ETS BUSINESS MAJOR FIELD TEST
REVIEW EXAM QUESTIONS &
DETAILED SOLUTIONS RATED 100%
CORRECT
Scarcity and Choice - correct answer ✔✔Human wants and needs are unlimited and resources
to satisfy them are limited. Choices must be made between the possible alternatives
3 Questions every economy must answer - correct answer ✔✔What to produce?
How to produce it?
For whom it is produced?
3 Questions
What to produce? - correct answer ✔✔Have to evaluate more than just needs. Involves the
wants and needs of individuals.
3 Questions
How to produce it? - correct answer ✔✔Center upon the methods and resources (land, labor,
capital, enterprise) used in the production process. Optimum way to achieve the desired output
utilizing these methods and resources.
3 Questions
For whom it is produced for? - correct answer ✔✔Issue of the distribution of the output
resulting from the application of the production methods and resources.
,Market Imperfections/Market Failure - correct answer ✔✔when market equilibrium results in
too many or too few resources being used in the production of a good or service. This can be
caused by lack of competition, externalities, public goods
Lack of competition (Market Imperfections) - correct answer ✔✔Must have competition among
both producers and consumers for markets to function effectively
Externalities (Market Imperfections) - correct answer ✔✔When a cost or benefit is imposed on
people other than the consumers and producers of a product (Ex. pollution from manufacturing
negatively affects the community rather than either the buyer or seller)
Public Goods (Market Imperfections) - correct answer ✔✔Goods are collectively consumed by
everyone and there is no way to bar people who do not pay from consumption (Ex. National
defense)
Law of Demand - correct answer ✔✔Inverse relationship between the price of a good and that
quantity buyers are willing to purchase in a defined time period
Price as the Determinants (Demand) - correct answer ✔✔Primary determinant of the quality
demanded is the price of the good.
Changes in the price of a good result in movement of the equilibrium point along the demand
line.
Nonprice Determinant (Demand - correct answer ✔✔These result in a shift (left or right) in the
demand curve
- number of buyers
- buyer tastes and preferences
- buyer income
- expectation of buyers
- prices of related goods
, Changes in Demand - correct answer ✔✔Increase - (rightward shift) high equilibrium price and
quantity
Decrease - (leftward shift) lower equilibrium price and quantity
Law of Supply - correct answer ✔✔More of a particular good will be supplied as the price of
that good rises, while less will be purchased as its price declines.
Non-Price Determinant (Supply) - correct answer ✔✔Result in a right or left shift in supply curve
- number of sellers in a market
-increases in technology that make suppliers more efficient
- prices of raw materials
- taxes of subsidies which increase or decrease the price of a product
- changes in the expectations of producers
- prices of other good the firm could produce
Increase in Supply - correct answer ✔✔Rightward shift. Results in a lower equilibrium price and
a higher equilibrium quantity
Decrease in Supply - correct answer ✔✔Leftward shift. Results in a higher equilibrium price and
a lower equilibrium quantity
Equal increase in Supply and Demand - correct answer ✔✔Rightward shift. Increase in
equilibrium quantity and no change in equilibrium price.
Supply Increases more than Demand - correct answer ✔✔Rightward shift. Lower equilibrium
price and greater equilibrium quantity
REVIEW EXAM QUESTIONS &
DETAILED SOLUTIONS RATED 100%
CORRECT
Scarcity and Choice - correct answer ✔✔Human wants and needs are unlimited and resources
to satisfy them are limited. Choices must be made between the possible alternatives
3 Questions every economy must answer - correct answer ✔✔What to produce?
How to produce it?
For whom it is produced?
3 Questions
What to produce? - correct answer ✔✔Have to evaluate more than just needs. Involves the
wants and needs of individuals.
3 Questions
How to produce it? - correct answer ✔✔Center upon the methods and resources (land, labor,
capital, enterprise) used in the production process. Optimum way to achieve the desired output
utilizing these methods and resources.
3 Questions
For whom it is produced for? - correct answer ✔✔Issue of the distribution of the output
resulting from the application of the production methods and resources.
,Market Imperfections/Market Failure - correct answer ✔✔when market equilibrium results in
too many or too few resources being used in the production of a good or service. This can be
caused by lack of competition, externalities, public goods
Lack of competition (Market Imperfections) - correct answer ✔✔Must have competition among
both producers and consumers for markets to function effectively
Externalities (Market Imperfections) - correct answer ✔✔When a cost or benefit is imposed on
people other than the consumers and producers of a product (Ex. pollution from manufacturing
negatively affects the community rather than either the buyer or seller)
Public Goods (Market Imperfections) - correct answer ✔✔Goods are collectively consumed by
everyone and there is no way to bar people who do not pay from consumption (Ex. National
defense)
Law of Demand - correct answer ✔✔Inverse relationship between the price of a good and that
quantity buyers are willing to purchase in a defined time period
Price as the Determinants (Demand) - correct answer ✔✔Primary determinant of the quality
demanded is the price of the good.
Changes in the price of a good result in movement of the equilibrium point along the demand
line.
Nonprice Determinant (Demand - correct answer ✔✔These result in a shift (left or right) in the
demand curve
- number of buyers
- buyer tastes and preferences
- buyer income
- expectation of buyers
- prices of related goods
, Changes in Demand - correct answer ✔✔Increase - (rightward shift) high equilibrium price and
quantity
Decrease - (leftward shift) lower equilibrium price and quantity
Law of Supply - correct answer ✔✔More of a particular good will be supplied as the price of
that good rises, while less will be purchased as its price declines.
Non-Price Determinant (Supply) - correct answer ✔✔Result in a right or left shift in supply curve
- number of sellers in a market
-increases in technology that make suppliers more efficient
- prices of raw materials
- taxes of subsidies which increase or decrease the price of a product
- changes in the expectations of producers
- prices of other good the firm could produce
Increase in Supply - correct answer ✔✔Rightward shift. Results in a lower equilibrium price and
a higher equilibrium quantity
Decrease in Supply - correct answer ✔✔Leftward shift. Results in a higher equilibrium price and
a lower equilibrium quantity
Equal increase in Supply and Demand - correct answer ✔✔Rightward shift. Increase in
equilibrium quantity and no change in equilibrium price.
Supply Increases more than Demand - correct answer ✔✔Rightward shift. Lower equilibrium
price and greater equilibrium quantity
