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ECO 561 Week 1 Quiz or Knowledge Check

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ECO 561 Week 1 Quiz or Knowledge Check -

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

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

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

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