WorksheetsEconomic Concepts
Total questions: 27
Worksheet time: 1hrs 21mins
Country A and Country B can both produce cars and planes. If it is advantageous for both countries to specialize and trade, which of the following must be true?
One of the countries has an absolute advantage in the production of both goods.
The countries have different opportunity costs of production.
The opportunity costs of production are the same for both countries.
Opportunity costs for cars will be less than planes.
One country has an absolute advantage in the production of cars while the other has an absolute advantage in the production of planes.
Which of the following is the best example of physical capital?
A $100,000 business loan from a bank
A business hiring 10,000 workers at a factory
A truck for a delivery company
An oven for a family of four
An increase in construction jobs
When making a decision, the next best alternative is called
The production possibilities
The opportunity cost
Scarcity
The absolute advantage
Efficiency
Which of the following must be true if an individual’s next best alternative to going to the beach is studying for an economics exam?
They will decide to study for the exam
The opportunity costs is seeing their friends at the beach
The person prefers playing volleyball at the beach to study for the exam
The opportunity cost of going to the beach is all the other things they could have done
The opportunity cost of going to the beach is being better prepared for the exam
If the production possibilities curve is concave from the origin (or bowed out), then economists say that
Resources are scarce in the economy
Resources are not equally suited for the production of both goods
Economic growth is occurring in the economy
Resources are being inefficiently used in the economy
Resources are equally suited for the production of either good
A point outside the production possibilities curve would represent
An efficient use of resources
Future output once producers become more efficient
An inefficient use of resources
A combination that cannot be achieved due to scarcity
Full employment of resources in the economy
An increase in which of the following would cause an outward shift of the production possibilities curve for consumer goods and capital goods?
An increase in the demand for consumer goods
An increase in taxes on consumers
A decrease in unemployment
An increase in the resources to produce capital goods
The efficient production of consumer goods
Which of the following is true regarding the production possibilities curve (PPC)?
An increase in resources will shift the PPC inward
A decrease in unemployment will cause the PPC to move outward
Consumers prefer capital goods
The production of capital goods will lead to more economic growth in the future
The government prefers consumer goods
An increase in which of the following will increase the quantity supplied of volleyballs?
Taxes on volleyball producers
The price of a substitute
The number of volleyball consumers
Subsidies for volleyball net producers
The price of volleyballs
If demand for mp3 players decreases when the price of mobile phones decreases, we can say that cell phones and mp3 players are
Normal goods
Inferior goods
Substitute goods
Complementary goods
Unrelated due to the substitution effect
If the price of cars significantly increases, then the
Supply of cars will increase
Supply of auto repair shops will decrease
Quantity supplied of cars will increase
The demand for cars will decrease
Car producers will find it more profitable to produce trucks
The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.
direct, inverse
inverse, direct
inverse, inverse
direct, direct
strong, weak
Which of the following will NOT cause the demand for video games to change?
a change in the price of a close substitute
a change in consumer incomes
a change in the price of video games
a change in consumer tastes
a change in consumer preferences
An economist for a computer company predicts that a rise in consumer incomes will increase the demand for consumers. This prediction assumes that:
there are many substitutes for computers
there are many complementary goods for computers
there are few goods that are substitutes for computers
computers are normal goods
computers are an inferior good
Which of the following statements is correct?
A decrease in the price of X will increase the demand for substitute product Y
A decrease in income will decrease the demand for an inferior good
An increase in income will decrease the demand for a normal good
An increase in the price of X will decrease the demand for complementary product Y
An increase in the price of X will increase the demand for complementary product Y
A leftward shift of a supply curve for avocados (a normal good) might be caused by:
an improvement in avocado picking techniques
a decrease in the wages that must be paid to avocado pickers
an increase in consumer incomes
some avocado farmers leaving the market
a news report stating that avocados are associated with good health
Assuming Ramen noodles are an inferior good, a decrease in income will shift the
supply curve for Ramen noodles to the left.
supply curve for Ramen noodles to the right.
demand curve for Ramen noodles to the left.
demand curve for Ramen noodles to the right
there is no shift
Refer to Figure A. At price $20, which of the following would occur?
Shortage of 100
Shortage of 150
Surplus of 200
Surplus of 50
Surplus of $100
Refer to Figure A. What would be the effect of a price floor at $60?
It would ineffective
A shortage of 50
Quantity demanded would increase
A shortage of 100
A surplus of 100
If the cost of producing cell phones increases, the price and equilibrium quantity of cell phones will most likely change in which of the following ways?
Price Quantity
Increase Increase
Price Quantity
Increase Increase
Price Quantity
Increase Decrease
Price Quantity
Decrease Increase
Price Quantity
Decrease Decrease
Other things equal, if the price of a key resource used to produce product X falls, the:
product supply curve of X will shift to the right.
product demand curve of X will shift to the right.
product supply curve of X will shift to the left.
product demand curve of X will shift to the left.
both the supply and demand of X will increase
Which of the following statements is correct?
If demand increases and supply decreases, equilibrium price will fall.
If the demand and the supply both fall at the same time, quantity will be indeterminate
If demand decreases and supply increases, equilibrium price will rise.
If supply increases and demand decreases, equilibrium price will fall.
If supply falls and demand remains constant, equilibrium price will fall.
When the government establishes a binding price floor on a good or service then there will be
An increase in demand for the good or service
A surplus because of the quantity demanded will decrease
A shortage because the quantity supplied will decrease
No incentive to place a tax on the good or service
A decrease in the price once the market adjusts
Which of the following changes in the market for corn could cause an increase in equilibrium price and quantity?
Demand Supply
Decrease Decrease
Demand Supply
No change Decrease
Demand Supply
No change Increase
Demand Supply
Increase No change
Demand Supply
Decrease No change
Claire is an economist who can earn $150 per hour. She is also an excellent chef who can cook three times as fast as the best chef in the area, whose hourly wage is $20 per hour. Which of the following is a correct economic statement?
Claire has a comparative advantage in economics so she should specialize in economics and hire the chef to cook for her.
Claire has an absolute and comparative advantage in both economics and cooking, so she work as an economist and as a chef.
Claire is three times faster than any chef so she could give up economics to become a chef.
When chefs work for economists, they should charge $150 per hour instead of $20 per hour.
Because Claire is an excellent chef, when the best chef works for Claire, she should pay the chef only 1/3 the hourly wage.
If Mike can make 2 surfboards per hour or 10 bikes per hour and Joe can produce 4 surfboards per hour and 12 bikes. Which of the following is true?
Mike has an absolute advantage in the production of surfboards
Mike’s opportunity cost for producing one bike is 5 surfboards
Joe has a comparative advantage in the production of both surfboards and bikes
Mike has a comparative advantage in the production of surfboards
Joe’s opportunity cost for producing one surfboard is 3 bikes
Atlantis can produce either 2 tons of grain or 4 cars with 10 units of labor. Zoltar can produce either 5 tons of grain or 25 cars with 10 units of labor. Based on this information, which of the following is true.
Atlantis has an absolute advantage in the production of grain, while Zoltar has a comparative advantage in the production of grain.
Atlantis has a comparative advantage in the production of grain, while Zoltar has a comparative advantage in the production of cars.
Atlantis has an absolute advantage in the production of grain, while Zoltar has a comparative advantage in the production of cars.
Atlantis has a comparative disadvantage in the production of both goods.
Neither country has a comparative advantage in the production of either good.
