Practice Quiz

CLEP Economics Exam Prep - Question List

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31. Which of the following is the most likely economic explanation for why a local restaurant that is busy and has many loyal customers could go out of business?
  1. The restaurant is spending too little on advertising.
  2. The restaurant is paying too little for rent and food.
  3. The restaurant has more customers than it needs.
  4. The restaurant's costs are higher than its revenues.
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32. Auto dealers begin to offer new cars for sale with no down payment required and an interest rate of 0 percent. Which of the following is most likely to occur?
  1. Sales of new cars will decrease.
  2. More consumers will buy new cars.
  3. More people will use public transportation.
  4. Prices of used cars will increase.
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33. A profit-maximizing company that manufactures sports clothing wants to spend $25 million to have a professional athlete appear in commercials for its clothing. Which of the following is the best economic reason for the company to spend the money?
  1. The company sells $25 million worth of clothing per year.
  2. The company could cover the cost of the athlete's contract with profits from previous years.
  3. The additional revenue generated by the commercials would be greater than the additional costs of producing the clothing.
  4. The additional revenue generated by the commercials would be greater than $25 million plus the costs of producing the additional clothing.
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34. Because Country A has no domestic sources of wood, it imports all its wood from wood-producing countries. If the price of wood in wood-producing countries rises substantially, which of the following is most likely to occur?
  1. Country A will import more wood to meet rising demand.
  2. Country A will impose a tariff on wood imports.
  3. Housing prices in Country A will increase as wood imports become more expensive.
  4. Profits in other wood-producing countries will increase because of increased exports to Country A.
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35. Other than wages, what are two issues commonly addressed by collective bargaining between labor unions and employers?
  1. Amount of stock to issue and selection of union leaders
  2. Corporate image and company location
  3. Fringe benefits and work rules
  4. Selection of corporate leaders and advertising
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