economies.

e)

In the private sector, the government is the owner and decision maker.

52.

In a mixed economy, which sector operates like a command economy?

a)

public

b)

private

c)

both public and private

53.

In a mixed economy, which sector operates like a free market economy?

a)

public

b)

private

c)

both public and private

54.

The key factor in determining the type of economy a country has is...

a)

the amount of resources owned by the country.

b)

the supply and demand of the consumers.

c)

the price of goods and services.

d)

the extent of government involvement in the economy.

55.

Which type of resource is the person who has the ideas for new businesses?

a)

natural

b)

human

c)

capital

d)

entrepreneurship

56.

Which type of resource is tools, equipment, and investment money?

a)

natural

b)

human

c)

capital

d)

entrepreneurship

57.

Tom has been saving for a trip to Rome after college. Tom however chooses to spend the money he had been saving on graduate school. The trip to Rome is called the what of Tom's decision?

a)

Incentive

b)

Resource

c)

Opportunity Cost

d)

Scarcity

58.

What form of economy has shared decision-making between individuals and the government? Individuals plan for the private sector, while the government plans for the public sector.

a)

Free Market Economy

b)

Command Economy

c)

Mixed Economy

d)

Traditional Economy

59.

Every economy must face the problem of...

a)

Profit

b)

Consumer Sovereignty

c)

Competition

d)

Scarcity

60.

Competition results in all of the following benefits to consumers EXCEPT?

a)

Lower priced goods and services.

b)

Better quality goods and services.

c)

More choices in goods and services.

d)

Lower income for employees.

61.

The amount of money a business has remaining after it has paid all costs such as labor, rent, and utilities is known as its?

a)

price

b)

competition

c)

supply

d)

profit

62.

Products such as fidget spinners, beanie babies, and hula hoops were extremely popular at one time and therefore were made in large number. However the demand for each has mostly disappeared so very few a made today. This is due to what principle?

a)

Proprietorship

b)

Consumer Sovereignty

c)

Due Process

d)

Opportunity Cost

63.

The United States has many characteristics of a Free Market Economy, however the United States is actually what form of economy?

a)

Command Economy

b)

Traditional Economy

c)

Mixed Economy

64.

The interaction of supply and demand determines what?

a)

The quality of goods and services.

b)

The taxes placed on goods and services.

c)

The price of goods and services.

d)

The choices we have in goods and services.

65.

The Law of Demand states that...

a)

Individuals will demand more of a good or service when prices are low.

b)

Individuals will demand less choices in goods or services.

c)

Individuals will demand less of a good or service when prices are low.

d)

Individuals will demand more of a good or service when quality is low.

66.

The Equilibrium Price is the ...

a)

The lowest that an item will sell for.

b)

The cost of the item to be made

c)

The price at which supply and demand meet.

d)

The most that the government allows to be charged for that item.

67.

The Federal Communications Commission regulates which industry in the United States?

a)

airlines

b)

energy

c)

television and radio broadcast stations

d)

professional sports

68.

The United States government enforces anti-trust laws to -

a)

discourage monopolies.

b)

limit competition.

c)

increase taxes.

d)

provide additional public goods and services.

69.

The radio disc jockey on Z104 aired a portion of his/her broadcast that was inappropriate and against the law. Which governmental regulatory agency will most likely levy a fine and/or penalty against the radio station?

a)

Federal Trade Commission

b)

Federal Communications Commission

c)

Consumer Protection Safety Commission

d)

Federal Deposit Insurance Corporation

70.

If the state of Virginia decided to buy and sell goods with a foreign company, which governmental regulatory agency would be required to approve the venture?

a)

Environmental Protection Agency

b)

Interstate Commerce Commission

c)

Securities and Exchange Commission

d)

Federal Trade Commission

71.

All are ways the government promotes marketplace competition except -

a)

encouraging businesses to start.

b)

passing and enforcing laws in order to prevent monopolies.

c)

participation in global trade.

d)

limiting small business start-up loans.

72.

Taxes and borrowed funds are two ways that the government provides -

a)

vacations.

b)

news conferences.

c)

public goods and services.

d)

bonuses.

73.

National Defense, Public Safety Officers, and the Postal Service are all examples of -

a)

goods and services provided by the government.

b)

private businesses that serve our communities.

c)

goods and services we pay for on an as needed basis.

d)

private businesses that are owned by individuals.

74.

Public goods and services are those things the government provides for us because -

a)

everybody needs them.

b)

we are unable to provide them for ourselves.

c)

there is a government budget surplus.

d)

monetary policy is not working to promote economic growth.

75.

Select all of the ways governments pay for public goods and services.

a)

taxes

b)

donations

c)

fees

d)

fines

e)

borrowing

76.

Which of these best explains why Mr. Darp is horizontal?

a)

Demand in that market is perfectly elastic

b)

Demand in that market is perfectly inelastic

c)

Firms can sell as many units as they want for the same price

d)

Mr. Darp is taking a nap

77.

Which of these is NOT a characteristic of Perfectly Competitive markets?

a)

Many small firms

b)

Virtually identical products

c)

High barriers to entry

d)

No need to advertise

78.

Which type of market have we studies in this unit?

a)

Perfect Competition

b)

Monopolistic Competition

c)

Oligopoly

d)

Monopoly

79.

A firm expands its fixed resources and its overall costs of production go up. It is experiencing...

a)

Increasing returns to scale

b)

Constant returns to scale

c)

Negative returns to scale

80.

A firm expands its fixed resources and its overall costs of production go down. It is experiencing...

a)

Increasing returns to scale

b)

Constant returns to scale

c)

Negative returns to scale

81.

What is the best definition for Long Run?

a)

A period of time in which at lease one resource is fixed

b)

A period of time in which all resources can change

c)

A period of 1 to 5 years

d)

A period of 5 or more years

82.

What is the best definition for Short Run?

a)

A period of time in which at lease one resource is fixed

b)

A period of time in which all resources can change

c)

A period of 1 to 5 years

d)

A period of 5 or more years

83.

With which worker does this firm begin to experience Negative Marginal Returns?

a)

Second

b)

Third

c)

Fourth

d)

Fifth

84.

With which worker does this firm begin to experience Diminishing Marginal Returns?

a)

First

b)

Second

c)

Third

d)

Fourth

85.

Which of the following best explains why firms experience Increasing Marginal Returns?

a)

Workers can specialize

b)

Workers reach the limit of fixed resources

c)

Managers motivate workers to produce more

d)

Poor management leads to low motivation

86.

Does an increase in Variable Costs affect a firm's output?

a)

Yes

b)

No

c)

Maybe

87.

Does an increase in Fixed Costs affect a firm's output?

a)

Yes

b)

No

c)

Maybe

88.

Which costs change based on the number of units produced?

a)

Fixed

b)

Variable

89.

Which of the following is the best definition for Marginal Cost?

a)

The cost of producing more units

b)

The cost of producing one additional unit

c)

Fixed costs

d)

Variable Costs

90.

According to the Profit Maximizing Formula, how many units should this firm produce?

a)

2

b)

3

c)

4

d)

5

91.

Bob currently earns $50,000 per year as a financial planner. If he quit his job and opened an ice cream stand on the beach, earning $25,000 per year in accounting profit, what is his Economic Profit?

a)

$25,000

b)

$50,000

c)

$75,000

d)

-$25,000

92.

What is the difference between Accounting (Normal) Profit and Economic Profit?

a)

Merchandise Costs

b)

Opportunity Cost

c)

Labor Cost

d)

Expenses

93.

What is the Profit Maximizing Formula?

a)

Revenue > Expenses

b)

MR > ATC

c)

MR = MC

d)

AFC + AVC = ATC

94.
The federal minimum wage law demonstrates
a)
a price ceiling
b)
a price floor
c)
a price equilibrium
d)
a market price
95.
In a market economy, a high price is a signal for
a)
producers to supply more and consumers to buy less.
b)
producers to supply less and consumers to buy more.
c)
government to intervene to protect consumers.
d)
producers to supply less and consumers to buy less.
96.
Profits will be maximized when marginal revenue
a)
is double marginal cost
b)
equals marginal cost
c)
is one-half marginal cost
d)
exceeds marginal cost
97.
Many businesses are engaging in e-commerce because
a)
subsidies are available to many e-commerce businesses.
b)
they are able to save on fixed and variable costs.
c)
operating costs never increase.
d)
variable costs can be almost eliminated.
98.
Rent payments and property taxes would be counted as
a)
total cost
b)
variable costs
c)
fixed costs
d)
marginal costs
99.
The level of profit-maximizing output is reached when marginal cost is
a)
double marginal revenue
b)
one-half of marginal revenue
c)
less than marginal revenue
d)
equal to marginal revenue
100.
Because a modest price increase has little or no effect, the demand for the product is
a)
complementary
b)
inelastic
c)
elastic
d)
unit elastic

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