MTTC MTTC Economics 2

Question 1

When the government imposes a price ceiling below the equilibrium price, what is the most likely result?

Accepted Answer

A shortage of goods

Answer

A price ceiling set below equilibrium keeps prices artificially low, causing quantity demanded to exceed quantity supplied, resulting in a shortage.

Question 2

Which economic indicator measures the average change over time in prices paid by urban consumers for a basket of goods and services?

Accepted Answer

Consumer Price Index

Answer

The Consumer Price Index (CPI) tracks price changes for a representative basket of goods and services purchased by urban households.

Question 3

A firm is a natural monopoly when:

Accepted Answer

Its average total cost continuously declines as output increases over the relevant range of demand

Answer

A natural monopoly exists when economies of scale are so significant that one firm can supply the entire market at a lower average cost than multiple competing firms.

Question 4

Which of the following best describes the concept of comparative advantage?

Accepted Answer

A country should produce goods in which it has the lowest opportunity cost

Answer

Comparative advantage means specializing in producing goods where your opportunity cost is lowest relative to trading partners, enabling mutually beneficial trade.

Question 5

In a recession, which automatic stabilizer would most immediately increase government spending?

Accepted Answer

Increased unemployment insurance payments

Answer

Unemployment insurance payments automatically rise during recessions as more workers qualify, increasing government spending without new legislation.

MTTC Test Practice Test

MTTC Test Practice Test

MTTC MTTC Economics 2