Economy Quiz

1. Fred wants to hire someone for $20/hour to fix his house. George wants to fix houses for $16/hour. Which of the following income taxes would prevent this from happening?

·  A. $5

·  B. $3

·  C. $1

·  D. Both A and B (my answer)

·  E. None of the above

Answer Key:A

3. You are sick and tired of your old wardrobe. You decide to donate it to a charity of your choice. Your action

·  A. Creates wealth by moving the clothes from lower value use to higher value use

·  B. Destroys wealth since you lose your clothes (my answer)

·  C. Creates wealth by making you feel richer

·  D. All of the above

Answer Key:A

6. If the government imposes a price floor at $9 (i.e., price must be $9 or higher) in the above market, how many goods will be traded?

·  A. Five

·  B. Four

·  C. Three (my answer) (I think there’s not enough information for this question)

·  D. Two

Answer Key:D

8. When demand for a product falls, which of the following events would you NOT necessarily expect to occur?

·  A. A decrease in the quantity of the product supplied

·  B. A decrease in its price

·  C. A decrease in the supply of the product

·  D. A leftward shift of the demand curve (my answer)

Answer Key:C