Economic Systems Quiz

Which of the following is a defining characteristic of a market economy?

• Private ownership of resources

• Equitable distribution of income

• Taxation of personal income

• Reliance on public goods

• Government-guided resource allocation

The table above shows the maximum possible output combinations of good X and good Y that Microland can produce by using all of its available resources and technology. As the production of good X increases, what happens to the opportunity cost of producing good X?

• It decreases, because the production of good Y decreases by greater amounts.

• It decreases, because the production of good Y increases by smaller amounts.

• It remains constant, because the production of good X increases by the same amount.

• It increases, because the production of good Y decreases by greater amounts.

• It increases, because the production of good Y increases by smaller amounts.

An increase in the supply of good X resulted in an increase in the price and quantity of good Y. It can be concluded that good Y is

• an inferior good

• a luxury good

• a normal good

• a substitute for good X

• a complement for good X

Which of the following will shift the supply curve for apples to the right?

• An increase in consumers’ income

• An increase in the price of apples

• An increase in the wages of apple pickers

• A decrease in the rental price for apple harvesting equipment

• A decrease in the demand for oranges, a substitute in consumption

Which of the following relationships among the price elasticity of demand, change in price, and change in total revenue is consistent?

• Elastic Demand Increase Decrease

• Elastic Demand Decrease Decrease

• Unit Elastic Decrease Decrease

• Inelastic Decrease Increase

• Inelastic Decrease Decrease

Which of the following best describes how a consumer maximizes total utility from the consumption of a bundle of goods and services?

• By choosing the quantity of each good such that the marginal utility from each good is equal to zero

• By choosing the combination of goods such that the marginal utility per dollar spent on the last unit of each good is equal

The marginal benefit of consuming a good is

• the change in average utility that results from consuming one more unit of the good

• the maximum amount a consumer is willing to pay for one more unit of the good

The economic concept of total consumer surplus refers to which of the following?

The table below is partially filled in with the different types of costs for a firm. Based on the information in the table, what is the marginal cost of producing the second unit?

How many units of output should a firm with the cost and demand curves shown above produce to maximize profit?

• 0

• Q1

• Q2

• Q3

• Q4