PracticeTest_1

Name: ________________________ Class: ___________________ Date: __________ ID: APractice_TestTrue/FalseIndicate whether the statement is true or false.____ ____ ____ 1. Scarcity means that there is less of a good or resource available than people wish to have.2. A market is a group of buyers and sellers of a particular good or service.3. The law of demand is true for most goods in the economy.Multiple ChoiceIdentify the choice that best completes the statement or answers the question.____ 4. A construction company has built 25 houses so far this year at a total cost to the company of $7.2 million. If the company builds a 26th house, its total cost will increase to $7.5 million. Which of the following statements is correct?a.For the first 25 houses, the average cost per house was $288,000.b.The marginal cost of the 26th house, if it is built, will be equal to the average cost per house.c.If the company can experience a marginal benefit of $288,000 by building the 26th house, then the company should build it.d.All of the above are correct.5. One effect of the government-imposed seat belt law in the U.S. has beena.a dramatic decrease in the number of pedestrian deaths.b.safer driving.c.an increase in the number of accidents.d.a dramatic decrease in the number of driver deaths.6. In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of a.market power caused by a change in the country’s standard of living.b.market power caused by a single firm controlling the newspaper production.c.inflation caused by increased productivity in the economy.d.inflation caused by an increase in the quantity of money in the economy.7. Which of the following is not an example of a graph of a single variable?a.a pie chartb.a bar graphc.a time-series graphd.a scatterplot____ ____ ____ 1Name: ________________________ Figure 3-8Chile’s Production Possibilities FrontierColombia’s Production Possibilities FrontierID: A____ 8. Refer to Figure 3-8. Colombia should specialize in the production ofa.coffee and import soybeans.b.soybeans and import coffee.c.both goods and import neither good.d.neither good and import both goods.9. In a competitive market, the quantity of a product produced and the price of the product are determined bya.buyers.b.sellers.c.both buyers and sellers.d.None of the above is correct.____ ____ 10. If Miguel expects to earn a higher income next month, he may choose toa.save more now and spend less of his current income on goods and services.b.save less now and spend more of his current income on goods and services.c.decrease his current demand for goods and services.d.move along his current demand curves for goods and services.____ 11. If the supply of a product decreases, then we would expect equilibrium pricea.to increase and equilibrium quantity to decrease.b.to decrease and equilibrium quantity to increase.c.and equilibrium quantity to both increase.d.and equilibrium quantity to both decrease.2Name: ________________________ Figure 4-19The diagram below pertains to the demand for turkey in the United States.ID: A____ 12. Refer to Figure 4-19. All else equal, sellers expecting the price of turkey to rise in the future would cause a current move from a.DA to DB.b.DB to DA.c.x to y.d.y to x.Figure 5-2____ 13. Refer to Figure 5-2. As price falls from Pa to Pb, we could use the three demand curves to calculate three different values of the price elasticity of demand. Which of the three demand curves would produce the smallest elasticity?a.D1b.D2c.D3d.All of the above are equally elastic.3Name: ________________________ Short Answer 14. How does the study of economics depend upon the phenomenon of scarcity?15. a.What is the difference between a \"change in demand\" and a \"change in quantity demanded?\" Graph your answer.b.For each of the following changes, determine whether there will be a change in quantity demanded or a change in demand.i.a change in the price of a related goodii.a change in tastesiii.a change in the number of buyersiv.a change in pricev.a change in consumer expectationsvi.a change in incomeID: A4