AnswersPersonal Finance and EconomicsMicroeconomics

Practice Test Answers

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1
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When prices drop below the point where supply and demand meet, it results in

A
disequilibrium.
B
production.
C
coordination.
D
equilibrium.
2
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Motherboards, Inc., manufactures computer parts. The company’s total revenue is

A
the amount the company receives from the sale of all of its computer parts.
B
the amount of money the company earns from selling an individual part.
C
the total wages the company pays workers in its factories and stores.
D
the money the company earns after paying all of its production costs.
3

A monopoly is a market that has

A
many sellers of the same item.
B
few competing businesses.
C
many sellers of a variety of products.
D
a single supplier of a good or service.
4

What does elasticity measure in economics?

A
how the amount of a good changes when the producer uses new materials
B
how the amount of a good changes when the producer hires more employees
C
how the amount of a good changes when its distribution expands
D
how the amount of a good changes when its price goes up or down
5

Which statement best explains the role of producers in economics?

A
Producers purchase goods and services.
B
Producers supply goods and services.
C
Producers sell shares for companies in the market.
D
Producers create theories about the market.
6

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

A
There is no need for alternative options.
B
The cost of production restricts competition in the market.
C
There are limited natural resources to meet demand.
D
Consumers only trust known companies to provide these essentials.
7

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 raise the price of the spring jeans to encourage producers.
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 consumers.
D
The store owner would most likely lower the price of the spring jeans to encourage producers.
8

According to the graph, the marginal cost begins to increase when the producer makes

A
three pies.
B
four pies.
C
five pies.
D
two pies.

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