WorksheetsUnit 1 - Test
Total questions: 40
Worksheet time: 20mins
Why might some historians consider Adam Smith one of the most influential people in history?
He taught that all people should be economic equals.
He introduced a way of thinking about economic ideas.
He argued for a larger role for the government in the economy.
He wrote the economic argument for American independence.
Which of these statements is an example of normative economics?
A. "Taxes ought to be lowered."
B. "Inflation is higher this year."
C. "The bond market is in decline."
D. "Speculation caused a recession."
A limitation of using graphs to represent relationships is that they
must be presented in a small space.
typically show the less important variables.
omit factors other than those being graphed.
are hard for anyone but economists to interpret.
Which statement is the best example of thinking at the margin?
John has six shirts and is trying to decide whether to buy a seventh.
Mary observes that the average cost of shoes is higher than last year.
David decides to volunteer this summer instead of working for pay.
Jane wants to buy a car but decides she cannot afford the insurance.
What are the factors of production?
goods and services
risk and opportunity
land, labor, and capital
wages, salaries, and profits
Ocean waves can be used to generate energy. Ocean waves are considered which type of resource?
capital
nonrenewable
perpetual
renewable
Which of these items is a measure of productivity?
years of education
bushels of corn per acre
number of workers employed
dollars invested in new equipment
Why are tradeoffs necessary?
Resources are limited.
Every product has flaws.
People want different things.
Advertisers promote products.
Which scenario best illustrates the law of diminishing marginal utility?
A car breaks down more often as it gets older.
A collector of china figurines is eager to get a new one.
Someone who doesn't listen to music does not care about getting a new CD.
A new toy is less exciting to a child with many toys than to a child with just a few.
Which of these economic goals is most important in a traditional economy?
growth
stability
freedom
efficiency
Why are economies most efficient when they have full employment?
No one person has to work too hard.
Wages are spent for consumer goods.
Unemployment offices can be closed.
No productive resources are left unused.
Which kind of economy is most common today?
command
market
mixed
traditional
What would government do in a model free enterprise system?
ensure that prices remain reasonable
stay out of economic activity altogether
protect property rights and enforce contracts
support entrepreneurs to encourage innovation
Which is the best example of specialization?
A surf shop lowers the price on swimsuits.
A dry cleaner spends extra time on grease spots.
An assistant in a tailoring shop only replaces zippers.
An online clothing outlet offers customized monograms.
How does division of labor increase productivity?
A. Workers require minimal training.
B. Workers can be paid a lower wage.
C. Workers become expert at one task.
D. Workers move often from job to job.
In a voluntary exchange, why do people give something up?
to increase their self-sufficiency
to get something they want more
to allocate scarce resources fairly
to comply with state requirements
What does it mean to say that Jen has a comparative advantage over Julian for weeding people's gardens?
Jen weeds more quickly than Julian does.
Jen's expertise at weeding is greater than Julian's.
Jen can charge more for weeding than Julian can.
Jen's opportunity cost for weeding is lower than Julian's.
Why has much clothing manufacturing moved from the United States to other countries?
Most of the market for textile products has shifted overseas.
American workers have a weaker work ethic today than in the past.
Education in this country has not kept up with the needs of the 21st-century economy.
Nations with large, low-skilled workforces have a comparative advantage for assembly-line production.
How does trade increase the value of an item?
It makes the item more expensive to buy.
It puts more different goods into competition.
It provides work for storekeepers and truckers.
It transfers the item to someone who values it more.
Which of these terms is most closely related to tradeoffs?
incentives
margin
markets
scarcity
Economists assume people choose something when its expected costs are less than its
working life.
chief competitors.
anticipated benefits.
required maintenance.
What is the best test of an economic model?
It has gone unchallenged for decades.
It is accepted by both liberals and conservatives.
It helps people make decisions more easily.
It is useful for both explaining past events and predicting future ones.
Which of the following is not a market?
an online auction site
a large appliance store
a high school classroom
a neighborhood garage sale
What does it mean to say that free markets are efficient?
Buyers and sellers trade until both are satisfied.
Information is communicated around the world.
Everyone is assured of getting basic necessities.
Decisions are made quickly with little confusion.
What is the law of unintended consequences?
Attempts to intervene always backfire.
Actions often have unforeseen effects.
Markets are always influenced by emotional factors.
Economic booms are always followed by downturns.
People's wants are unlimited. This fact means that which of the following is always present?
scarcity
shortages
marginal utility
costs of production
Which of the following is a major reason the standard of living in Japan is much higher than in Nigeria?
greater human capital
richer natural resources
more foreign residents
fewer temporary shortages
When Amy returns a good library book without finishing it so she won't have to pay a late fee, what is her opportunity cost?
paying the fee
paying for something else
finishing the book
reading a different book
What does it mean to maximize utility?
To become as efficient as possible
To gain the most satisfaction possible
to strengthen a national infrastructure
to strengthen the skills of a workforce
Which method of distribution is most commonly used by online bookstores?
ability to pay
equal distribution
according to need
first come, first served
What does Adam Smith's idea of an "invisible hand" represent?
the economic role of governments
the divine oversight of human affairs
the concern of people for one another
the way that markets coordinate trade
In the circular flow model, which of these is a factor payment?
the monthly mortgage on a house
the hourly wage a store pays to a clerk
the check someone writes to buy groceries
the credit card charge for ordering games online
Why did the Soviet Union experience many surpluses and shortfalls?
The labor force was not well educated.
The cold Russian climate made farming hard.
Central planners could not manage every detail.
The country depended on imports to obtain resources.
Which is the best example of a transfer payment?
Social Security check
police officer's paycheck
fee for renting a park facility
moving expense reimbursement
What is the main reason Americans specialize more today than the early pioneers did?
We have more access to markets.
We have more vocational training.
We depend less on transportation.
We live in less crowded conditions.
Which of these is the main reason for national differences in comparative advantage in producing raw materials?
differences in allocations of natural resources
differences in cultural traditions
differences in monetary systems
differences in local business practices
Which term best describes the fact that we depend on others to produce most of the goods and services we want?
absolute advantage
division of technology
commercial productivity
economic interdependence
Match the economic systems to its characteristics or meaning.
Command economy
Centrally owned by the government
Mixed economy
Public and private sectors
Traditional economy
Customs, family, and historical basis
Free Market
Private sector, profit, and minimal gov.
(a) is anything that is generally accepted as a means of payment
Scarcity arises because human (a) are limitless, while resources are (b) .
