Basic Economic Concepts Quiz

Assume an economy is producing at full employment, increasing the production of one good will result in:

• an inward shift of the production possibilities curve

• an outward shift of the production possibilities curve

• a decrease in the amount of the other good that can be produced

• an increase in the amount of resources available.

The opportunity cost of an activity is ______.

• the amount of time spent on the activity

• the value of the benefit received from performing the activity

• the value of the forgone benefit of the next best alternative

• zero if the activity has no benefits.

Scarcity exists because:

• human wants exceed the productive capacity of the economy

• supplies of land and other natural resources are unlimited

• physical capital does not depreciate

• population and labor force growth are slowing

Which of the following combinations of shifts will result in a decreased EP and EQ?

• supply and demand increase

• supply and demand increase

• demand decrease and supply no change

• supply decrease and demand no change

You are graphing pears. Pears and apples are substitutes. Pesticides used with apples are found to be harmful to humans. What happens on the pear graph?

• supply and demand decrease

• supply increase

• demand decrease

• demand increase

Fill in the blank: Scarcity exists because human wants exceed the _______ capacity of the economy.

• productive

• limited

• infinite

• decreasing

If 1/4 of the nation's wheat crop is destroyed, what will happen to the price and quantity of wheat?

• price decrease, quantity unchanged

• price decrease, quantity increase

• price increase, quantity decrease

• price increase, quantity increase

Which of the following describes the law of supply?

• A) increase in price decreases quantity demanded

• B) increase in price increases quantity supplied

• C) an increase in taxes will decrease the supply of a good

• D) an increase in the number of sellers will increase the supply of the good.

If the wage rate of workers producing a good decreases, then which of the following will most likely occur?

• A) demand will shift to the right

• B) the supply of the good will increase

• C) the supply of the good will decrease

• D) quantity demanded will decrease.

Which of the following changes would result in an indeterminate change in the equilibrium price in a competitive market?

• increase in demand and decrease in supply

• increase in demand and increase in supply

• a decrease in demand and increase in supply

• a decrease in demand with no change to supply