ECON 2100 TEST 1 QUESTIONS AND ANSWERS
_________________ is the subfield of economics that compares and contrasts the
structure and performance of different types of economic organization.
A. Microeconomics
B. Macroeconomics
C. International Trade
D. Comparative Economic Systems - Answer -D
____________ refers to the freedom of an individual to choose to purchase (or to
choose to not purchase) a good or service at a price determined in a free market.
A. Consumer Sovereignty
B. Moral Suasion
C. The Invisible Hand
D. Coercion - Answer -C
In regards to a Production Possibilities Frontier, which of the following statements is
true?
A. "A combination of goods is characterized by Productive Inefficiency if it cannot
possibly be produced with the currently available resources and technology."
B. "An Attainable combination of output can never be characterized by Productive
Efficiency."
C. "A combination of goods is Unattainable if it cannot possibly be produced with the
currently available resources and technology."
D. More than one (perhaps all) of the above answers is correct. - Answer -C
Adam Smith was
A. a 17th century English mercantilist.
B. an 18th century Scottish economist.
C. a 19th century German philosopher, economist, and revolutionary.
D. a 20st century American government bureaucrat - Answer -B
Eli and Peyton produce footballs and athletic shoes. Eli's opportunity cost of producing a
football is lower than Peyton's opportunity cost of producing a football. The
________________ suggests that they can increase their total output of these two
goods if Eli focuses his production on footballs while Peyton focuses his production on
athletic shoes.
A. Cost-Benefit Principle
B. Incentive Principle
C. Law of Comparative Advantage
D. distinction between a positive statement and a normative statement - Answer -C
Which markets are represented in the simple "Circular Flow Diagram"?
A. Markets for "Goods and Services" and markets for "Factors of Production."
B. Markets for "Financial Assets" and markets for "Exports."
, C. Markets for "Goods and Services" and markets for "Financial Assets."
D. Markets for "Imports" and markets for "Exports." - Answer -A
________________ first said "From each according to his ability, to each according to
his need."
A. Karl Marx
B. Louis Blanc
C. Alec Nove
D. Adam Smith - Answer -A
Within our discussion of private ownership of property, it was noted that "Property
Rights" consist of three different interconnected dimensions of rights, one of which was
the "right to restitution." The "right to restitution" refers to
A. the right to decide how to use your property.
B. the right to obtain ownership of property from or relinquish ownership of property to
another person.
C. the right to be compensated by another person when he damages your property.
D. the right to be able to seize the property of someone else in order to use it for the
"public good." - Answer -C
The "Law of Demand" implies that
A. if the price of a good decreases, then the quantity demanded of the good will
increase.
B. demand curves should be "upward sloping."
C. demand for a good will increase if consumers realize an increase in income.
D. More than one (perhaps all) of the above answers is correct. - Answer -D
When considering potential government policies, it is important to recognize that
A. most businesses are "self-interested," but households are not.
B. voluntary trade generally makes both sellers and buyers worse off.
C. if a policy alters the costs and/or benefits for a decision maker, then the decision
maker might change his behavior as a result of the policy.
D. Republicans care only about "the 1%," while Democrats care primarily about "the
99%." - Answer -C
The ___________________ provides an illustration of the general interactions between
households and firms in a simplified free market economy.
A. Production Possibilities Frontier.
B. Circular Flow Diagram.
C. Demand Curve.
D. Supply Curve. - Answer -B
_______________ specifies what different parties must do, whatever the external
circumstances, and provides for enforcement or compensation for non-performance.
A. Indicative Planning
B. The Invisible Hand
_________________ is the subfield of economics that compares and contrasts the
structure and performance of different types of economic organization.
A. Microeconomics
B. Macroeconomics
C. International Trade
D. Comparative Economic Systems - Answer -D
____________ refers to the freedom of an individual to choose to purchase (or to
choose to not purchase) a good or service at a price determined in a free market.
A. Consumer Sovereignty
B. Moral Suasion
C. The Invisible Hand
D. Coercion - Answer -C
In regards to a Production Possibilities Frontier, which of the following statements is
true?
A. "A combination of goods is characterized by Productive Inefficiency if it cannot
possibly be produced with the currently available resources and technology."
B. "An Attainable combination of output can never be characterized by Productive
Efficiency."
C. "A combination of goods is Unattainable if it cannot possibly be produced with the
currently available resources and technology."
D. More than one (perhaps all) of the above answers is correct. - Answer -C
Adam Smith was
A. a 17th century English mercantilist.
B. an 18th century Scottish economist.
C. a 19th century German philosopher, economist, and revolutionary.
D. a 20st century American government bureaucrat - Answer -B
Eli and Peyton produce footballs and athletic shoes. Eli's opportunity cost of producing a
football is lower than Peyton's opportunity cost of producing a football. The
________________ suggests that they can increase their total output of these two
goods if Eli focuses his production on footballs while Peyton focuses his production on
athletic shoes.
A. Cost-Benefit Principle
B. Incentive Principle
C. Law of Comparative Advantage
D. distinction between a positive statement and a normative statement - Answer -C
Which markets are represented in the simple "Circular Flow Diagram"?
A. Markets for "Goods and Services" and markets for "Factors of Production."
B. Markets for "Financial Assets" and markets for "Exports."
, C. Markets for "Goods and Services" and markets for "Financial Assets."
D. Markets for "Imports" and markets for "Exports." - Answer -A
________________ first said "From each according to his ability, to each according to
his need."
A. Karl Marx
B. Louis Blanc
C. Alec Nove
D. Adam Smith - Answer -A
Within our discussion of private ownership of property, it was noted that "Property
Rights" consist of three different interconnected dimensions of rights, one of which was
the "right to restitution." The "right to restitution" refers to
A. the right to decide how to use your property.
B. the right to obtain ownership of property from or relinquish ownership of property to
another person.
C. the right to be compensated by another person when he damages your property.
D. the right to be able to seize the property of someone else in order to use it for the
"public good." - Answer -C
The "Law of Demand" implies that
A. if the price of a good decreases, then the quantity demanded of the good will
increase.
B. demand curves should be "upward sloping."
C. demand for a good will increase if consumers realize an increase in income.
D. More than one (perhaps all) of the above answers is correct. - Answer -D
When considering potential government policies, it is important to recognize that
A. most businesses are "self-interested," but households are not.
B. voluntary trade generally makes both sellers and buyers worse off.
C. if a policy alters the costs and/or benefits for a decision maker, then the decision
maker might change his behavior as a result of the policy.
D. Republicans care only about "the 1%," while Democrats care primarily about "the
99%." - Answer -C
The ___________________ provides an illustration of the general interactions between
households and firms in a simplified free market economy.
A. Production Possibilities Frontier.
B. Circular Flow Diagram.
C. Demand Curve.
D. Supply Curve. - Answer -B
_______________ specifies what different parties must do, whatever the external
circumstances, and provides for enforcement or compensation for non-performance.
A. Indicative Planning
B. The Invisible Hand
