Unit 3 of 5
Study guide for CLEP CLEP Social Sciences & History — Unit 3: Economics. Practice questions, key concepts, and exam tips.
50
Practice Questions
12
Flashcards
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Key Topics
Try these 5 questions from this unit. Sign up for full access to all 50.
What best describes mercantilism?
Economic system where countries have no international trade
Economic system where countries focus on importing goods
Economic system where countries focus on exporting goods
Economic system where countries have equal trade balances
Economic system where countries print their own currency
Answer: C — Economic system where countries focus on exporting goods is correct because mercantilism is an economic policy where countries prioritize exporting goods to accumulate wealth.
What best describes the concept of comparative advantage?
Countries should only produce goods for domestic consumption
Countries should specialize in producing goods with absolute advantage
Countries benefit from trade by specializing in producing goods at a lower opportunity cost
Trade is a zero-sum game where one country's gain is another country's loss
Tariffs are necessary to protect domestic industries
Answer: C — Countries benefit from trade by specializing in producing goods at a lower opportunity cost is correct because it accurately describes the concept of comparative advantage, while distractor B is incorrect as it refers to absolute advantage.
The concept of opportunity cost is best described as
The cost of producing one more unit of a good
The profit earned from selling a good
The total cost of producing all units of a good
The value of the next best alternative given up
The revenue generated from a business
Answer: D — The value of the next best alternative given up is correct because opportunity cost refers to the value of the next best alternative foregone.
The law of diminishing marginal utility states that as
The price of a good increases, the quantity demanded increases
The price of a good decreases, the quantity demanded decreases
The quantity of a good consumed decreases, the marginal utility increases
The quantity of a good consumed increases, the marginal utility decreases
The quantity of a good consumed remains constant, the marginal utility remains constant
Answer: D — The quantity of a good consumed increases, the marginal utility decreases is correct because the law of diminishing marginal utility states that as the quantity of a good consumed increases, the marginal utility decreases.
Which 18th-century philosopher argued that people are motivated by self-interest?
Jean-Jacques Rousseau
John Locke
Adam Smith
Immanuel Kant
Voltaire
Answer: C — Adam Smith is correct because Adam Smith discussed self-interest in 'The Wealth of Nations'. Rousseau focused on social contracts.
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