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Economics 101 Practice Test: The Principles of Economics
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The principles of economics govern how people satisfy their unlimited wants with their limited resources.  Some basic principles of economics include: Scarcity Resources are limited, and the allocation of resources is based on supply and demand. Supply and demand Consumers consider marginal costs, benefits, and incentives when making purchasing decisions. People face trade-offs Most decisions, especially economic ones, involve trading off one thing for another. Markets are usually a good way to organize economic activity In a market economy, decisions are made collectively by... Show more
Economics 101 Practice Test: The Principles of Economics
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25 Questions

1. An example of a firm with market power would be a
2. iEconomics is the study of
3. A marginal change is a
4. A good is considered to be scarce in a society when
5. When government policies are being designed,
6. Market power refers to the
7. The income of a typical worker in a country is most closely linked to which of the following?
8. In a market economy, economic activity is guided by
9. Inflation is defined as
10. An externality is the impact of
11. According to the Phillips curve
12. Inflation causes
13. Almost all variation in living standards is attributable to differences in countries’
14. When economists refer to people making decisions “at the margin” they mean that people
15. Suppose that the average income of a Brazilian is higher than the average income of a Canadian. You might conclude that
16. If the government wanted to enact a policy to increase living standards in the country, it should
17. If Canada is better than the United States at producing hockey sticks, but the United States is better than Canada at producing roller blades, the United States should
18. In Adam Smith’s book The Wealth of Nations, the “invisible hand” refers to
19. In most cases, the cause of high or persistent inflation is
20. Economists use the phrase “There is no such thing as a free lunch,” to illustrate
21. A rational decision maker takes an action only if the
22. Economics deals primarily with the concept of
23. When the government implements such programs as welfare assistance and progressive income tax rates, which of the following is likely to occur?
24. Market failure can be caused by
25. Economics is defined as the study of

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