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FBLA Economics
| Question | Answer |
|---|---|
| Fundamentally, economics deals with | Scarcity |
| Approximately what percentage of the world's economies experience scarcity? | 100% |
| In a competitive market, the quantity of a product produced and the price of the product are determined by | All buyers and all sellers |
| Which of the following is not a reason perfect competition is a useful simplification, despite the diversity of market types we find in the world? | There are many buyers and many sellers in all types of markets. |
| In general, elasticity is a measure of | how much buyers and sellers respond to changes in market conditions. |
| Which of the following statements about the consumers’ responses to rising gasoline prices is correct? | Consumers decrease their quantity demanded more in the long run than in the short run. |
| Welfare economics is the study of | how the allocation of resources affects economic well-being. |
| The particular price that results in quantity supplied being equal to quantity demanded is the best price because it | maximizes the combined welfare of buyers and sellers. |
| Who once said that taxes are the price we pay for a civilized society? | Oliver Wendell Holmes, Jr. |
| When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy, | producer surplus increases and total surplus decreases in the market for that good. |
| When the nation of Brownland first permitted trade with other nations, domestic producers of wheat experienced an increase in producer surplus of $4 million and total surplus in Brownland’s wheat market increased by $1 million. We can conclude that | Brownland became an exporter of wheat. |
| When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy, the result was that the country began to import automobiles. The change in policy improved the well-being of that nation | the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation. |
| Some environmentalists argue that we should protect the environment as much as possible, regardless of cost. Which of the following is not a likely outcome of pursuing such a course of action? | the elimination of all pollution |
| Which of the following statements is correct? | All of the above are correct. |
| A command-and-control policy is another term for a | government regulation. |
| A city street is | a common resource when it is congested, but it is a public good when it is not congested. |
| A local park filled with picnickers is | not excludable and rival in consumption. |
| If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then | a one-unit increase in output will increase the firm's profit. |
| Shrimp Galore, a shrimp harvesting business in the Pacific Northwest, has a 30-year loan on its shrimp harvesting boat. The annual loan payment is $25,000 and the boat has a market (salvage) value that exceeds its outstanding loan balance. | produce nothing and experience a loss of $75,000. |
| When price is below average variable cost, a firm in a competitive market will | shut down and incur fixed costs. |
| Gross domestic product measures | income and expenditures. |
| In a simple circular-flow diagram, total income and total expenditure are | always equal because every transaction has a buyer and a seller. |
| According to the circular-flow diagram GDP | can be computed as the total income paid by firms or as expenditures on final goods and services. |
| Consider three imaginary countries. In Aziria, saving amounts to $3,000 and consumption amounts to $7,000; in Graniva, saving amounts to $2,000 and consumption amounts to $8,000; and in Tanistan, saving amounts to $4,500 and consumption amount | higher in Aziria than in Graniva, and it is the same in Aziria and Tanistan. |
| In some countries it is time consuming and costly to establish ownership of property. Reforms to reduce these costs would likely | raise real GDP and productivity. |
| The theory of efficiency wages explains why | it may be in the best interest of firms to offer wages that are above the equilibrium level. |
| Emeril is the owner of a restaurant. He decides to raise the wages of his workers even though he faces an excess supply of labor. His decision | might increase profits if it attracts a better pool of workers to apply for jobs at his restaurant. |
| A relatively mild period of falling incomes and rising unemployment is called a(n) | recession |
| On average, over the last 50 years, real GDP has grown by about | 3 percent per year. |
| Shifts in the aggregate-demand curve can cause fluctuations in | the level of output and in the level of prices. |
| The biggest difference between communism and socialism concerns | Their political systems |
| The following describes a proportional tax: | The tax rate stays the same no matter what income level |
| Which of the following is an important advantage of the corporate form of business organization? | Corporations are able to gather large amounts of money |
| Import permits which nations use to regulate the level of imports by individual businesses are called | Quotas |
| Which of the following best demonstrates opportunity cost? | Your sister chooses to read a book instead of cleaning her room |
| If a good or service is scarce, it becomes | Valuable in terms of money |
| An incompetent employee and customers who shoplift are both examples of________ risks. | Human |
| Adam Smith’s theory that people’s self-interest leads them to do what is best for themselves and for the economic society as a whole is known as | Invisible Hand |
| Interlocking directorates occur when | The majority of members of the boards of directors of competing corporations are the same |
| Pure competition | Means there are many buyers and sellers in the market |
| The price of soccer balls is likely to be increased by | A decrease in the supply of soccer balls |
| The demand curve for a firm in a competitive environment is | Perfectly elastic |
| The marginal tax rate is the rate on the | Last dollar of income |
| The amount of work you do in a period of time and the frequency with which you do it is | Production |
| The effective working of competitive markets require | Full information of consumers and producers |
| Which strategy is likely to reduce unemployment? | Lower taxes |
| The basis of the U.S. economy is | the market |
| Prices to be charged for natural gas, electricity, and local telephone service in a state are set by | Antitrust law |
| The effects of minimum wage laws are | Both positive and negative |
| A firm in capitalism will hire a worker if he or she | Increases their profit |
| A lower price most likely indicates | less scarcity. |
| The primary source of tax revenues for most states is | corporate income taxes. |
| In competitive markets, the long-run economic profit is | zero. |
| Pollution is an example of | externality cost. |
| Suppose crude oil prices rise, what is the likely effect on gasoline a product made from crude oil? | Supply of gasoline decreases |
| When supply increases, the equilibrium quantity will | increase |
| The minimum wage is an example of | a price floor. |
| A share in the ownership of a corporation is called a | stock |
| A company that produces tires and greeting cards is an example of | a conglomerate. |
| Investment spending is unstable because | firms can postpone buying capital because it is durable. |
| conglomerate | a corporation made up of several different, independent businesses. |
| Externality | a cost or benefit that is caused by one party but financially incurred or received by another. |
| equilibrium | a condition or state in which economic forces are balanced |
| Which term is used to describe the study of how people make decisions in a world where resources are limited? | economics |
| According to economic theory, when does scarcity occur? | when there are not enough resources to produce all of the things a society would like to have |
| When deciding between renovating a water treatment plant or building a new community pool, what is the government most likely to consider? | wants vs. needs |
| What term do economists use to describe the alternative you face if you decide to do one thing instead of another? | trade-off |
| Which of the following best describes an opportunity cost? | an individual pays for a guitar lesson instead of going to the movies |
| Of the following scenarios, which is an example of immediate gratification? | an individual spends $100 on a pair of shoes instead of putting that money into his saving account |
| Which of the following is represented by the graph? (down) | cost-benefit analysis |
| An MP3 player manufacturer pays the same amount to produce each MP3 player no matter how many it produces in total. Which term describes the type of cost for producing MP3 players? | fixed cost |
| A car manufacturer can produce 5 cars for $10,000 each. After 5 cars are produced, the price to produce each additional car decreases to $7,500. Which term describes the type of cost for producing cars? | variable cost |
| Which of the following is the best example of a fixed cost? | a monthly car payment |
| Which of the following terms refers to the extra or additional cost of producing one additional unit of output? | marginal cost |
| Which of the following is a market economy primarily based on? | capitalism and free enterprise |
| Which term would economists use to describe a low initial interest rate on a credit card? | incentive |
| Which of the following best defines informed judgment? | choosing an alternative that has the greatest value from among comparable products |
| Which of the following is an example of a capital good? | a hammer |
| Which of the following best defines Gross Domestic Product (GDP) | the total value of all final goods and services produced in a single year |
| Capitalism thrives on competition. What is the main benefit of competition? | lower prices |
| What are the major characteristics of capitalism | markets, private property, competition, and profits |
| Who wrote the book Wealth of Nations, which provides the basic philosophy for the capitalist system? | Adam Smith |
| Which term describes the money left over after all costs of production have been paid? | profit |
Created by:
haileykms