Ap Eco Test 3&4 - * 4&3 TAKE-HOME 4&3 *...

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*** TAKE-HOME *** 1. Broadly defined, competition involves: A) private property and freedom of expression. B) independently acting buyers and sellers and freedom to enter or leave markets. C) increasing opportunity costs and diminishing marginal utility. D) capital goods and division of labor. 2. To increase the amount of capital goods in a full employment-full production economy, society must: A) decrease consumption. B) increase consumption. C) inflate the general price level. D) deflate the general price level. 3. A firm's economic profit is: A) usually lower than its normal profit. B) profit over and above that which it needs to compensate for the time and other resources the owner supplies to the business. C) a cost of production. D) a signal to the firm that it is producing too much output. 4. Specialization in production is important primarily because it: A) results in greater total output. B) allows society to avoid the coincidence-of-wants problem. C) allows society to trade by barter. D) allows society to have fewer capital goods. 5. Suppose industry A is realizing substantial economic profit. Which of the following best describes the adjustment process that would bring about a new equilibrium? A) Firms will leave the industry, output will fall, and product price will rise. B) Firms will enter the industry, output will rise, and product price will rise. C) Firms will leave the industry, output will rise, and product price will fall. D) Firms will enter the industry, output will rise, and product price will fall. Tuesday, September 15, 2009 Page 1
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6. Which of the following best reflects the idea of derived demand? A) Product demand is determined by the demand for resources. B) The demand for automobiles will decline if the price of gasoline goes up. C) Economic resources are demanded because there is a demand for the goods they produce. D) The dollar votes of consumers determine the composition of output. 7. The market system's answer to the fundamental question "How will the goods and services be produced?" is essentially: A) "With as much machinery as possible." B) "Using the latest technology." C) "By exploiting labor." D) "At least-cost production." 8. The market system's answer to the fundamental question "How will the system
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This note was uploaded on 11/08/2009 for the course ECO 496928 taught by Professor Aguirre,clelia during the Fall '09 term at Miami Dade College, Miami.

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Ap Eco Test 3&4 - * 4&3 TAKE-HOME 4&3 *...

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