1. In a restaurant, cash registers,
freezers, and grills are
A economic goods.
B free goods.
C consumer goods.
D capital goods.

2. Scarcity is the result of limited
resources and
A the failure to produce what
consumers want.
B the lack of adequate technological
progress.
C overpopulation in industrial
countries.
D unlimited wants and needs.

3. In order for a product to have value it must have utility
In order for a product to have value it must have utility. Utility is the capacity to
A produce industrial products.
B provide a service in the market.
C receive goods and services.
D be useful and provide satisfaction.

4. The more units of a certain
economic product a person
acquires, the less eager that person
is to buy more of that product.
According to economists, this is
the principle of
A substitution effect.
B income effect.
C variable proportions.
D diminishing marginal utility.

5. Dina likes two skirts, one red and
one blue. She has enough money
for one, so she buys the red skirt.
The blue skirt is the
A capital good.
B limited resource.
C opportunity cost.
D commodity.

6. To maintain or increase
production in the dairy industry,
the government provides
A productivity.
B regulations.
C subsidies.
D rationing.

7. Which of the following would be a
monetary incentive?
A a company car
B a larger office
C an employee lounge
D an assigned parking space

8. Which of the following would be a
non-monetary incentive?
A overtime
B an office with a view
C an increased benefits package
D paid vacation

9. The economist who identified that
self-interest and competition drive
a market economy was
A Thomas Malthus.
B Milton Friedman.
C Alan Greenspan.
D Adam Smith.

10. Private property is an incentive in
a market economy since it
provides the ability to
A avoid paying taxes on annual
earnings.
B enjoy productivity at the worksite.
C keep any earned rewards.
D share the benefits of public
services.

11. Fundamental to capitalism is the
ability of individuals and
businesses to own and control
A natural resources.
B private property.
C public utilities.
D transportation facilities.

12. Which belief suggests that
government should not interfere in
its country’s business or economic
affairs?
A scarcity
B voluntary exchange
C laissez-faire
D quotas

13. Demand for goods will be more elastic if the goods
A are essential.
B have many substitutes.
C have no complements.
D are trendy.

14. A local restaurant determines that
hamburgers have a price elasticity
of If hamburger prices drop
from $2.00 to $1.50, the restaurant
will supply how many
hamburgers?
A 50 percent more hamburgers
B 25 percent less hamburgers
C 25 percent more hamburgers
D 50 percent less hamburgers

15. What happens to the demand for a
luxury good when its price
increases?
A consumer demand will remain the
same
B consumer demand will increase
C consumers will buy more
complementary goods
D consumers will buy more
substitute goods

16. Productivity is increased by
specialization because it
A reduces employees needed.
B reduces the work load of
employees.
C increases workers’ skills.
D increases dependency on foreign
countries.

17. A hurricane hits the coast of
Florida and subsequent weather
conditions destroy half of the
oranges produced in orange
orchards. What happens to the
price and quantity of oranges on
the market?
A The supply of oranges decreases,
and the price of oranges increases.
B The supply of oranges increases,
and the price of oranges
decreases.
C The supply of oranges decreases,
D The supply of oranges increases,

18. Monopolies are
A price takers.
B price setters.
C competitive.
D illegal.

19. What results when competitors
undercut the market price in an
attempt to gain an advantage?
A interdependent pricing
B price competition
C price leadership
D price war

20. In a competitive economy the
adjustment process helps establish
a relatively stable price where
quantity demanded is the same as
quantity supplied. This point in
the market is called
A correction.
B elasticity.
C equilibrium.
D surplus.

21. If Congress limits the number of
foreign automobiles that enter the
United States, prices of foreign
automobiles will
A increase because of technology
costs.
B increase because of decrease in
supply.
C decrease because of new
technology.
D decrease because of increased
domestic supply.

22. The role of an entrepreneur in a
market economy includes all the
following except
A to take on the risk of enterprise
with his or her own resources in
search for profit.
B to bring together the factors of
production to create a desired
product or service.
C to lobby government for stronger
business regulations.
D to explore and developed new, or
unrecognized, markets and
products.

23. When the sale of a product is no longer generating a profit, the
company producing the product is
most likely to
A continue making the product as it
is and hope that consumer values
change.
B improve or alter the product to
meet the needs and interests of
consumers.
C petition the government for
regulations that eliminate
competing products.
D decrease advertising costs to save
money on the low-profit product.