ECO561 Economics Week 1 Knowledge Check
SolutionGuruECO561 Economics Week 1 Knowledge Check
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1.
Revenue increases when
- A.
producer surplus increases
- B.
producer surplus decreases
- C.
consumer surplus increases
- D.
consumer surplus decreases
2. An increase in the price of an inelastic good
- A.
decreases revenues
- B.
decreases the percentage change in quantity less than the percentage change in price
- C.
increases revenues
- D.
increases the percentage change in quantity more than the percentage change in price
3. Price elasticity of Demand increases when
- A.
the number of complementary goods decreases
- B.
the number of substitute goods decreases
- C.
people become more price sensitive over time
- D.
people become less price sensitive over time
4.
The purpose of a market in a market system is to
- A.
allow government to control what is sold
- B.
set constraints between buyers and sellers
- C.
bring buyers and sellers into contact
- D.
allow an organization to set prices in relation to their products
5.
By specializing in the production of one good, a company is able to benefit from economies of scale which increases its revenue. Which of the following is an attribute of specialization?
- A.
Reducing costs by creating a surplus
- B.
Saving time by allowing a worker to focus on one task
- C.
Encouraging workers to learn new skills
- D.
Encouraging workers to learn a number of different skills
6 . The market system promotes progress by
- A.
creating incentive to continue to do things in the same way
- B.
restricting the amount of capital directed to specific goods
- C.
slowly adjusting to changes in the prices of resources
- D.
providing incentive for technological advances
7.
Productive efficiency is achieved when
- A.
the most valued combination of resources is used
- B.
the best technology is used
- C.
when production occurs at a fair cost per unit
- D.
fewer resources are left for production of other goods
8.
The market is said to be in equilibrium when
- A.
there is potential for a shortage but not a surplus
- B.
there is potential for a surplus but not a shortage
- C.
neither a shortage nor a surplus exists
- D.
the quantity sold equals the quantity purchased
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9.
The market will move to a higher equilibrium price if
- A.
the decrease in supply is equal to the decrease in demand
- B.
the increase in supply is greater than the increase in demand
- C.
the decrease in demand is greater than the decrease in supply
- D.
the increase in demand is greater than the increase in supply
10.
The intersection of supply and demand will be at a lower equilibrium price but a higher equilibrium quantity if
- A.
supply is constant and demand increases
- B.
supply is constant and demand decreases
- C.
demand is constant and supply decreases
- D.
demand is constant and supply increases
11.
When a price ceiling occurs
- A.
the market price will be lower than the equilibrium price
- B.
the market price will be higher than the equilibrium price
- C.
the supply will exceed the demand
- D.
buyers will not be willing to pay more than the ceiling price
12.
Because the goals of firms, entrepreneurs, and workers have different incentives, which of the following principles applies?
- A.
Self-interest
- B.
Invisible hand
- C.
Moral hazard
- D.
Free enterprise
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