AnswersAcademy - Economics and Personal FinanceUnit Test

Unit Test Answers

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1
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A consumer might respond to a negative incentive by

A
purchasing more of the products.
B
buying the good at a cheap price.
C
receiving a discount.
D
decreasing use of the product to save money.
2
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Which of these best describes an opportunity cost?

A
a win-win
B
a loss
C
a chance
D
a trade-off
3

Carmen wants to open her own coffee shop. She has narrowed down a list of wholesale retailers and their cost per pound of coffee beans. Whole Sale Company Cost per lb.Café con Leche$8.50Beans Brothers$7.50Colombian Co.$11.25Turkish Coffee Company$6.25Which company has the comparative advantage in cost per pound of coffee?

A
Café con Leche
B
Beans Brothers
C
Colombian Co.
D
Turkish Coffee Company
4

Which scenario is the best example of an opportunity cost?

A
A computer company issues a recall on its tablets.
B
A computer company produces fewer laptops to meet tablet demand.
C
A computer company reduces the price on last year’s models.
D
A computer company stops making computers with CD/DVD drives.
5

The chart shows the marginal revenue of producing apple pies.According to the chart, the marginal revenue

Question illustration
A
decreases by ten dollars as production increases.
B
increases by ten dollars as production increases.
C
falls to zero dollars as production increases.
D
remains the same as production increases.
6

The graph shows excess demand.Which needs to happen in order to stop disequilibrium from occurring?

Question illustration
A
Q needs to be coordinated with supply.
B
Q needs to be coordinated with demand.
C
The price of goods needs to be increased.
D
The price of goods needs to be decreased.
7

In the United States, which type of industry is often considered part of an oligopoly?

A
electric companies
B
cell phone carriers
C
mail delivery services
D
denim companies
8

Which helps enable an oligopoly to form within a market?

A
Costs of starting a competing business are too high.
B
The government restricts market entry.
C
The number of options in a market confuses consumers.
D
No competition exists between producers.
9

What is the difference between profit and revenue?

R
Revenue is the total amount producers receive after selling a good. Profit is the total amount producers earn after subtracting the production costs.
R
Revenue is the total amount producers earn after subtracting the production costs. Profit is the total amount producers receive after selling a good.
R
Revenue is the total amount producers pay to manufacture a good. Profit is the total amount producers earn after subtracting the production costs.
R
Revenue is the total amount producers pay to manufacture a good. Profit is the total amount producers receive after selling a good.
10

SovereigntyCompetitionOligopoly

A
Sovereignty
B
Competition
C
Oligopoly
11

When an oligopoly exists, how many producers dominate the market?

A
none
B
one
C
a few
D
many
12

Which is an example of a positive incentive for consumers?

A
a sales tax imposed by a state
B
a steady rise in profits over a year
C
a coupon clipped from a newspaper
D
an increase in price for a popular product
13

The Davis family grows organic vegetables to sell at a local farmer’s market. Which are factors that directly affect their profit? Check all that apply.

A
an increase in the cost of farm equipment
B
a rise in demand for organic produce
C
an increase in customers at the market
D
a change in the market price for non-organic fruit
E
a sale on organic meats at the market
14

Which best describes how the government enables government monopolies to exist?

A
by issuing a patent
B
by allowing natural monopolies to exist
C
by creating and running a monopoly
D
by owning the means of production
15

How can producers maximize their profit? Check all that apply.

A
They can work to increase their marginal cost.
B
They can work to decrease their marginal cost.
C
They can raise prices to increase marginal revenue.
D
They can lower prices to decrease marginal revenue.
E
They can keep marginal costs below marginal revenues.
F
They can keep marginal revenues below marginal costs.
16

Which is an example of a negative incentive for producers?

A
a chance to make more money
B
a special sale at a department store
C
a coupon clipped from a newspaper
D
a sharp increase in production costs
17

Which best describes the availability of substitutes in a monopoly?

A
Price points vary.
B
There are no substitutes.
C
There are different brands.
D
Products have different features.
18

According to the law of supply, price and quantity move

A
along a track in the same direction.
B
along a track in opposite directions.
C
from different points toward one another.
D
from the same point away from one another.
19

Tasty Treat Tea is a popular iced tea drink. When the manufacturer begins to use imported tea leaves, the price rises by 10%, and the quantity demanded falls by 20%.The fact that quantity demanded changed by more than the price change suggests that

A
The consumer no longer prefers the iced tea drink.
B
The demand for Tasty Treat Tea is elastic.
C
The demand for Tasty Treat Tea is inelastic.
D
The consumer no longer shops at Tasty Treat Tea.
20

What happens when the quantity of a good supplied at a given price is greater than the quantity demanded?

e
excess supply
s
stable prices
e
exact equilibrium
i
increased production

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