1
An increase in consumer incomewill affect the supplyof any given
product.
True
False
2
The production
possibilities frontierassumes that the level of
technologyvaries when applying the
model.
True False
3
Government actions,
such as price
floors and ceilings, can actually reduce employment and raise market inefficiency.
True
False
4
The smaller percentage of one’s net budgetone has
to allocate money to a particular product, the
more price inelastic will be the demand for that
product.
True
False
5
The law of demand states that there is a direct relationship between supply and
demand.
True
False
6
Equilibrium is a state of balance between supply and demand.
True False
7
Joint output of individuals or nationswill be maximized when goods are exchanged between
parties in accordance with the law of “comparative
advantage”.
True
False
8
A supply curve is negatively sloped, while a demand curve is positively sloped. If given a graph of them both,
that will be evidenced by computing each curve’s X axis divided by its Y axiswhen devising a 90-degree angle.
True
False
9
Households play a dual roleof
providing the factors of production while purchasing the goods and services of
firms.
True
False
10
Excess demandin the market will cause the price
of a product to decline.
True
False
11
“As the price of gasoline rises, consumer demand decreases. In addition, the quantity demanded of compact cars increased, causing their price to rise.”
This statement contains TWO ERRORS:
demand and quantity demanded are confused twice.
True
False
12
A point inside the production
possibilities frontier represents an economy that is utilizing
resources efficiently.
True
False
13
“The big corporations in
this country, like ExxonMobil and GM, have deep pockets and need to be hiring
more people.” This is a positive statementabout economic policy.
True
False
14
The law of supply states that there is a negative relationship between price and quantity
demanded.
True
False
15
A change in quantity demandedis a movement along the same demand
curve.
True
False
16
In the production possibilities frontier, a
nation’s boundary will shift inwardif
they export more than they import, likely leading to inflationary pressuresin the economy.
True False
17
The “Law of diminishing
returns” states that as any activity is extended, it eventually
becomes increasingly easier to pursue the activity further.
True
False
18
Demand is measured on the vertical axisand supply on the horizontal axis.
True
False
19
A substitute goodis a determinant of supply.
True False
20
As globalization
and world trade proliferates, individual markets within countries’
economies become more competitive.
True
False
21
In the circular flow model, firms own
economic resources, and households buy the manufactured products and services.
True
False
22
Opportunity cost is the lowest valued benefit that must be
sacrificed as the result of choosing an alternative.
True False
23
Antiqueswould
tend to have highly price inelastic
supply curves.
True
False
24
For economies that rely
on decentralized
decision making, the most important decisions are made by the
government.
True
False
25
If the spot oil price in petroleum markets is rising, then we can
expect the supply curves of products
using petroleum as an input to shift rightward.
True False
