Economics Mock Exam

__ is the science of how individuals and societies deal with the fact that wants are greater than the limited resources available to satisfy those wants

• Psychology

• Human Resources

• Economics

• Accounting

Economy comes from the word___which means "one who manages the household".

• oikanomia

• oikonomos

• oikawa

• okinawa

__is the condition where our wants are greater than the limited resources available to satisfy them

• corporate greed

• scarcity

• sarcity

• late stage capitalism

__is the most highly valued opportunity or an alternative forfeited when a choice is made (1pt.)

• marginal cost

• Opportunity cost

• marginal benefit

• Opportunity benefit

Economists use the ____ assumption to clearly designate what they believe is the correct relationship between two variables. This also means "other things constant" or "nothing else changes". (1pt.)

• ceretis paribus

• ceteris pavirus

• ceteris paribus

• coronavirus

What is the reason for the law of increasing opportunity costs?

• Resources have varying abilities and those with lower opportunity costs of producing a good will be used to produce it before resources with higher opportunity costs produce it.

• The price of a good rises as more of it is demanded.

• There is no reason: it is just one of the laws of economics.

• As more of a good is produced, the taxes applied to the production of the good rise.

The latest Taylor Swift album is available to be downloaded for $12.99. Is this price a rationing device?

• No, for price to be a rationing device, it must be so high that only one unit of the item is sold.

• No, the album will be sold to anyone having the required number of dollars.

• Yes, since that is a reasonable price.

• Yes, because the album will only be purchased by people who are willing and able to pay $12.99.

The economy is currently on its production possibilities frontier (PPF). A politician says that it is possible to get more of everything--more infrastructure, more schools, more national defense, more spending on social programs, and so on. The politician is _

• incorrect if he is assuming a rightward-shifting PPF.

• correct if he is assuming a leftward-shifting PPF.

• correct if he is assuming a rightward-shifting PPF.

• correct if he is assuming a PPF that does not change.

Most states have instituted mandatory seatbelt laws to reduce traffic fatalities. An economist may point out that an unintended effect of these laws is _.

• a decrease in driving speed, further reducing fatalities.

• an increase in driving speed, reducing the number of accidents.

• an increase in the price of automobiles, further reducing fatalities.

• an increase in risky driving behavior, increasing fatalities.

On a supply-and-demand diagram, equilibrium is found_ The_ is a metaphor for the unseen forces that would lead to the optimal balance of supply and demand.

• at every point on either curve; invisible land.

• where the demand curve intersects the horizontal axis; invisible hand.

• where the supply curve intercepts the vertical axis; invisible land.

• where the demand and supply curves intersect; invisible hand.