Hcs/215 Principles Of Economics Quiz

ANSWER KEY: MIDTERM #1 BUSN / SOCS 215 Principles of Economics (Macro)
NUMERIC VALUES MAY BE CHANGED. ORDERING OF ANSWERS MAY CHANGE.

NAME: _______________________________________________________

1. The overriding reason why households and societies face many decisions is that
|a. |resources are scarce. |
|b. |goods and services are not scarce. |
|c. |incomes fluctuate with business cycles. |
|d. |people, by nature, tend to disagree.
When the "invisible hand" guides economic activity, prices of products reflect
|a. |only the values that society places on those products. |
|b. |only the costs to society of producing those products. |
|c. |both the values that society places on those products and the costs to society of producing those products. |
|d. |none of the above; when the "invisible hand" guides economic activity, prices of products are set by the government in a|
| |manner that is thought to be "fair." |

8. The term market failure refers to
|a. |a situation in which the market on its own fails to allocate resources efficiently. |
|b. |an unsuccessful advertising campaign which reduces demand for a product. |
|c. |a situation in which competition among firms becomes ruthless. |
|d. |a firm which is forced out of business because of losses.