ECON Questions with Correct Answers (Grade A+)
Question 1: The opportunity cost of an item is
a. the number of hours that one must work in order to buy one unit of the item.
b. what you give up to get that item.
c. always less than the dollar value of the item.
d. always greater than the cost of producing the item.
Answer: B. what you give up to get that item.
Question 2: If Shawn can produce donuts at a lower opportunity cost than Sue, then
a. Shawn has a comparative advantage in the production of donuts.
b. Sue has a comparative advantage in the production of donuts.
c. Shawn should not produce donuts.
d. Shawn is capable of producing more donuts than Sue in a given amount of time.
Answer: A. Shawn has a comparative advantage in the production of donuts.
Question 3: Demand is elastic if the price elasticity of demand is
a. less than 1.
b. equal to 1.
c. equal to 0.
d. greater than 1.
Answer: D. greater than 1.
Question 4: Suppose the incomes of buyers in a market for a particular normal good decrease and there
is also a reduction in input prices. What would we expect to occur in this market?
a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
Answer: A. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
Question 5: An increase in the price of a good will
a. increase supply.
b. decrease supply.
c. increase quantity supplied.
d. decrease quantity supplied.
Answer: C. increase quantity supplied.
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,Question 6: A group of buyers and sellers of a particular good or service is called a(n)
a. coalition.
b. economy.
c. market.
d. competition.
Answer: C. market.
Question 7: "Other things equal, when the price of a good rises, the quantity demanded of the good
falls, and when the price falls, the quantity demanded rises." This relationship between price and
quantity demanded is referred to as
a. equilibrium.
b. the law of demand.
c. the relationship between supply and demand.
d. the definition of an inferior good.
Answer: B. the law of demand.
Question 8: You lose your job and, as a result, you buy more frozen pizzas.
a. luxury good.
b. inferior good.
c. normal good.
d. complementary good.
Answer: B. inferior good.
Question 9: Demand is inelastic if the price elasticity of demand is
a. less than 1.
b. equal to 1.
c. greater than 1.
d. equal to 0.
Answer: A. less than 1.
Question 10: Two goods are substitutes when a decrease in the price of one good
a. decreases the demand for the other good.
b. decreases the quantity demanded of the other good.
c. increases the demand for the other good.
d. increases the quantity demanded of the other good.
Answer: A. decreases the demand for the other good.
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, Question 11: An increase in the price of a good will
a. increase demand.
b. decrease demand.
c. increase quantity demanded.
d. decrease quantity demanded.
Answer: D. decrease quantity demanded.
Question 12: "Other things equal, when the price of a good rises, the quantity supplied of the good also
rises, and when the price falls, the quantity supplied falls as well." This relationship between price and
quantity supplied
a. is referred to as the law of supply.
b. applies only to a few goods in the economy.
c. is represented by a downward-sloping supply curve.
d. All of the above are correct.
Answer: A. is referred to as the law of supply.
Question 13: The cross-price elasticity of demand can tell us whether goods are
a. normal or inferior.
b. elastic or inelastic.
c. luxuries or necessities.
d. complements or substitutes.
Answer: D. complements or substitutes.
Question 14: Suppose that demand for a good increases and, at the same time, supply of the good
decreases. What would happen in the market for the good?
a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
Answer: B. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
Question 15: Alexis is a lawyer. She bills her clients $100 an hour for her services. minutes. She can hire
someone to mow her lawn who takes an hour. She can also mow her lawn in 30 Of the following prices,
which is the highest Alexis would pay someone to mow her lawn?
a. $99
b. $49
c. $29
d. Alexis would always mow her own lawn because she can do it faster.
Answer: B. $49
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Question 1: The opportunity cost of an item is
a. the number of hours that one must work in order to buy one unit of the item.
b. what you give up to get that item.
c. always less than the dollar value of the item.
d. always greater than the cost of producing the item.
Answer: B. what you give up to get that item.
Question 2: If Shawn can produce donuts at a lower opportunity cost than Sue, then
a. Shawn has a comparative advantage in the production of donuts.
b. Sue has a comparative advantage in the production of donuts.
c. Shawn should not produce donuts.
d. Shawn is capable of producing more donuts than Sue in a given amount of time.
Answer: A. Shawn has a comparative advantage in the production of donuts.
Question 3: Demand is elastic if the price elasticity of demand is
a. less than 1.
b. equal to 1.
c. equal to 0.
d. greater than 1.
Answer: D. greater than 1.
Question 4: Suppose the incomes of buyers in a market for a particular normal good decrease and there
is also a reduction in input prices. What would we expect to occur in this market?
a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
Answer: A. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
Question 5: An increase in the price of a good will
a. increase supply.
b. decrease supply.
c. increase quantity supplied.
d. decrease quantity supplied.
Answer: C. increase quantity supplied.
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,Question 6: A group of buyers and sellers of a particular good or service is called a(n)
a. coalition.
b. economy.
c. market.
d. competition.
Answer: C. market.
Question 7: "Other things equal, when the price of a good rises, the quantity demanded of the good
falls, and when the price falls, the quantity demanded rises." This relationship between price and
quantity demanded is referred to as
a. equilibrium.
b. the law of demand.
c. the relationship between supply and demand.
d. the definition of an inferior good.
Answer: B. the law of demand.
Question 8: You lose your job and, as a result, you buy more frozen pizzas.
a. luxury good.
b. inferior good.
c. normal good.
d. complementary good.
Answer: B. inferior good.
Question 9: Demand is inelastic if the price elasticity of demand is
a. less than 1.
b. equal to 1.
c. greater than 1.
d. equal to 0.
Answer: A. less than 1.
Question 10: Two goods are substitutes when a decrease in the price of one good
a. decreases the demand for the other good.
b. decreases the quantity demanded of the other good.
c. increases the demand for the other good.
d. increases the quantity demanded of the other good.
Answer: A. decreases the demand for the other good.
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, Question 11: An increase in the price of a good will
a. increase demand.
b. decrease demand.
c. increase quantity demanded.
d. decrease quantity demanded.
Answer: D. decrease quantity demanded.
Question 12: "Other things equal, when the price of a good rises, the quantity supplied of the good also
rises, and when the price falls, the quantity supplied falls as well." This relationship between price and
quantity supplied
a. is referred to as the law of supply.
b. applies only to a few goods in the economy.
c. is represented by a downward-sloping supply curve.
d. All of the above are correct.
Answer: A. is referred to as the law of supply.
Question 13: The cross-price elasticity of demand can tell us whether goods are
a. normal or inferior.
b. elastic or inelastic.
c. luxuries or necessities.
d. complements or substitutes.
Answer: D. complements or substitutes.
Question 14: Suppose that demand for a good increases and, at the same time, supply of the good
decreases. What would happen in the market for the good?
a. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
b. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
d. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
Answer: B. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
Question 15: Alexis is a lawyer. She bills her clients $100 an hour for her services. minutes. She can hire
someone to mow her lawn who takes an hour. She can also mow her lawn in 30 Of the following prices,
which is the highest Alexis would pay someone to mow her lawn?
a. $99
b. $49
c. $29
d. Alexis would always mow her own lawn because she can do it faster.
Answer: B. $49
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