Saylor Academy ECON101: Direct Credit
Test Questions and Answers
Q: Why does scarcity exist? - -Resources are limited.
-Which of the following is the most fundamental concept in economics? - -
Scarcity
-The Greek word for "economy" is oikonomos, which literally means a person
who: - -manages a household.
-What does the term "capital" refer to in economics? - -The equipment, and
buildings used by firms
-According to the production possibility frontier below, the economy of this
country can produce 50 boats and 25 cars (point Z). For strategic reasons
the government would like to produce 45 boats and 35 cars (point Y). What
advice would you give to the government of this country?
IMAGE - -It is an impossible goal because there are too few resources.
-Equality and efficiency are both terms used to judge economic outcomes.
Although they share similarities in meaning, they are different in which of the
following ways? - -Equality refers to a uniform distribution of economic
benefits, while efficiency refers to a maximization of economic benefits.
-A firm has the lowest opportunity cost to produce a product when it: - -
gives up the least to make the product.
-In the circular flow model, what are the two main groups of actors in the
economy? What are the two markets that make up the economy? - -The
main groups of actors are households and firms, and the two markets are the
goods/services market and the market for the factors of production.
-Suppose that baristas at a coffee shop currently earn the legal minimum
wage. What is likely to happen if the minimum wage increases to $15 an
hour? - -The supply of coffee will shift to the left.
-Hops is an input in the production of beer. The demand for beer is
declining. How will this affect hops? - -The demand for hops will decrease.
-The supply of a good is determined by: - -sellers of the good present in the
market
, -Some of the determinants of demand are: - -price, price of compliments
and tastes/preferences.
-If producers of a certain product are pessimistic or uncertain about the
future business climate, how will the supply of the product behave? - --TRY
This expectation will affect future supply but not today's supply
-NOT This expectation will cause movement along the supply curve.
-The price for a good decreases in price from $2.50 per unit to $1.50 per
unit. As a result, the amount purchased increases from 300 units per day to
500 units per day. What is the price elasticity of demand for this good? - --
TRY 1.0
-The Smith family's income increases by 25%. What impact will this have on
their spending habits? - -There will be a shift in demand for all goods, and
the Smiths will consume more compared to before the increase in income.
-Effective price control will result in either shortage or surplus. What
additional actions are needed to counter these unwanted effects? - -
Production quotas and rationing must be imposed.
-The following table presents the supply and demand schedules for
volleyballs. There are protests, and volleyball supporters march on
Washington to demand that volleyballs be made more affordable. A
concerned President approaches Congress, and Congress repeals its policy of
a price floor for volleyballs and imposes a price ceiling of $9 ($1 below the
former price floor of $10). What are the consequences of this price ceiling?
IMAGE - -There will be market equilibrium with 600 volleyballs sold at a price
of $8 each.
-In a competitive market people: - -compete to achieve the collective good.
-Why are markets more responsive to the preferences of people with high
incomes than to those of people with low incomes? - -Consumer demand is
affected by income, and the market responds in an efficient manner to
consumer demand.
-According to the figure below, how much is spent by consumers purchasing
bananas? How much does it cost producers to supply that amount?
IMAGE - -Consumers spend $9,000, and producers' costs are $9,000.
-According to the figure below, the banana market is at equilibrium. 300
hundred boxes of bananas are bought and sold every week at a per box
Test Questions and Answers
Q: Why does scarcity exist? - -Resources are limited.
-Which of the following is the most fundamental concept in economics? - -
Scarcity
-The Greek word for "economy" is oikonomos, which literally means a person
who: - -manages a household.
-What does the term "capital" refer to in economics? - -The equipment, and
buildings used by firms
-According to the production possibility frontier below, the economy of this
country can produce 50 boats and 25 cars (point Z). For strategic reasons
the government would like to produce 45 boats and 35 cars (point Y). What
advice would you give to the government of this country?
IMAGE - -It is an impossible goal because there are too few resources.
-Equality and efficiency are both terms used to judge economic outcomes.
Although they share similarities in meaning, they are different in which of the
following ways? - -Equality refers to a uniform distribution of economic
benefits, while efficiency refers to a maximization of economic benefits.
-A firm has the lowest opportunity cost to produce a product when it: - -
gives up the least to make the product.
-In the circular flow model, what are the two main groups of actors in the
economy? What are the two markets that make up the economy? - -The
main groups of actors are households and firms, and the two markets are the
goods/services market and the market for the factors of production.
-Suppose that baristas at a coffee shop currently earn the legal minimum
wage. What is likely to happen if the minimum wage increases to $15 an
hour? - -The supply of coffee will shift to the left.
-Hops is an input in the production of beer. The demand for beer is
declining. How will this affect hops? - -The demand for hops will decrease.
-The supply of a good is determined by: - -sellers of the good present in the
market
, -Some of the determinants of demand are: - -price, price of compliments
and tastes/preferences.
-If producers of a certain product are pessimistic or uncertain about the
future business climate, how will the supply of the product behave? - --TRY
This expectation will affect future supply but not today's supply
-NOT This expectation will cause movement along the supply curve.
-The price for a good decreases in price from $2.50 per unit to $1.50 per
unit. As a result, the amount purchased increases from 300 units per day to
500 units per day. What is the price elasticity of demand for this good? - --
TRY 1.0
-The Smith family's income increases by 25%. What impact will this have on
their spending habits? - -There will be a shift in demand for all goods, and
the Smiths will consume more compared to before the increase in income.
-Effective price control will result in either shortage or surplus. What
additional actions are needed to counter these unwanted effects? - -
Production quotas and rationing must be imposed.
-The following table presents the supply and demand schedules for
volleyballs. There are protests, and volleyball supporters march on
Washington to demand that volleyballs be made more affordable. A
concerned President approaches Congress, and Congress repeals its policy of
a price floor for volleyballs and imposes a price ceiling of $9 ($1 below the
former price floor of $10). What are the consequences of this price ceiling?
IMAGE - -There will be market equilibrium with 600 volleyballs sold at a price
of $8 each.
-In a competitive market people: - -compete to achieve the collective good.
-Why are markets more responsive to the preferences of people with high
incomes than to those of people with low incomes? - -Consumer demand is
affected by income, and the market responds in an efficient manner to
consumer demand.
-According to the figure below, how much is spent by consumers purchasing
bananas? How much does it cost producers to supply that amount?
IMAGE - -Consumers spend $9,000, and producers' costs are $9,000.
-According to the figure below, the banana market is at equilibrium. 300
hundred boxes of bananas are bought and sold every week at a per box
