ECON 100 Spring Exam Review (2023)

What is economics?

• A study of how people make choices to achieve goals with resource constraints.

• A study of the institutional mechanisms of commerce, like trade and the stock market.

• A study of how businesses and individuals make the most money.

• A study of comprehensive, international economic development.

What is the contribution of The Wealth of Nations published by Adam Smith in 1776?

• Adam Smith described how people made production and consumption decisions in the 18th century.
• Adam Smith created Capitalism.
• Adam Smith was an English warrior who led the English people to freedom from a king.
• Adam Smith was a landowner and trade protectionist who drafted the "Corn Laws".
• Pluto

What do consumers want to achieve?

• Maximize personal satisfaction.
• Assure that poor people are fed, housed, and clothed.
• Take care of their children and families.
• Any and all of the above.

As the price of gasoline continues to rise,

• The quantity consumed will rise because consumers will need more gasoline for their bigger cars.
• The quantity consumed will not change because everyone must travel.
• The quantity consumed will decline as consumers respond to higher prices.
• The quantity consumed will rise because producers will produce more gasoline.

Which of the following products is likely to have the lowest income elasticity of demand?

• Vacation trip to Las Vegas.
• Milk.
• Diamond rings.
• Refrigerators.

How would you characterize the price elasticity of demand for college education?

• Price inelastic because if one wants education, they get it at almost any price as an investment in their future income.
• Price elastic because it is so expensive.
• Price inelastic because it consumes a large part of disposable income.
• Price elastic because it is a luxury item.

Price elasticity of supply tends to get higher over longer periods of time because:

• Interest rates are lower over time.
• Companies run out of input materials over time.
• There is time to build capacity to produce more of a product at higher prices.
• Quantity supplied gets more rigid as production plants age.

Which of the following is not a fundamental private property right?

• The right to transfer ownership of the property.
• The right to exclude others from using the property.
• The right to use the property as desired.
• The right to buy property at a fair price.

Capitalism represents a system of economic production and exchange in which individuals own and manage the major means of production. Which of the following statements is not a characteristic of capitalism?

• Capitalism captures the greatest amount of creativity among people.
• Capitalism assures a fair distribution if income and wealth among people.
• Capitalism tends to create the greatest amount of total wealth among people.
• Capitalism results in rapid adjustments to changing conditions.

Why are capitalism, socialism, and communism called economic systems?

• An economic system is an accepted, interconnected set of people and institutions regularly working to accomplish production and consumption of goods and services.
• Like the solar system, there are spheres of influence in the control of wealth.
• Like a water system, economic pressures are equivalent everywhere.
• The one common element of economic systems is the power of a central authority.