AnswersEconomics and Personal FinanceMicroeconomics

Practice Test Answers

16 verified answers
1
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According to the graph, the marginal cost begins to increase when the producer makes

A
three pies.
B
five pies.
C
two pies.
D
four pies.
2
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Which best describes the relationship between consumers and producers?

A
They usually ignore each other.
B
They dislike each other.
C
They agree on prices.
D
They interact with each other.
3

Which is likely to occur if there is a price increase for a good which exhibits elastic demand?

A
People might buy a more expensive substitute good.
B
People might buy a less expensive substitute good.
C
People might buy a less expensive complementary good.
D
People might buy a more expensive complementary good.
4

Equilibrium occurs when supply and demand coordinate to

A
raise prices and production.
B
set excess demand.
C
set prices and production.
D
maintain excess supply.
5

What are the factors of production in business?

A
land, labor, and capital
B
capital, customer base, and interest
C
land, capital, and interest
D
land, labor, and customer base
6

A monopoly is a market that has

A
many sellers of the same item.
B
many sellers of a variety of products.
C
a single supplier of a good or service.
D
few competing businesses.
7

A chart that shows the connection between consumer demand and price is a

A
demand schedule.
B
market schedule.
C
demand curve.
D
market curve.
8

What does elasticity measure in economics?

A
how the amount of a good changes when its distribution expands
B
how the amount of a good changes when the producer hires more employees
C
how the amount of a good changes when the producer uses new materials
D
how the amount of a good changes when its price goes up or down
9

A clothing store has ordered a new supply of jeans for the fall season and wants to sell off the remaining items from the previous spring. What action would the store owner most likely take?

A
The store owner would most likely lower the price of the spring jeans to encourage consumers.
B
The store owner would most likely raise the price of the spring jeans to encourage consumers.
C
The store owner would most likely lower the price of the spring jeans to encourage producers.
D
The store owner would most likely raise the price of the spring jeans to encourage producers.
10

Why are utilities, such as electricity and water, examples of natural monopolies?

A
The cost of production restricts competition in the market.
B
There are limited natural resources to meet demand.
C
There is no need for alternative options.
D
Consumers only trust known companies to provide these essentials.
11

Which scenario is an example of market saturation?

A
There are three shoe stores on one block in town, and they have trouble finding customers and making a profit.
B
The single coffee shop in town usually has a long line of customers and tends to stay busy during business hours.
C
It can be difficult to get reservations at the only upscale Ethiopian restaurant in town, and it is best to call in advance.
D
A second health club will open because the only health club in town is too crowded to accept new customers.
12

Which is the best title for this diagram?

A
The Law of Supply
B
The Definition of Supply
C
Factors That Affect Supply
D
Elasticity and Competition
13

If quantity demanded exceeds quantity supplied, what most likely needs to happen to achieve equilibrium?

A
The demand needs to increase.
B
The price needs to increase.
C
The supply needs to increase.
D
The price needs to decrease.
14

Which manufacturing company has the comparative advantage for car parts?

A
Company A
B
Company B
C
Company C
D
Company D
15

Which food truck has the absolute advantage?

A
Frank’s Falafels
B
Kimchi Kim’s
C
Lunch on the Go
D
Deli Delight
16

What most likely will happen if the pie maker bakes a seventh pie?

A
The marginal cost will most likely increase to 2 point 0 0 dollars
B
The marginal cost will most likely decrease to 1 point 0 0 dollars
C
The marginal revenue will most likely decrease to 8 point 0 0 dollars .
D
The marginal revenue will most likely increase to 12 point 0 0 dollars .

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