ETS Business Major Field Test Review [ACTUAL EXAM] LATEST
VERSION [QUESTIONS AND ANSWERS] WITH PRACTICE EXAM
DETAILED AND VERIFIED FOR GUARANTEED PASS- LATEST UPDATE
2025 GRADED A
Save
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
Demand Increases more than Supply - CORRECT ANSWER Rightward Shift. High
price and greater equilibrium quantity
, Equal Decrease in Supply and Demand - CORRECT ANSWER Leftward shift.
Decrease in equilibrium quantity with no change in equilibrium price.
Supply decreases more than Demand - CORRECT ANSWER Leftward shift. Higher
equilibrium price and lower equilibrium quantity.
Demand decreases more than Supply - CORRECT ANSWER Leftward shift. Lower
price and a lower equilibrium quantity
Shortage (Supply and Demand) - CORRECT ANSWER Happens when a price is
established below the equilibrium price and demand exceeds supply.
Can be fixed when the price is free to move. The increase in price will slowly reduce the
quantity demanded and increase the quantity supplied.
Neither the supply or demand curves will move
Surplus (Supply and Demand) - CORRECT ANSWER Occurs when a prices is
established above the equilibrium price and supply exceeds demand
Can be fixed if the price is able to move. The decrease in price will slowly increase the
quantity demanded and decrease the quantity supplied
Neither supply or demand curves will move.
Price Ceiling (Supply and Demand) - CORRECT ANSWER A price set below the
equilibrium price and results in a shortage with quantity demanded exceeding quantity
supplied.
Price Floor (Supply and Demand) - CORRECT ANSWER A price set above the
equilibrium price and results in a surplus with quantity supplied exceeding quantity
demanded.
Price Elasticity of Demand - CORRECT ANSWER The relationship between the
changes in the price of a product and the resulting changes in demand of that product
Elastic demand - CORRECT ANSWER When the percentage change in quantity
demanded is greater than the percentage change in price. Ex. commodity products
Inelastic demand - CORRECT ANSWER When the percentage change in quantity
demanded is less than the percentage change in price. Ex. health care
Income Elasticity of Demand - CORRECT ANSWER The ratio of the percentage
change in the quantity demanded to a given percentage change in income
Demand:Income
Cross-Price Elasticity of Demand - CORRECT ANSWER The ratio of the percentage
change in the quantity demanded of a good to a given percentage change in the price of
another good
VERSION [QUESTIONS AND ANSWERS] WITH PRACTICE EXAM
DETAILED AND VERIFIED FOR GUARANTEED PASS- LATEST UPDATE
2025 GRADED A
Save
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
Demand Increases more than Supply - CORRECT ANSWER Rightward Shift. High
price and greater equilibrium quantity
, Equal Decrease in Supply and Demand - CORRECT ANSWER Leftward shift.
Decrease in equilibrium quantity with no change in equilibrium price.
Supply decreases more than Demand - CORRECT ANSWER Leftward shift. Higher
equilibrium price and lower equilibrium quantity.
Demand decreases more than Supply - CORRECT ANSWER Leftward shift. Lower
price and a lower equilibrium quantity
Shortage (Supply and Demand) - CORRECT ANSWER Happens when a price is
established below the equilibrium price and demand exceeds supply.
Can be fixed when the price is free to move. The increase in price will slowly reduce the
quantity demanded and increase the quantity supplied.
Neither the supply or demand curves will move
Surplus (Supply and Demand) - CORRECT ANSWER Occurs when a prices is
established above the equilibrium price and supply exceeds demand
Can be fixed if the price is able to move. The decrease in price will slowly increase the
quantity demanded and decrease the quantity supplied
Neither supply or demand curves will move.
Price Ceiling (Supply and Demand) - CORRECT ANSWER A price set below the
equilibrium price and results in a shortage with quantity demanded exceeding quantity
supplied.
Price Floor (Supply and Demand) - CORRECT ANSWER A price set above the
equilibrium price and results in a surplus with quantity supplied exceeding quantity
demanded.
Price Elasticity of Demand - CORRECT ANSWER The relationship between the
changes in the price of a product and the resulting changes in demand of that product
Elastic demand - CORRECT ANSWER When the percentage change in quantity
demanded is greater than the percentage change in price. Ex. commodity products
Inelastic demand - CORRECT ANSWER When the percentage change in quantity
demanded is less than the percentage change in price. Ex. health care
Income Elasticity of Demand - CORRECT ANSWER The ratio of the percentage
change in the quantity demanded to a given percentage change in income
Demand:Income
Cross-Price Elasticity of Demand - CORRECT ANSWER The ratio of the percentage
change in the quantity demanded of a good to a given percentage change in the price of
another good
