Module 1 Practice Exam Answer Key V14
1. D: Opportunity Cost = Opportunity Lost. She chose the books so she gave up the movies.
2. D: Scarcity – Time is a scare resource, you cannot be in more than one place at the same time.
3. D: Quantity demanded is a shift along the same graph, from one point to a new point. A change
in demand would mean the entire line moves.
4. A: Demand goes Down to the group (and sUPply goes UP to the sky)
5. C: Equilibrium is where demand and supply intersect. It is the perfect price and quantity so that
there is not a surplus or a shortage. Buyers and sellers are both happiest at this price.
6. A. Demand drops, so the entire demand curve would shift to the left. As demand lessens, the
price will also drop.
7. C: As the price of gas increases, supply would decrease (left is less and right is more). Thus the
supply curve would shift to the left. Once supply moves to the left, equilibrium price would
decrease.
8. B: It illustrates a medium of exchange because she hands 11.99 to the cashier and in return gets
a CD. It shows the measure of value because the hardcover is worth $12 while the softcover is
worth $6.
9. C – The basic economic questions are: What to produce, How to produce, & For whom to
produce?
10. D – This answer demonstrates all three economics questions (option A does not show “how to
produce”).
11. A – “Opportunity cost = Opportunity lost”, the best alternative, what you gave up.
12. A – Scarcity is limited resources, or rarity. It is often time or money.
13. B – You could have spent the same $20 on cookies, since each cookie costs $2, you must divide
$20 by $2 to determine how many cookies were given up by buying 1 shirt.
14. C – Equilibrium is the point where supply and demand curves meet. This is how much suppliers
should charge for their product. If suppliers charge too little, it will create a shortage. Charging
too much will create a surplus.
15. C - On a supply and demand graph, the line that indicates quantity is the x-axis. The y-axis
indicates price.
16. B - Equilibrium is the point where supply and demand curves meet. This is how much suppliers
should charge for their product. If suppliers charge too little, it will create a shortage. Charging
too much will create a surplus.
17. A – For shifts in supply and demand, “Left is Less and Right is more”. Review ROTTEN and TRIBE
for reasons for supply or demand curve shifts.
18. A - Quantity supplied is the quantity suppliers will produce at a specific price - a specific point on
the curve. A change in price will not cause the entire curve to shift.
19. B - Quantity demanded is the quantity people will purchase at a specific price - a specific point
along the curve. A change in price alone will not cause the entire curve to shift.
20. C - Supply curves point from left to right up on the page. Shifts to the right indicate increases.
Shifts to the left indicate decreases.
21. B – Price alone will NOT cause the entire curve to shift. Use the values on the y-axis to
determine a reduction in price and the new plotted point on the original curve.
22. C - Measure of Value - Money is used to describe the worth of an item.
23. D – The gold standard was abandoned in the Great Depression. Now money is backed by public
and government acceptance.
24. D: Remember opportunity cost is opportunity lost. In this case, you made the decision to study
for your exam rather than go to the movies.
25. D: Companies will analyze which age group they are targeting for a particular product then
market that item to that specific age group. This will help them decide whom to produce the
item for.
26. C: The point where supply and demand meet is also known as the equilibrium price.
27. C: This occurs because the supplier is making an economic decision based on a prediction for
future demand of the product and also sees this as a good time to earn more profit.
28. A: because after analyzing the scenario you would see that the other two economic questions
are answered. (Which word(s) answers the economic question: How to produce? = make pizzas
from scratch. Which word(s) answers the economic question: What to produce? = Pizzas. When
to produce? Not an economic question)
29. A: because as demand for a product increases the amount paid for the product will also
increase.
30. B: Because to slide up and down on the line you need to have a change in price. Lifting the price
celling allowed prices to rise and supply to increase. The rest of the options would cause a
change in the overall supply and make the curve shift.
31. C: In this scenario you need to think about which way the curve moves to get an increasing
equilibrium price and a decreasing quantity. To do that the supply curve would have to move
left and make a new line.
32. D: In this scenario Jen’s 20 dollars was accepted by the vending machine, it was also divisible by
Shea breaking it down into smaller amounts and it was portable by her carrying it to the
machine.
33. D (opportunity cost is your next valued alternative – you can invest your money or go on a trip
with your friends. If you decide to invest your money than your opportunity cost would be a trip
with your friends)
34. A (Taste and preferences target your likes and your dislikes)
35. B (producer expectations – producers expect people to purchase cookies. The supply will
increase to prepare for this)
36. A: When Aaron heads to the store with his LAST 20 dollars this demonstrates that money is
scarce. The cashier inspects his bill and determines it is real, thus accepting it and showing
acceptability. Getting his change shows that money is divisible and can be broken down into
smaller denominations.
37. C: Louise’s scarce resource here is time, not money. So her enjoyment from the Imagine
Dragons concert is what she will give up in order to spend time with her dad on his birthday.
Opportunity cost = opportunity lost.
38. A: Lines 3 and 4 are supply lines so your scenario relates to supply. Moving from line 4 to line 3
indicates an increase in supply (remember “right is more” and “left is less”). A factory worker
strike would cause a decrease so b) is incorrect. C) is incorrect because price is not an indicator
for an entire line to shift. D) would also not cause an increase in supply for Nikes, but rather a
decrease.
39. C: Scarcity is a limited resource that creates the need to make a choice. In this case, Time would
be the most likely resource that would create the dilemma. Mark is unable to be at both places
at the same time.
40. D: Opportunity Cost is the opportunity lost in the making of a choice. In this case, by choosing to
go to the football game, Mark is giving up the opportunity to attend the movie.
41. A: With Valentine’s Day approaching the tastes and preferences of the consumer has changed.
By adding a new line of jewelry specifically for this change, Kalli has increased the Demand of
her line, making the demand graph the best to display this scenario.