Principles Of Economics - D089 TESTS Questions
And Answers Updated 2023-2024
Quiz :Which type of economy is characterized by a government that plans and
controls all economic activity? - Answer :Command
Correct! A command economy is a centralized economic system in which all
economic decisions are made by the nation's government.
Quiz :What is an example of a normative economic statement? -
Answer :Marginal tax rates should be lowered on high-income individuals.
Correct! A marginal tax rate is the amount of money an individual pays in taxes
on each additional dollar earned. This statement uses the word "should",
which makes it a value judgment or opinion and a normative statement.
Quiz :Which characteristic is associated with natural resources from a business
perspective? - Answer :They exist without human effort.
Correct! Natural resources are found in nature without any human effort.
Quiz :How can the available supply of natural resources be increased? -
Answer :Discovering new ways to extract resources
Correct! The discovery of different ways to extract natural resources can make
them more available.
Quiz :A ski resort sells tickets online at $70 per ticket. The resort is not selling
many tickets, so it offers a two-for-one opportunity. Which economic principle
is being used? - Answer :People respond to incentives.
Correct! The incentive of a sale or coupon changed the cost from $70 to $35,
making the ski trip more affordable and desirable. This incentive is what likely
changed buyers' behaviors.
Quiz :What are the characteristics of the production possibility frontier graph?
- Answer :Trade-offs in choices and downward sloping
Correct! The graph of the production possibility frontier reflects trade-offs in
choices and is downward sloping.
Quiz :How is scarcity represented on the production possibility frontier? -
Answer :By there being attainable and unattainable points
Correct! The production possibility frontier depicts the impact of scarcity by
providing a clear mark between the set of attainable and unattainable points.
, Quiz :The government imposes new safety regulations on the production of
gas stoves. What will happen in the market for gas stoves? - Answer :Supply
decreases.
Correct! New government regulations on producers will make it more
expensive to produce gas stoves and will decrease supply.
Quiz :The price of steel has increased by 5%, which leads to an increase in
quantity supplied by 8%. Which outcome can be concluded from the demand
and supply of steel? - Answer :The supply of steel is elastic.
Correct! Because the quantity supplied increased by more than 5%, it is
reasonable to conclude that the supply of steel is elastic.
Quiz :An individual wants to sell a car that frequently requires costly repairs.
Although the car performs worse and requires more repairs than similar
products, the seller hopes to get a price equal to better performing cars since
the buyers will not know about the problems. Why is this seller able to charge
a price equal to other sellers? - Answer :Asymmetric information
Correct! The seller has more information relevant to the transaction about the
car than the buyer does.
Quiz :Which market failure is overcome by a money-back guarantee strategy
using mail-order catalogs? - Answer :Imperfect information
Correct! A money-back guarantee helps instill confidence in the buyer about
the quality of the product by refunding purchase price if the buyer is
dissatisfied.
Quiz :Why do high labor-cost countries typically have more capital than low
labor-cost countries? - Answer :Firms choose technology that requires more
capital than labor to offset higher labor costs.
Correct! Firms minimize costs by choosing a mix of inputs according to their
relative cost. Firms operating in high labor cost countries will use more capital
than firms operating in low labor cost countries.
Quiz :A bakery operates in an industry with many competitors and easy entry
and exit. The firms in the industry are price takers. What is the price elasticity
of demand for the bakery's bread? - Answer :Perfectly elastic
Correct! In a perfectly competitive market, the price elasticity of demand is
infinite
And Answers Updated 2023-2024
Quiz :Which type of economy is characterized by a government that plans and
controls all economic activity? - Answer :Command
Correct! A command economy is a centralized economic system in which all
economic decisions are made by the nation's government.
Quiz :What is an example of a normative economic statement? -
Answer :Marginal tax rates should be lowered on high-income individuals.
Correct! A marginal tax rate is the amount of money an individual pays in taxes
on each additional dollar earned. This statement uses the word "should",
which makes it a value judgment or opinion and a normative statement.
Quiz :Which characteristic is associated with natural resources from a business
perspective? - Answer :They exist without human effort.
Correct! Natural resources are found in nature without any human effort.
Quiz :How can the available supply of natural resources be increased? -
Answer :Discovering new ways to extract resources
Correct! The discovery of different ways to extract natural resources can make
them more available.
Quiz :A ski resort sells tickets online at $70 per ticket. The resort is not selling
many tickets, so it offers a two-for-one opportunity. Which economic principle
is being used? - Answer :People respond to incentives.
Correct! The incentive of a sale or coupon changed the cost from $70 to $35,
making the ski trip more affordable and desirable. This incentive is what likely
changed buyers' behaviors.
Quiz :What are the characteristics of the production possibility frontier graph?
- Answer :Trade-offs in choices and downward sloping
Correct! The graph of the production possibility frontier reflects trade-offs in
choices and is downward sloping.
Quiz :How is scarcity represented on the production possibility frontier? -
Answer :By there being attainable and unattainable points
Correct! The production possibility frontier depicts the impact of scarcity by
providing a clear mark between the set of attainable and unattainable points.
, Quiz :The government imposes new safety regulations on the production of
gas stoves. What will happen in the market for gas stoves? - Answer :Supply
decreases.
Correct! New government regulations on producers will make it more
expensive to produce gas stoves and will decrease supply.
Quiz :The price of steel has increased by 5%, which leads to an increase in
quantity supplied by 8%. Which outcome can be concluded from the demand
and supply of steel? - Answer :The supply of steel is elastic.
Correct! Because the quantity supplied increased by more than 5%, it is
reasonable to conclude that the supply of steel is elastic.
Quiz :An individual wants to sell a car that frequently requires costly repairs.
Although the car performs worse and requires more repairs than similar
products, the seller hopes to get a price equal to better performing cars since
the buyers will not know about the problems. Why is this seller able to charge
a price equal to other sellers? - Answer :Asymmetric information
Correct! The seller has more information relevant to the transaction about the
car than the buyer does.
Quiz :Which market failure is overcome by a money-back guarantee strategy
using mail-order catalogs? - Answer :Imperfect information
Correct! A money-back guarantee helps instill confidence in the buyer about
the quality of the product by refunding purchase price if the buyer is
dissatisfied.
Quiz :Why do high labor-cost countries typically have more capital than low
labor-cost countries? - Answer :Firms choose technology that requires more
capital than labor to offset higher labor costs.
Correct! Firms minimize costs by choosing a mix of inputs according to their
relative cost. Firms operating in high labor cost countries will use more capital
than firms operating in low labor cost countries.
Quiz :A bakery operates in an industry with many competitors and easy entry
and exit. The firms in the industry are price takers. What is the price elasticity
of demand for the bakery's bread? - Answer :Perfectly elastic
Correct! In a perfectly competitive market, the price elasticity of demand is
infinite
