Unit 1 -- Microeconomics PRE

The economic system where decisions are based on customs and traditions is called:

• Market economy

• Command economy

• Traditional economy

• Mixed economy

Which of the following is NOT a characteristic of a market economy?

• Private ownership of resources

• Competition among businesses

• Central planning by the government

• Consumer sovereignty

The point at which the quantity demanded equals the quantity supplied is called:

• Equilibrium point

• Shortage

• Surplus

• Price ceiling

An incentive is best described as:

• A government regulation

• A factor that motivates a person to act

• A measure of a country's economic output

• A type of market structure

In a command economy, economic decisions are primarily made by:

• Individuals

• Businesses

• The government

• Consumers

A monopoly is a market structure characterized by:

• Many sellers

• A single seller

• Perfect competition

• Government regulation

If the price of a good increases, we would expect the demand for that good to:

• Increase

• Decrease

• Remain constant

• Cannot be determined

Profit is defined as:

• Total revenue minus total cost

• Total revenue plus total cost

• The price of a product

• The quantity of a product sold

Opportunity cost refers to:

• The total cost of producing a good

• The value of the next best alternative given up

• The cost of all resources used to produce a good

• The profit earned from selling a good

Perfect competition is characterized by:

• Many sellers, identical products

• Few sellers, differentiated products

• One seller, no close substitutes

• Government control of the market