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Ch. 4-6 Economics
Test Description: Spring 2017
Instructions: Answer all questions to get your test result.
1) If prices rise and income stays the same, what is the effect on demand?
A
Demand stays the same.
B
More is bought of some goods and less of others.
C
More goods are bought.
D
Fewer goods are bought.
2) Why does an economist create a market demand schedule?
A
Why does an economist create a market demand schedule?
B
to have an idea of how a market would change if conditions in an area changed
C
to predict how all people will change their buying habits when prices change
D
to show how various conditions can change an individual’s demand for a good
3) How can expectations about the future change consumer behavior?
A
Immediate demand for a good will rise if the good is expected to be plentiful.
B
Immediate demand for a good will drop if there are no substitutes available.
C
Immediate demand for a good will rise if its price is expected to rise.
D
Immediate demand for a good will drop if the price is expected to stay the same.
4) Which of the following will happen if the price of butter goes up?
A
The demand for margarine increases.
B
The demand curve for butter moves to the right.
C
The demand curve for margarine moves to the left.
D
The demand for butter increases.
5) A music store holds a half-price sale on all CDs. During the sale, people buy more CDs than usual. What does this event show?
A
the law of demand
B
inelasticity of demand
C
the income effect
D
the substitution effect
6) The price of home computers rises. According to the law of supply, what will computer makers do?
A
stop making computers
B
make more computers
C
make fewer computers
D
make the same number of computers
7) Owners of digital cameras have to buy memory cards in order to use the cameras. Cameras and memory cards are
A
elastic
B
complements
C
unrelated.
D
substitutes.
8) Businesses multiply the price they charge for a good by the quantity sold to calculate
A
total revenue.
B
market demand.
C
elastic demand.
D
profit shares.
9) A demand curve is accurate only as long as ceteris paribus is true. What does this Latin phrase mean?
A
Supply can keep up with prices.
B
Demand for goods remains elastic.
C
Goods are used in place of one another.
D
All things other than price stay constant.
10) Which of these must consumers have in order to have demand for a good?
A
desire for the good and money to buy it.
B
ability to predict price changes
C
ability to sell the good to others
D
knowledge of all similar products
11) Which of these statements is an example of the “bandwagon” advertising approach?
A
Be like other cool people and use this hair gel.
B
This hair gel will make you beautiful.
C
Famous movie star says: “I buy only this hair gel.”
D
Other brands of hair gel will damage your hair.
12) If a seller expects the price of a good to rise in the future, the seller will
A
increase production of the good.
B
store these goods until the price goes up.
C
increase the price of the good now.
D
place these goods on the market immediately.
13) What does technology generally do to production?
A
It lowers cost and increases supply.
B
It increases cost and decreases supply.
C
It lowers cost and decreases supply.
D
It has very little effect on production.
14) Which of the following actions by the government constitutes a subsidy?
A
a price floor on wages
B
a requirement to use lead-free fuel
C
an excise tax on cigarettes
D
a payment to farmers for not cultivating land
15) What is the effect of import restrictions on supply?
A
They cause the available supply of goods to drop.
B
They often cause supply to rise steeply and then drop.
C
They cause the available supply of goods to rise.
D
They usually do not have any lasting effect on supply.
16) Which most affects a supplier’s decision to make more or fewer goods?
A
government laws and rules
B
the wish to make the most profit
C
the availability of natural resources
D
people’s need for better goods
17) Farmer Brown has ten dairy cows. The cost of feed goes up, but milk production stays the same. What does Farmer Brown do?
A
She sells less milk.
B
She sells more milk.
C
She lowers milk prices.
D
She raises milk prices.
18) A factory makes pencils. New machines in the factory make it faster and cheaper to make pencils. What will happen next?
A
Costs will go down and supply will go up.
B
At first, supply will rise, but then it will decrease.
C
Supply and costs will both decrease.
D
Costs will drop, but supply will remain the same.
19) Which is a government subsidy?
A
a minimum wage for farm workers
B
an excise tax on soybeans
C
a law on which crops can be grown
D
a minimum price for soybeans
20) What does a low price tell suppliers?
A
Too much of a product is being produced.
B
Demand for a product will go up.
C
Demand for a product will go down.
D
Not enough of a product is being produced.
*select an answer for all questions
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