Chapter 4—Price: The Role of Demand and Supply MULTIPLE CHOICE
1.
2.
3.
4.
5.
6.
For demand to exist, there must be
a. a desire and an ability to buy.
b. a supply of the product in the market.
c. a price that is low enough to permit all consumers to afford the product.
d. All of these...
1. Generally, in economics we study how people
a. react to changes in government policy.
b. make choices when resources are scarce.
c. react to rising prices.
d. get increases in income.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: A-Head: Economics Defined KEY: Bloom's: Comprehension
2. Economics can be classified best as a(n)
a. exact science.
b. physical science.
c. social science.
d. natural science.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Communication
TOP: A-Head: Economics Defined KEY: Bloom's: Knowledge
3. Which of the following areas of study is included in the field of macroeconomics?
a. electricians’ wage rates
b. monopolistic pricing
c. price of automobiles
d. general price level
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Communication
TOP: A-Head: Microeconomics and Macroeconomics KEY: Bloom's: Comprehension
4. An example of a macroeconomic model is one that considers
a. how the price of chicken influences the quantity of chicken bought.
b. why the size of the total national output depends on the size of total spending.
c. how the output of a product is influenced by the cost of production for the product.
d. All of these.
ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: A-Head: Microeconomics and Macroeconomics KEY: Bloom's: Application
5. The interactions of producers and consumers in individual markets are part of the study of
a. macroeconomics.
b. monetary economics.
c. normative economics.
d. microeconomics.
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Analytic
TOP: A-Head: Microeconomics and Macroeconomics KEY: Bloom's: Comprehension
6. The process of allocating the total product among the resources involved is referred to as
a. geographic distribution.
b. functional distribution.
c. marketing distribution.
d. frictional distribution.
, ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic
TOP: B-Head: Economics and Distribution KEY: Bloom's: Analysis
7. A person who organizes and assumes the risks of a business venture is called a(n)
a. capitalist.
b. manager.
c. labor leader.
d. entrepreneur.
ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Communication
TOP: B-Head: Economics and Distribution KEY: Bloom's: Knowledge
8. As economists use the term, capital means
a. such things as machinery and equipment.
b. such things as money and credit.
c. the profits that come from hiring and using labor and natural resources.
d. All of these.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Communication
TOP: B-Head: Economics and Distribution KEY: Bloom's: Knowledge
9. Payment to the owners of natural resources used in the production process is in the form of
a. interest.
b. rent.
c. wages.
d. profits.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Communication
TOP: B-Head: Economics and Distribution KEY: Bloom's: Knowledge
10. For the use of their capital in production, owners receive
a. wages.
b. rent.
c. interest.
d. profit.
ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Communication
TOP: B-Head: Economics and Distribution KEY: Bloom's: Knowledge
11. For the use of the employee’s participation in production, an employee receives
a. wages.
b. rent.
c. interest.
d. profit.
ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Communication
TOP: B-Head: Economics and Distribution KEY: Bloom's: Knowledge
12. If an economist is trying to figure out, in a certain situation, “What would happen if?”, then that
economist is working in the area of
a. normative economics.
b. positive economics.
c. the theory of the firm.
d. welfare economics.
, ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Communication
TOP: B-Head: Economic Theory and Policy KEY: Bloom's: Comprehension
13. Which of the following is the study of “what is” rather than “what ought to be”?
a. normative economics
b. subjective economics
c. positive economics
d. the theory of the origin of humanity
ANS: C PTS: 1 DIF: Moderate NAT: BUSPROG: Communication
TOP: B-Head: Economic Theory and Policy KEY: Bloom's: Comprehension
14. Determining “what ought to be” in the economy is considered
a. positive economics.
b. normative economics.
c. distributive economics.
d. mesoeconomics.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Communication
TOP: B-Head: Economic Theory and Policy KEY: Bloom's: Knowledge
15. An editorial in a newspaper calling for the government to abolish the minimum wage because it takes
advantage of consumers is an example of a(n)
a. positive economic statement.
b. pure economic statement.
c. normative economic statement.
d. abstract economic statement.
ANS: C PTS: 1 DIF: Moderate
NAT: BUSPROG: Reflective Thinking TOP: B-Head: Economic Theory and Policy
KEY: Bloom's: Analysis
16. If you heard someone say that coal miners should be paid more wages to enable them to adequately
support their families, that would be a statement of
a. positive economics.
b. normative economics.
c. radical economics.
d. None of these.
ANS: B PTS: 1 DIF: Moderate
NAT: BUSPROG: Reflective Thinking TOP: B-Head: Economic Theory and Policy
KEY: Bloom's: Analysis
17. Utility as an economic term refers to
a. the amount of electricity generated.
b. the ability of a good to satisfy a want.
c. tangible goods only.
d. services only.
ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Communication
TOP: B-Head: Economics and Production KEY: Bloom's: Knowledge
18. An economic service need not be
a. useful.
b. scarce.
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