In a restaurant, cash registers, freezers, and grills are A economic goods. B free goods. C consumer goods. D capit

1. In a restaurant, cash registers, freezers, and grills are A economic goods. B free goods. C consumer goods. D capital goods.

2. Scarcity is the result of limited resources and A the failure to produce what consumers want. B the lack of adequate technological progress. C overpopulation in industrial countries. D unlimited wants and needs.

3. In order for a product to have value it must have utility. Utility is the capacity to A produce industrial products. B provide a service in the market. C receive goods and services. D be useful and provide satisfaction.

4. The more units of a certain economic product a person acquires, the less eager that person is to buy more of that product. According to economists, this is the principle of A substitution effect. B income effect. C variable proportions. D diminishing marginal utility.

5. Dina likes two skirts, one red and one blue. She has enough money for one, so she buys the red skirt. The blue skirt is the A capital good. B limited resource. C opportunity cost. D commodity.

6. To maintain or increase production in the dairy industry, the government provides A productivity. B regulations. C subsidies. D rationing.

7. Which of the following would be a monetary incentive? A a company car B a larger office C an employee lounge D an assigned parking space

8. Which of the following would be a non-monetary incentive? A overtime B an office with a view C an increased benefits package D paid vacation

9. The economist who identified that self-interest and competition drive a market economy was A Thomas Malthus. B Milton Friedman. C Alan Greenspan. D Adam Smith.

10. Private property is an incentive in a market economy since it provides the ability to A avoid paying taxes on annual earnings. B enjoy productivity at the worksite. C keep any earned rewards. D share the benefits of public services.

11. Fundamental to capitalism is the ability of individuals and businesses to own and control A natural resources. B private property. C public utilities. D transportation facilities.

12. Which belief suggests that government should not interfere in its country’s business or economic affairs? A scarcity B voluntary exchange C laissez-faire D quotas

13. Demand for goods will be more elastic if the goods A are essential. B have many substitutes. C have no complements. D are trendy.

14. A local restaurant determines that hamburgers have a price elasticity of +2.0. If hamburger prices drop from $2.00 to $1.50, the restaurant will supply how many hamburgers? A 50 percent more hamburgers B 25 percent less hamburgers C 25 percent more hamburgers D 50 percent less hamburgers

15. What happens to the demand for a luxury good when its price increases? A consumer demand will remain the same B consumer demand will increase C consumers will buy more complementary goods D consumers will buy more substitute goods

16. Productivity is increased by specialization because it A reduces employees needed. B reduces the work load of employees. C increases workers’ skills. D increases dependency on foreign countries.

17. A hurricane hits the coast of Florida and subsequent weather conditions destroy half of the oranges produced in orange orchards. What happens to the price and quantity of oranges on the market? A The supply of oranges decreases, and the price of oranges increases. B The supply of oranges increases, and the price of oranges decreases. C The supply of oranges decreases, and the price of oranges decreases. D The supply of oranges increases, and the price of oranges increases.

18. Monopolies are A price takers. B price setters. C competitive. D illegal.

19. What results when competitors undercut the market price in an attempt to gain an advantage? A interdependent pricing B price competition C price leadership D price war

20. In a competitive economy the adjustment process helps establish a relatively stable price where quantity demanded is the same as quantity supplied. This point in the market is called A correction. B elasticity. C equilibrium. D surplus.

21. If Congress limits the number of foreign automobiles that enter the United States, prices of foreign automobiles will A increase because of technology costs. B increase because of decrease in supply. C decrease because of new technology. D decrease because of increased domestic supply.

22. The role of an entrepreneur in a market economy includes all the following except A to take on the risk of enterprise with his or her own resources in search for profit. B to bring together the factors of production to create a desired product or service. C to lobby government for stronger business regulations. D to explore and developed new, or unrecognized, markets and products.

23. When the sale of a product is no longer generating a profit, the company producing the product is most likely to A continue making the product as it is and hope that consumer values change. B improve or alter the product to meet the needs and interests of consumers. C petition the government for regulations that eliminate competing products. D decrease advertising costs to save money on the low-profit product.