MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Other things being equal, a higher price induces 1) _______ A) buyers to reduce the amount they want to buy and sellers to increase the amount they are willing to sell. B) buyers to reduce the amount they want to buy and sellers to reduce the amount they are willing to sell. C) buyers to increase the amount they want to buy and sellers to reduce the amount they are willing to sell. D) buyers to increase the amount they want to buy and sellers to increase the amount they are willing to sell.

2) According to the law of demand, a decrease in the price of a good causes 2) _______ A) an upward movement along the demand curve for that good. B) a downward movement along the demand curve for that good. C) a leftward shift of the demand curve for that good. D) a rightward shift of the demand curve for that good.

3) Prices play a role in a market 3) _______ A) because they eliminate scarcity. B) because they help eliminate poverty. C) because they distribute scarce goods to those consumers who value them most highly. D) because when prices are in equilibrium, product shortages or surpluses can occur.

4) A period in which the level of business is consistently less than its long-term trend is known as 4) _______ A) recession. B) business cycle. C) depression. D) growth trend.

5) The Consumer Price Index measures 5) _______ A) the average of the prices of all goods produced in a country and goods imported from other countries. B) hourly wage rates of manufacturing workers. C) the level of prices with respect to goods and services purchased by a typical consumer in urban areas. D) the average of raw material prices paid by producing firms.

6) Which of the following spending components makes up the largest percentage of Gross Domestic Product (GDP)? 6) _______

A) gross private domestic investment expenditures B) expenditures on net exports of goods and services C) government expenditures D) consumption expenditures

7) Mr. Ramirez lost his job at a steel mill due to competition from cheaper imported steel. He would be classified as 7) _______

A) structurally unemployed. B) frictionally unemployed. C) not in the labor force. D) cyclically unemployed.

8) Refer to the above table. The equilibrium price of tablets is 8) _______ A) $500. B) $550. C) $650. D) $700.

9) Unemployment is measured as 9) _______ A) all adults in the civilian labor force, regardless of whether or not they have been engaged in actively seeking employment, who do not have the job they want. B) all adults in the civilian labor force who are not working. C) all teens and adults in the civilian labor force who are not working. D) all adults in the civilian labor force who are willing and able to work and who are actively looking for work, but have not found a job.

10) If the price of oil rises, producers of oil will 10) ______ A) increase the quantity of oil supplied. B) cut the price. C) supply less oil. D) leave the amount of oil supplied unchanged.

11) In a market system, which component conveys information about what is relatively scarce and what is relatively abundant? 11) ______

A) the number of consumers B) market price C) the number of producers D) the amount of resources used in producing the goods and services

12) In a market system, how are the price signals established? 12) ______ A) Federal legislation establishes maximum prices for most goods, and state governments regulate the prices of any remaining items. B) Industry associations establish an acceptable price range for each commodity sold within the industry, and member firms are obligated to abide by association guidelines. C) Consumer advocacy groups establish fair prices for items, and most firms follow these pricing guidelines because they don't want to anger their consumers. D) The forces underlying supply and demand interact to determine a market clearing price.

13) The price system has 13) ______ A) prices fixed by the seller. B) voluntary exchange. C) prices fixed by the producer. D) prices fixed by the government. 14) An increase in demand and an increase in supply will lead to 14) ______ A) unambiguous increases in both price and quantity. B) unambiguous decreases in both price and quantity. C) an unambiguous increase in quantity, but the effect on price is indeterminate. D) an unambiguous increase in price, but the effect on quantity is indeterminate.

15) A surplus occurs whenever 15) ______ A) price is below the equilibrium price. B) price is above the equilibrium price. C) the supply curve is downward sloping. D) price is equal to the equilibrium price.

16) Suppose that producers of bottled water expect that the price of bottled water is going to drop next week. This would cause 16) ______

A) the selling price of bottled water to rise today. B) a decrease in the supply of bottled water today. C) an increase in the supply of bottled water today. D) an increase in the demand for bottled water today.

17) Specialization occurs because 17) ______ A) society trades current consumption for future consumption. B) society produces at the production possibilities curve. C) the production possibilities curve tends to be linear. D) people have different skills.

18) Opportunity cost is best defined as 18) ______ A) the next highest valued alternative when a choice is made. B) the cost of producing the purchased goods. C) the sum of the dollar values of all alternatives given up when choices are made. D) the dollar price of the purchased item.

19) In economic terminology, the accumulated training and education that workers receive to increase their productivity is referred to as 19) ______

A) entrepreneurship. B) physical capital. C) human capital. D) labor.

20) Refer to the above table. At a price of $450, there is an 20) ______ A) excess quantity supplied of 4,000 tablets. B) equilibrium. C) excess quantity demanded of 9,000 tablets. D) excess quantity demanded of 6,000 tablets.

21) Suppose the equilibrium quantity of ethanol has decreased. Which of the following could have caused this change? 21) ______

A) an increase in quantity demanded B) an increase in quantity supplied C) an increase in supply D) a decrease in demand

22) Suppose we observe that the demand for eggs increases when people buy more cheese. We can conclude that eggs and cheese are 22) ______

A) inferior goods. B) normal goods. C) complements. D) substitutes.

23) Comparative advantage is 23) ______ A) when a person can produce all goods more quickly than other people. B) when the production possibilities curve shifts outward to the right. C) only for individuals and not countries. D) when a person can produce a good at a lower opportunity cost compared to another person.

24) A wildfire destroyed a large amount of orange crops in California, leading to 24) ______ A) a decrease in quantity demanded for oranges. B) a decrease in demand for oranges. C) a decrease in quantity supplied of oranges. D) a decrease in supply of oranges.

25) Scarcity exists because 25) ______ A) people are too greedy and refuse to share what they have with others. B) not enough new technology is being used to eliminate scarcity. C) human wants exceed what can be produced with the limited resources available. D) the majority of people in the world are poor. OPEN RESPONSE. Point total indicated at the end of each question. In a short statement, describe the relationship between the concepts of scarcity, opportunity cost and trade-offs. 5 points. Explain why the labor force and unemployment rate do not reflect the participation of ALL adults over age 16. 5 points. Read the attached excerpt from the Economist titled Rod Stewards. Using the 4-step process we have used in class, read the article and interpret the forces affecting supply and demand in the uranium market. Draw the market before and after the change in demand and then provide an explanation for why you made the changes to the market you showed. 15 points. Rod stewards

The Economist LondonVol.448,Iss.9364, (Sep 23, 2023): 69. When Russia invaded Ukraine, panic gripped Europe's nuclear expertsthe civilian variety, that is. Ukraine, where 15 reactors relied on Russia for their uranium, rushed to sign an unusually long 12-year deal with Canada. European utilities, also reliant on Russia, drew the maximum they could under other contracts. Most exposed were operators in Finland and eastern Europe that owned Russian-made reactors, which only Russian firms knew how to feed. Finding an American rival that could bundle uranium rods into the hexagonal blocks such plants demand took a year. ... The scramble is just one illustration of the fallout of the war on a once-sedate market already squeezed by rising demand, supply shocks and speculation. In the week to September 18th uranium's spot price hit $65 a pound, its highest since 2011, reports uxc, a data firm. ... Most supply comes directly from mines. Canada and Kazakhstan, two reliable exporters, account for 60% of such "primary" supply. A quarter of total global supply arrives from "secondary" sources. Exhausted fuel blocks, replaced every three-to-four years, are re-enriched and re-used. Fuel is also made by diluting weapons-grade uranium, which contains more than 90% fissile elements, to concentrations of just 3-4%. In the two decades following the cold war the dilution of just 30 tonnes a year displaced 10,000 tonnes of annual mine output. More supply is regularly released from stockpiles. America, China, France and Japan hold a combined stash worth years of global use, which can be drawn from when prices are high. This tranquil trade is now being rocked by two forces. One is resurgent demand. For years after the Fukushima disaster in 2011 the closure of plants in Japan, Germany and elsewhere pushed the market into surplus. But the search for steady sources of low-carbon power, and Russia's war in Ukraine, have led governments back to nuclear energy, which emits about the same as wind power and can operate even if pipelines are shut. Some 60 new reactors are under construction, which should add an additional 15% to the world's nuclear-power-generation capacity over the next decade, reckons Liberum, a bank. Small "modular" reactorscheap and easy to buildcould turbocharge demand for fuel. The World Nuclear Association, an industry body, forecasts that they could make up half of France's nuclear capacity by 2040. ... Meanwhile, supply is looking precariousthe second reason why prices are soaring. Early panic aside, Russian ores can still be obtained. But a coup in Niger in July has put 4% of mined supply in jeopardy. Last week Orano, France's state-owned giant, said it had halted its ore processing there owing to a lack of critical chemicals. Logistical headaches are causing Kazatomprom, the leading Kazakh supplier, to ship less uranium than expected (it typically passes through Russia). Cameco, Canada's champion, recently cut its production forecast by 9% after hiccups at two mines.