1) The price of a popular breakfast cereal increases, ceteris paribus. As a result, demand will _______ and quantity demanded will _______.

a)be constant; increase

b) be constant; decrease

c) increase; be constant

d) decrease; be constant

e) depend on its determinants; increase

2) Which of the following occurrences expands a production possibilities curve outward?

a) Converting resources from producing one good to another

b) Sustained production of consumer goods

c) Improvements in technology

d) Combinations showing a decreasing opportunity cost

e) An economic recession

3) When comparing two countries' production possibilities of a certain good, _____ is the ability to simply produce more of it, while _____ is having a lower opportunity cost to produce it.

a) efficiency; absolute advantage

b) comparative advantage; absolute advantage

c) absolute advantage; comparative advantage

d) efficiency; comparative advantage

e) economic growth; absolute advantage

4) As producers increase their output, generally the factors of production will become less productive and therefore more costly for each additional unit. This explains the

a) law of diminishing marginal utility

b) income effect

c) substitution effect

d) law of supply

e) law of demand

5) What would happen to the equilibrium price and quantity for a normal good if consumer incomes decreased?

a) The equilibrium price would decrease, and the equilibrium quantity would decrease.

b) The equilibrium price would decrease, and the equilibrium quantity would increase.

c) The equilibrium price would increase, and the equilibrium quantity would decrease.

d) The equilibrium price would increase, and the equilibrium quantity would increase.

e) There would be no change in either equilibrium price or quantity.

6) Which of the following is a consumer good?

a) A power drill used by a teenager just for a hobby

b) The property on which a restaurant is located

c) Raw steel purchased by a car manufacturer

d) The labor of an ice cream truck vendor

e) The money used by a small business start up

7) If supply and demand are not moving, but consumers are responding to increasing prices, what situation is being eliminated in the market for that good?

a) A surplus

b) Scarcity

c) A shortage

d) A dysfunctional coordinating mechanism

e) Equilibrium

8) A resource is scarce if

a) there is a limited amount of it

b) the supply exceeds the demand

c) the quantity desired is greater than the quantity available

d) it cannot be supplied by the government

e) it is land or labor, but capital is unlimited

9) When a market is in equilibrium, _____ equals ______.

a) supply; demand

b) price; quantity

c) total input cost; total output price without advertising

d) quantity of shortage; quantity of surplus

e) quantity demanded; quantity supplied

10) If the wage rate for laborers who make a good increases, ceteris paribus, what will happen to the market for that good?

a) The demand curve will shift right.

b) The supply curve will shift right.

c) The demand curve will shift left.

d) The supply curve will shift left.

e) The good's market will not be impacted.

11) Country Alpha takes 4 hours to produce a unit of jet fuel and 2 hours to produce a unit of butter. Country Omega takes 9 hours to produce a unit of jet fuel and 3 hours to produce a unit of butter. Based on this, what range of jet fuel for every 60 units of butter would be mutually beneficial?

a) Between 0.33 and 0.5 units of jet fuel

b) Between 2 and 3 units of jet fuel

c) Between 4 and 9 units of jet fuel

d) Between 20 and 30 units of jet fuel

e) Between 120 and 180 units of jet fuel

12) Consumer tastes shift toward an increased preference for a good at the same time that the government subsidizes production of it. After this, the equilibrium quantity would ____ and the equilibrium price would ________.

a) decrease; increase

b) decrease; decrease

c) increase; decrease

d) increase; be indeterminate

e) decrease; be indeterminate

13) Which of the following events would cause the demand curve to shift left?

a) The price of the good increases.

b) The price of the good decreases.

c) The buyers in the market expect the good's price will soon increase.

d) The good is inferior and the number of buyers in the market increases.

e) The good is inferior and consumer incomes increase.