Test #1- Scarcity, Free Enterprise, Demand

Test #1- Scarcity, Free Enterprise, Demand a. free ride b. negative externality _____ 1. ______is a problem because c. positive externality of the tension between limited d. public transfer resources and unlimited wants a. choice _____ 9. What is necessary for demand? b. scarcity a. consumers are willing to buy and the product is available c. law of diminishing marginal utility b. consumers are willing and able to buy product d. economics c. the product is available and consumers are able to buy d. consumers are familiar with the product _____ 2. An example of capital in a computer repair store would include: _____ 10. An actress sets off a craze for wearing a. office space, phones, computers camouflage clothing among her fans. What b. workers to take care of the register factor is affecting demand? c. natural resources like copper used to make wires a. consumer expectation d. the entrepreneurship of a new manager b. consumer taste c. complements _____ 3. The term for the value of the next d. substitutes best alternative in an economic decision is _____ 11. Following an increase in demand for a. cost-benefit analysis cookies is an increase of demand for milk. What b. free lunch factor is affecting demand? c. opportunity cost a. consumer expectation d. trade off b. consumer taste c. complements _____ 4. An outward shift in a production d. substitutes possibilities curve could be caused by _____ 12. What is a market demand curve? a. fewer resources available a. a graph showing the production possibilities of a firm b. more resources available b. a table showing how much of a product a market is willing and c. underutilization able to buy at each price d. efficiency c. a table showing the production possibilities of a firm d. a graph showing how much of a product a market is willing and able to buy at each price _____ 5. Adam Smith’s “invisible hand” works only in a _____ 13. How is total revenue calculated? a. command economy a. price x change in demand b. market economy b. price x quantity sold c. planned economy c. change in price x quantity demanded d. traditional economy d. change in price x quantity sold

_____ 6. In a command economy, the _____ 14. How is profit calculated? Government a. Revenue + Cost of production a. encourages entrepreneurs b. Cost of production x Revenue b. controls basic industries c. Cost of production - Revenue c. practices laissez faire d. Revenue – Cost of Production4 d. protects private property _____ 15. A demand curve is usually _____ 7. One main idea of a market a. a horizontal line. economy is b. a downward slope from left to right. a. consumer sovereignty c. an upward slope from left to right. b. high taxes d. bow-shaped. c. government-controlled production _____ 16. The change in the amount consumers will d. national health insurance buy because they can buy a different product instead a. inferior goods b. normal goods c. income effect d. substitution effect _____ 8. A person who lives downstream from a polluting factory may experience a _____ 17. What explains the reason why at a buffet, a. Jeans advertising misled consumers. your 10th plate doesn’t bring you the same satisfaction b. Advertising increased demand for jeans. as the 1st plate? c. Advertising decreased demand for jeans. a. the law of diminishing marginal utility d. Advertising did not affect demand for jeans. b. the formula to calculate total revenue c. the substitution effect Use data below to answer Q’s 25-27 d. the income effect Hot Dogs at Oracle Arena Revenue Table _____ 18. A factory closes, laying off hundreds of Price of Hot Dog Qty Demanded Total Revenue workers, and consumer spending in the $5 500 $2,500 town falls. What factor is affecting demand? $4.50 550 $2,475 a. consumer expectation $4 600 $2,400 b. consumer taste $3.50 650 $2,275 c. income $3 715 $2,145 d. substitutes _____ 25. At $5 per hot dog, what is the total revenue _____ 19. If quantity demanded does not change of the hot dog stand at Oracle Arena? significantly when price changes the demand is a. $500 b. $2,500 c. $2,000 d. $355 a. elastic b. inelastic _____ 26. The demand for hot dogs at Oracle Arena c. perfectly elastic according to the total revenue test is d. unit elastic a. elastic b. inelastic c. perfectly elastic d. unit elastic _____ 20. What do various points on a demand curve represent? _____ 27. What conclusion can you draw from the a. change in demand b. change in marginal utility revenue table? c. change in elasticity d. change in quantity demanded a. If hot dog vendors at sporting events wanted to increase their revenue and maximize profits, they should lower their _____ 21. What does a shift of a demand curve prices. represent? a. change in demand b. The price of a hot dog makes up a significant portion of b. change in marginal utility people’s income which is the reason for such an elastic c. change in elasticity demand d. change in quantity demanded c. In controlled spaces like sporting events, there is a lack Use graph below for Q’s 22-24 of available substitutes and a large volume of people will buy hot dogs at any price

d. Golden State fans are incapable of thinking economically unlike Clipper fans who excel in the field of economics and smuggle in their own snacks

_____ 22. On curve D1, when the price is $60, what is the quantity demanded? a. 200 b. 300 c. 400 d. 500

_____ 23. On curve D2, at what price is the quantity demanded 300? a. $60 b. $90 c. $120 d. $150

_____ 24. . What conclusion can you draw from this demand curve?