Economics Final Exam Study Guide| 200
QUESTIONS| GRADED A
Which is true about the economic policy known as laissez-faire: Correct Answer: 1: The
doctrine which states that government should not intervene in the marketplace
2: Adam Smith created and promoted the concept of laissez-faire
Which statement about the Unites States' free enterprise system is NOT true? Correct Answer:
Entrepreneurs are guaranteed unrestricted freedom and financial success
In a free market economy, private property is: Correct Answer: encouraged
Which agency is responsible for enacting policies to save lives, prevent injuries, and protect the
health of workers? Correct Answer: Occupational Safety and Health Administration (OSHA)
Entrepreneurs and companies that offer the same goods and services are in a state of: Correct
Answer: Competition
Which economist argued in favor of the policy known as laissez-faire? Correct Answer: Adam
Smith
In a free enterprise system, what occurs when there is a demand for a product or service that does
not presently exist in the market? Correct Answer: An innovative entrepreneur or company will
eventually produce it
Workers recently complained about dangerous conditions inside a factory. The air conditioner
was not working properly and temperatures were known to exceed 100 degrees. Which
government agency is responsible for investigating this condition? Correct Answer: OSHA
If a nation is currently operating at a point inside its production possibilities curve, it: Correct
Answer: Has unemployed workers and/or inefficiently employed resources
Which of the following refers to the tendency to buy more of a good when its price falls in
relation to similar goods? Correct Answer: Substitution effect
Part of the reason that NBA superstar Kobe Bryant earns millions of dollars each year while
teachers may earn $40,000 is that: Correct Answer: 1: Demand for Kobe Bryant's talents is very
high since he can generate so much revenue for a firm
2: The supply of superstar basketball players is very low, while the supply of competent teachers
is much larger
3: Consumers enjoy basketball to the point that they are willing to spend lots of money and time
attending games and watching commercials
,If the price of a product increases, this will reduce the amount of it that gets purchased because:
Correct Answer: Consumers will substitute other products for the one whose price has risen
Tesla is a car company that typically makes sports cars valued at $100,000. Recently, Tesla has
created a new vehicle for $30,000. What do you think happened as a result of this
announcement? Correct Answer: Demand for Tesla vehicles increased with the price decrease
When a change in an individuals consumption results from a change in their salary, this is known
as: Correct Answer: Income Effect
Which of the following economic factors can cause a change in the demand for a product?
Correct Answer: 1: Consumer Income
2: Consumer expectations
3: Consumer tastes
Our demand for apple juice is elastic. This means that if the price of apple juice increases:
Correct Answer: consumers will buy less or find a juice to substitute for it
A leftward shift in the supply curve indicates: Correct Answer: a decrease in the quantity
supplied at each price
Imagine the price of mozzarella cheese decreased, but farmers were able to increase production
of mozzarella cheese by using the same resources presently available. How would this effect the
supply of pizza? Correct Answer: The supply would increase
As the price of a good increases, the quantity supplied will: Correct Answer: increase
Imagine that a book publisher raises the price of a novel that normally costs $5.95 to $9.95 to
cover the author's expenses. How will this affect the supply of novels? Correct Answer: The
supply will increase
The economic concept explaining why a business provides more of a good or service at higher
prices than they would be willing or able to at lower prices is known as: Correct Answer: Law
of Supply
Market equilibrium refers to a specific situation in which the market price: Correct Answer: is at
a level where there is neither a shortage nor a surplus
At a price of $299.99, the manufacturer of a smoothie maker is willing to produce 29,000 units
per quarter. At a price of $350.00, it is likely that the manufacturer will be willing to produce:
Correct Answer: more than 29,000 units per quarter
At a price of $299.99, the manufacturer of a smoothie maker is willing to produce 29,000 units
per quarter. If the CEO of the smoothie maker decides to sell the smoothie maker for $350.00
this will create a: Correct Answer: Surplus of makers
, At a price of $5.95, a brand new fiction novel has recently been published. If the novel is offered
for sale at a price of $2.95, then the publisher can expect the demand for the book to: Correct
Answer: Increase
When the actual price of a good or service is lower than the equilibrium price, this creates:
Correct Answer: Excess demand
Market disequilibrium occurs when: Correct Answer: The quantity supplied does not equal the
quantity demanded
A complement can be described as: Correct Answer: An instance when the use of one good
increases the use of another good
Hot dog buns pair perfectly with hot dogs. This relationship is known as: Correct Answer:
Complementary
Chevy is running ads for the Chevy Camaro, offering lower prices and better warranties than the
Ford Mustang. This is known as: Correct Answer: Competition
When a company does not meet the demand of the consumer by supplying enough of a specific
goof or service, then another company will emerge to fill the void until: Correct Answer: the
market reaches equilibrium
Fast food companies have noticed the consumption of fast food has been decreasing. This is an
example of: Correct Answer: Consumer taste
Kevin decided to open a new toy store in his local community. Before Kevin rents a space,
which non-price determinates should he take into consideration: Correct Answer: 1: Consumer
tastes
2: Consumer income
3: Age of population
Which of the terms below defines a market with significant barriers to entry and a single
supplier? Correct Answer: Monopoly
Which of the terms below describes a highly competitive market with many buyers and sellers
with slightly differentiated goods and services? Correct Answer: Monopolistic competition
In which of the market structures does a highly competitive market with many buyers and sellers
of an identical product have no control over the price of a product? Correct Answer: Perfect
competition
Which market structure has the least barriers to entry? Correct Answer: Perfect competition
Which of the answers below is NOT a characteristic of monopolistic competition? Correct
Answer: Identical products
QUESTIONS| GRADED A
Which is true about the economic policy known as laissez-faire: Correct Answer: 1: The
doctrine which states that government should not intervene in the marketplace
2: Adam Smith created and promoted the concept of laissez-faire
Which statement about the Unites States' free enterprise system is NOT true? Correct Answer:
Entrepreneurs are guaranteed unrestricted freedom and financial success
In a free market economy, private property is: Correct Answer: encouraged
Which agency is responsible for enacting policies to save lives, prevent injuries, and protect the
health of workers? Correct Answer: Occupational Safety and Health Administration (OSHA)
Entrepreneurs and companies that offer the same goods and services are in a state of: Correct
Answer: Competition
Which economist argued in favor of the policy known as laissez-faire? Correct Answer: Adam
Smith
In a free enterprise system, what occurs when there is a demand for a product or service that does
not presently exist in the market? Correct Answer: An innovative entrepreneur or company will
eventually produce it
Workers recently complained about dangerous conditions inside a factory. The air conditioner
was not working properly and temperatures were known to exceed 100 degrees. Which
government agency is responsible for investigating this condition? Correct Answer: OSHA
If a nation is currently operating at a point inside its production possibilities curve, it: Correct
Answer: Has unemployed workers and/or inefficiently employed resources
Which of the following refers to the tendency to buy more of a good when its price falls in
relation to similar goods? Correct Answer: Substitution effect
Part of the reason that NBA superstar Kobe Bryant earns millions of dollars each year while
teachers may earn $40,000 is that: Correct Answer: 1: Demand for Kobe Bryant's talents is very
high since he can generate so much revenue for a firm
2: The supply of superstar basketball players is very low, while the supply of competent teachers
is much larger
3: Consumers enjoy basketball to the point that they are willing to spend lots of money and time
attending games and watching commercials
,If the price of a product increases, this will reduce the amount of it that gets purchased because:
Correct Answer: Consumers will substitute other products for the one whose price has risen
Tesla is a car company that typically makes sports cars valued at $100,000. Recently, Tesla has
created a new vehicle for $30,000. What do you think happened as a result of this
announcement? Correct Answer: Demand for Tesla vehicles increased with the price decrease
When a change in an individuals consumption results from a change in their salary, this is known
as: Correct Answer: Income Effect
Which of the following economic factors can cause a change in the demand for a product?
Correct Answer: 1: Consumer Income
2: Consumer expectations
3: Consumer tastes
Our demand for apple juice is elastic. This means that if the price of apple juice increases:
Correct Answer: consumers will buy less or find a juice to substitute for it
A leftward shift in the supply curve indicates: Correct Answer: a decrease in the quantity
supplied at each price
Imagine the price of mozzarella cheese decreased, but farmers were able to increase production
of mozzarella cheese by using the same resources presently available. How would this effect the
supply of pizza? Correct Answer: The supply would increase
As the price of a good increases, the quantity supplied will: Correct Answer: increase
Imagine that a book publisher raises the price of a novel that normally costs $5.95 to $9.95 to
cover the author's expenses. How will this affect the supply of novels? Correct Answer: The
supply will increase
The economic concept explaining why a business provides more of a good or service at higher
prices than they would be willing or able to at lower prices is known as: Correct Answer: Law
of Supply
Market equilibrium refers to a specific situation in which the market price: Correct Answer: is at
a level where there is neither a shortage nor a surplus
At a price of $299.99, the manufacturer of a smoothie maker is willing to produce 29,000 units
per quarter. At a price of $350.00, it is likely that the manufacturer will be willing to produce:
Correct Answer: more than 29,000 units per quarter
At a price of $299.99, the manufacturer of a smoothie maker is willing to produce 29,000 units
per quarter. If the CEO of the smoothie maker decides to sell the smoothie maker for $350.00
this will create a: Correct Answer: Surplus of makers
, At a price of $5.95, a brand new fiction novel has recently been published. If the novel is offered
for sale at a price of $2.95, then the publisher can expect the demand for the book to: Correct
Answer: Increase
When the actual price of a good or service is lower than the equilibrium price, this creates:
Correct Answer: Excess demand
Market disequilibrium occurs when: Correct Answer: The quantity supplied does not equal the
quantity demanded
A complement can be described as: Correct Answer: An instance when the use of one good
increases the use of another good
Hot dog buns pair perfectly with hot dogs. This relationship is known as: Correct Answer:
Complementary
Chevy is running ads for the Chevy Camaro, offering lower prices and better warranties than the
Ford Mustang. This is known as: Correct Answer: Competition
When a company does not meet the demand of the consumer by supplying enough of a specific
goof or service, then another company will emerge to fill the void until: Correct Answer: the
market reaches equilibrium
Fast food companies have noticed the consumption of fast food has been decreasing. This is an
example of: Correct Answer: Consumer taste
Kevin decided to open a new toy store in his local community. Before Kevin rents a space,
which non-price determinates should he take into consideration: Correct Answer: 1: Consumer
tastes
2: Consumer income
3: Age of population
Which of the terms below defines a market with significant barriers to entry and a single
supplier? Correct Answer: Monopoly
Which of the terms below describes a highly competitive market with many buyers and sellers
with slightly differentiated goods and services? Correct Answer: Monopolistic competition
In which of the market structures does a highly competitive market with many buyers and sellers
of an identical product have no control over the price of a product? Correct Answer: Perfect
competition
Which market structure has the least barriers to entry? Correct Answer: Perfect competition
Which of the answers below is NOT a characteristic of monopolistic competition? Correct
Answer: Identical products
