question
Scarcity is best defined as
a. unlimited resources
b. a shortage -- when buyers cannot obtain the goods they want
c. a surplus -- when sellers cannot sell the goods they produce
d. insufficient resources to satisfy unlimited wants
e. the private ownership of society's resources
a. unlimited resources
b. a shortage -- when buyers cannot obtain the goods they want
c. a surplus -- when sellers cannot sell the goods they produce
d. insufficient resources to satisfy unlimited wants
e. the private ownership of society's resources
answer
D
question
Economics
a. studies human behavior when scarcity exists and choices must be made
b. provides the only reasonable explanation of how people make decisions
c. can accurately explain all human behavior since it is based on the assumption of rationality
d. is better at showing the way things ought to be than the other social sciences are
e. is the only social science that can explain the existence and behavior of public institutions
a. studies human behavior when scarcity exists and choices must be made
b. provides the only reasonable explanation of how people make decisions
c. can accurately explain all human behavior since it is based on the assumption of rationality
d. is better at showing the way things ought to be than the other social sciences are
e. is the only social science that can explain the existence and behavior of public institutions
answer
A
question
In economics, capital is defined as
a. natural resources, such as water, oil, and iron ore
b. the natural, unskilled abilities of people
c. a man made resource
d. money and other financial assets
e. the willingness of business owners to take risks
a. natural resources, such as water, oil, and iron ore
b. the natural, unskilled abilities of people
c. a man made resource
d. money and other financial assets
e. the willingness of business owners to take risks
answer
C
question
Which of the following is an example of capital?
a. pizza ovens
b. bulldozers
c. a college education
d. carpentry skills
e. all of the above
a. pizza ovens
b. bulldozers
c. a college education
d. carpentry skills
e. all of the above
answer
E
question
The assumption that individuals act rationally implies that
a. people think only of themselves and disregard the well-being of others
b. people undertake all those activities that yield benefits to themselves
c. people only consider the costs of an activity to decide whether it is worthwhile
d. the greater the cost of a charitable deed to a benefactor, the more likely he or she is to perform that deed
e. people implicitly calculate the costs and benefits of an activity to decide if it is worthwhile
a. people think only of themselves and disregard the well-being of others
b. people undertake all those activities that yield benefits to themselves
c. people only consider the costs of an activity to decide whether it is worthwhile
d. the greater the cost of a charitable deed to a benefactor, the more likely he or she is to perform that deed
e. people implicitly calculate the costs and benefits of an activity to decide if it is worthwhile
answer
E
question
Consumers need information to make good choices. Which of the following is correct regarding this information?
a. Advertising is always harmful to consumers.
b. Information is scarce and therefore valuable.
c. Brand names offer no informational content.
d. Acquiring more information is always rational.
e. Marginal analysis does not apply to the acquisition of information.
a. Advertising is always harmful to consumers.
b. Information is scarce and therefore valuable.
c. Brand names offer no informational content.
d. Acquiring more information is always rational.
e. Marginal analysis does not apply to the acquisition of information.
answer
B
question
Rational economic decision makers will make a change only if
a. the change is free of risk
b. there are no costs involved
c. their expectations are correct
d. there is no uncertainty about the results of the change
e. the expected marginal benefit exceeds expected marginal cost
a. the change is free of risk
b. there are no costs involved
c. their expectations are correct
d. there is no uncertainty about the results of the change
e. the expected marginal benefit exceeds expected marginal cost
answer
E
question
When economic choice involves an adjustment to an existing situation, marginal analysis
a. has no practical applications or real-world uses
b. eliminates incorrect decisions and bad choices
c. involves comparing the additional costs and additional benefits of an activity before deciding
d. involves examining only the total costs and total benefits of an activity before deciding
e. none of the above
a. has no practical applications or real-world uses
b. eliminates incorrect decisions and bad choices
c. involves comparing the additional costs and additional benefits of an activity before deciding
d. involves examining only the total costs and total benefits of an activity before deciding
e. none of the above
answer
C
question
The assumption of rational self-interest means that economic decision makers
a. have no concern for the welfare of others
b. consider the welfare of others to be more important than their own happiness
c. know with certainty which choice will have the best result
d. make reasonable decisions based on their expectations of results
e. do not make incorrect decisions or bad choices
a. have no concern for the welfare of others
b. consider the welfare of others to be more important than their own happiness
c. know with certainty which choice will have the best result
d. make reasonable decisions based on their expectations of results
e. do not make incorrect decisions or bad choices
answer
D
question
Your friend notices that U.S. auto production and U.S. population growth have moved together over several decades. He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production. You gently explain to him that he
a. is correct only when the economy is in a recession
b. has committed the fallacy of "post hoc ergo proctor hoc."
c. has ignored secondary effects
d. has committed the fallacy of composition
e. is correct only when the United States enjoys economic growth
a. is correct only when the economy is in a recession
b. has committed the fallacy of "post hoc ergo proctor hoc."
c. has ignored secondary effects
d. has committed the fallacy of composition
e. is correct only when the United States enjoys economic growth
answer
B
question
Someone who commits the fallacy of composition is likely to assume that
a. the simplest model is the best predictor
b. event B, which follows event A, was caused by event A
c. event B, which follows event A, was not necessarily caused by event A
d. what is true for the individual is also true for the group
e. what is true for the individual is not necessarily true for the group
a. the simplest model is the best predictor
b. event B, which follows event A, was caused by event A
c. event B, which follows event A, was not necessarily caused by event A
d. what is true for the individual is also true for the group
e. what is true for the individual is not necessarily true for the group
answer
D
question
According to Adam Smith, what is the "invisible hand?"
a. moral sentiment
b. rationality
c. scarcity
d. self-interest
e. the market
a. moral sentiment
b. rationality
c. scarcity
d. self-interest
e. the market
answer
D
question
Which economic concept does the expression "time is money" reflect?
a. opportunity cost
b. specialization
c. market exchange
d. comparative advantage
e. efficiency
a. opportunity cost
b. specialization
c. market exchange
d. comparative advantage
e. efficiency
answer
A
question
The term opportunity cost suggests that
a. in any exchange situation where one person gains, someone else must lose
b. not all individuals make the most of life's opportunities
c. executives do not always recognize opportunities for profit as quickly as they should
d. the only factor that is important in decision making is cost
e. because goods are scarce, in order to get some good you must give up some other good in return
a. in any exchange situation where one person gains, someone else must lose
b. not all individuals make the most of life's opportunities
c. executives do not always recognize opportunities for profit as quickly as they should
d. the only factor that is important in decision making is cost
e. because goods are scarce, in order to get some good you must give up some other good in return
answer
E
question
The opportunity cost of a particular activity
a. must be the same for everyone
b. is the value of all alternative activities that are forgone
c. has a maximum value equal to the minimum wage
d. varies from person to person
e. can usually be known with certainty
a. must be the same for everyone
b. is the value of all alternative activities that are forgone
c. has a maximum value equal to the minimum wage
d. varies from person to person
e. can usually be known with certainty
answer
D
question
Suppose you have purchased a non-refundable plane ticket and, at the last moment, you cannot take the trip. You can, however, sell the ticket. If you paid $700 for the ticket, the cost of sending the ticket to someone through overnight mail is $20, and you spend $10 on a courier to get the ticket to the post office for overnight delivery, what is the minimum you should accept for the ticket?
a. $700 because that is what the ticket cost.
b. $720 because that is the cost of the ticket and of getting it to the buyer.
c. $730 because that is the total cost of the ticket and getting it to the buyer.
d. More than $730, so that you can make a profit.
e. $30 because the $700 is a sunk cost.
a. $700 because that is what the ticket cost.
b. $720 because that is the cost of the ticket and of getting it to the buyer.
c. $730 because that is the total cost of the ticket and getting it to the buyer.
d. More than $730, so that you can make a profit.
e. $30 because the $700 is a sunk cost.
answer
E
question
The law of comparative advantage says that
a. the individual with the lowest opportunity cost of producing a particular good should produce it
b. comparative advantage exists only when one person has an absolute advantage in the production of two goods
c. whoever has a comparative advantage in producing a good also has an absolute advantage in producing that good
d. whoever has an absolute advantage in producing a good also has a comparative advantage in producing that good
e. gains from trade are possible only when one person has the comparative advantage in producing both goods
a. the individual with the lowest opportunity cost of producing a particular good should produce it
b. comparative advantage exists only when one person has an absolute advantage in the production of two goods
c. whoever has a comparative advantage in producing a good also has an absolute advantage in producing that good
d. whoever has an absolute advantage in producing a good also has a comparative advantage in producing that good
e. gains from trade are possible only when one person has the comparative advantage in producing both goods
answer
A
question
Hans Maria
Loads of laundry per hour 4 12
Pages typed per hour 6 8
According to Exhibit 2-1, Hans' opportunity cost of doing a load of laundry is
a. 12 papers
b. 8 papers
c. 1 1/2 pages
d. 2/3 of a page
e. impossible to compute
Loads of laundry per hour 4 12
Pages typed per hour 6 8
According to Exhibit 2-1, Hans' opportunity cost of doing a load of laundry is
a. 12 papers
b. 8 papers
c. 1 1/2 pages
d. 2/3 of a page
e. impossible to compute
answer
C
question
Hans Maria
Loads of laundry per hour 4 12
Pages typed per hour 6 8
According to Exhibit 2-1, Hans' opportunity cost of typing one page is
a. 12 loads of laundry
b. 8 loads of laundry
c. 3/2 of a load of laundry
d. 2/3 of a load of laundry
e. impossible to compute
Loads of laundry per hour 4 12
Pages typed per hour 6 8
According to Exhibit 2-1, Hans' opportunity cost of typing one page is
a. 12 loads of laundry
b. 8 loads of laundry
c. 3/2 of a load of laundry
d. 2/3 of a load of laundry
e. impossible to compute
answer
D
question
Hans Maria
Loads of laundry per hour 4 12
Pages typed per hour 6 8
According to Exhibit 2-1, Maria's opportunity cost of doing a load of laundry is
a. 4 pages
b. 6 pages
c. 2/3 of a page
d. 3/2 of a page
e. impossible to compute
Loads of laundry per hour 4 12
Pages typed per hour 6 8
According to Exhibit 2-1, Maria's opportunity cost of doing a load of laundry is
a. 4 pages
b. 6 pages
c. 2/3 of a page
d. 3/2 of a page
e. impossible to compute
answer
C
question
Hans Maria
Loads of laundry per hour 4 12
Pages typed per hour 6 8
According to Exhibit 2-1, if Hans types one fewer page, how many loads of laundry can he do in the time saved on typing?
a. 12 loads
b. 8 loads
c. 3/2 of a load
d. 2/3 of a load
e. it cannot be determined
Loads of laundry per hour 4 12
Pages typed per hour 6 8
According to Exhibit 2-1, if Hans types one fewer page, how many loads of laundry can he do in the time saved on typing?
a. 12 loads
b. 8 loads
c. 3/2 of a load
d. 2/3 of a load
e. it cannot be determined
answer
D
question
The division of labor
a. allows more people to be employed
b. allows tasks to be performed more efficiently
c. makes people happier on the job
d. means that less management is required
e. means that less equipment will be used
a. allows more people to be employed
b. allows tasks to be performed more efficiently
c. makes people happier on the job
d. means that less management is required
e. means that less equipment will be used
answer
B
question
Specialization of labor
a. increases productivity without creating any problems
b. reduces productivity, and is usually eliminated by business firms
c. can create problems of boredom and repetitive motion injuries
d. prevents the introduction of more sophisticated and efficient production techniques
e. ignores individual preferences and natural abilities
a. increases productivity without creating any problems
b. reduces productivity, and is usually eliminated by business firms
c. can create problems of boredom and repetitive motion injuries
d. prevents the introduction of more sophisticated and efficient production techniques
e. ignores individual preferences and natural abilities
answer
C
question
If all resources are used efficiently to produce goods and services, a nation will find itself producing
a. inside its production possibilities frontier
b. somewhere on its production possibilities frontier
c. outside of its production possibilities frontier
d. at one extreme end of its production possibilities frontier
e. more of one product with no decrease in the production of any other product
a. inside its production possibilities frontier
b. somewhere on its production possibilities frontier
c. outside of its production possibilities frontier
d. at one extreme end of its production possibilities frontier
e. more of one product with no decrease in the production of any other product
answer
B
question
If an economy is operating at a point inside the production possibilities frontier, then
a. some of the nation's resources are unemployed
b. the production decisions are made by the government
c. unlimited resources must satisfy scarce desires
d. there is a scarcity of human resources relative to human wants therefore society must have some mechanism for making choices
e. society is paying too much for wages
a. some of the nation's resources are unemployed
b. the production decisions are made by the government
c. unlimited resources must satisfy scarce desires
d. there is a scarcity of human resources relative to human wants therefore society must have some mechanism for making choices
e. society is paying too much for wages
answer
A
question
The concave shape of a production possibilities frontier showing possible output levels of good A and good B indicates that if the economy produces more and more of good B,
a. larger and larger amounts of good A must be sacrificed
b. smaller and smaller amounts of good A must be sacrificed
c. more of good A will be produced
d. the amount of resources available in the economy must be increased
e. there must be an improvement in technology
a. larger and larger amounts of good A must be sacrificed
b. smaller and smaller amounts of good A must be sacrificed
c. more of good A will be produced
d. the amount of resources available in the economy must be increased
e. there must be an improvement in technology
answer
A
question
In the United States since World War II, there has been
a. a dramatic increase in the population living in rural areas
b. a decline in the number of women in the labor force
c. a decrease in the opportunity cost of working in the home
d. more specialization of production within households
e. a dramatic increase in the number of married women in the labor force
a. a dramatic increase in the population living in rural areas
b. a decline in the number of women in the labor force
c. a decrease in the opportunity cost of working in the home
d. more specialization of production within households
e. a dramatic increase in the number of married women in the labor force
answer
E
question
The objective of the household is to
a. maximize household wealth
b. own as much land as possible
c. save as much money as possible
d. acquire as many goods as possible
e. maximize utility
a. maximize household wealth
b. own as much land as possible
c. save as much money as possible
d. acquire as many goods as possible
e. maximize utility
answer
E
question
Which resource generates the largest share of the income in the United States?
a. labor
b. land
c. capital
d. entrepreneurial ability
e. money
a. labor
b. land
c. capital
d. entrepreneurial ability
e. money
answer
A
question
Which of the following represents the largest source of income for U.S. households?
a. personal interest
b. proprietor's income
c. wages and salaries
d. rental income
e. transfer payments
a. personal interest
b. proprietor's income
c. wages and salaries
d. rental income
e. transfer payments
answer
C
question
Household income is spent on all of the following except one. Which is the exception?
a. services
b. tax payments
c. durable goods
d. nondurable goods
e. dividends
a. services
b. tax payments
c. durable goods
d. nondurable goods
e. dividends
answer
E
question
Which of the following is an example of a durable good?
a. food prepared at home
b. food eaten at a restaurant
c. high-fashion clothing
d. binoculars
e. motor oil
a. food prepared at home
b. food eaten at a restaurant
c. high-fashion clothing
d. binoculars
e. motor oil
answer
D
question
Which form of business organization is the most common in the United States?
a. sole proprietorship
b. partnership
c. corporation
d. nonprofit organization
e. S-corporation
a. sole proprietorship
b. partnership
c. corporation
d. nonprofit organization
e. S-corporation
answer
A
question
Which form of business organization accounts for the largest proportion of business sales in the United States?
a. sole proprietorship
b. partnership
c. corporation
d. nonprofit organization
e. conglomerate
a. sole proprietorship
b. partnership
c. corporation
d. nonprofit organization
e. conglomerate
answer
C
question
Despite specialization and comparative advantage, household production still exists because for some households
a. the opportunity cost of production at home is greater than the cost of purchasing the good in the market
b. production at home is less costly than purchasing the good in the market
c. the value of home production exceeds the sunk cost of home production
d. the value of home production is ignored
e. food and clothing expenditures represent a small portion of their total budget
a. the opportunity cost of production at home is greater than the cost of purchasing the good in the market
b. production at home is less costly than purchasing the good in the market
c. the value of home production exceeds the sunk cost of home production
d. the value of home production is ignored
e. food and clothing expenditures represent a small portion of their total budget
answer
B
question
Which of the following is the best example of a public good?
a. food stamps
b. police services
c. trash removal
d. a restaurant meal
e. an IPad
a. food stamps
b. police services
c. trash removal
d. a restaurant meal
e. an IPad
answer
B
question
An external benefit is a benefit from an activity that falls on a third party who is not a party to the activity.
a. True
b. False
a. True
b. False
answer
A
question
When externalities are present, market prices do not reflect all the social costs or benefits of the activity.
a. True
b. False
a. True
b. False
answer
A
question
Which of the following is a reason why government is a participant in a market-oriented economy?
a. to enforce contracts and protect private property
b. to promote collusion
c. to promote the growth of natural monopolies
d. to provide more inequality in the distribution of income
e. all of the above
a. to enforce contracts and protect private property
b. to promote collusion
c. to promote the growth of natural monopolies
d. to provide more inequality in the distribution of income
e. all of the above
answer
A
question
Natural monopolies occur when
a. government antitrust laws are too weak or not enforced
b. negative externalities are present
c. firms collude to set prices and divide the market among themselves
d. one firm can service the market more cheaply than two or more firms can
e. a public good is produced by a private firm
a. government antitrust laws are too weak or not enforced
b. negative externalities are present
c. firms collude to set prices and divide the market among themselves
d. one firm can service the market more cheaply than two or more firms can
e. a public good is produced by a private firm
answer
D
question
Which of the following is true of public goods?
a. The market mechanism helps to signal the quantity that is demanded by the public.
b. Payment for consumption is efficiently provided by market prices.
c. Consumption by one person does not preclude consumption of the same good by another person.
d. The public sector is guided to produce the correct quantity by market prices.
e. Voluntary contributions will be sufficient to finance the production of public goods.
a. The market mechanism helps to signal the quantity that is demanded by the public.
b. Payment for consumption is efficiently provided by market prices.
c. Consumption by one person does not preclude consumption of the same good by another person.
d. The public sector is guided to produce the correct quantity by market prices.
e. Voluntary contributions will be sufficient to finance the production of public goods.
answer
C
question
Determining the most socially desirable level of income equality or inequality
a. is done through markets, rather than by the government
b. is done directly by firms
c. involves normative economics
d. involves evaluation of public goods
e. involves evaluation of all externalities, both positive and negative
a. is done through markets, rather than by the government
b. is done directly by firms
c. involves normative economics
d. involves evaluation of public goods
e. involves evaluation of all externalities, both positive and negative
answer
C
question
When the social cost of production is greater than the private cost, we have a
a. positive externality
b. negative externality
c. public good
d. private good
e. positive spillover
a. positive externality
b. negative externality
c. public good
d. private good
e. positive spillover
answer
B
question
A common assumption that economists make about the behavior of elected officials is that they try to
a. maximize the size of their government salaries
b. maximize the size of their control over the budget process
c. maximize the number of votes they receive in the next election
d. minimize the government's expenditures in order to balance the budget
e. conform to the wishes of special interest groups so that the government behaves as a single, consistent decision maker
a. maximize the size of their government salaries
b. maximize the size of their control over the budget process
c. maximize the number of votes they receive in the next election
d. minimize the government's expenditures in order to balance the budget
e. conform to the wishes of special interest groups so that the government behaves as a single, consistent decision maker
answer
C
question
Market activity differs from government activity because
a. markets generally force prices to below-cost levels
b. governments never charge for the services they provide
c. markets do not use voluntary exchange mechanisms
d. markets provide a direct link between benefits and costs
e. governments have strong incentives to keep costs under strict control
a. markets generally force prices to below-cost levels
b. governments never charge for the services they provide
c. markets do not use voluntary exchange mechanisms
d. markets provide a direct link between benefits and costs
e. governments have strong incentives to keep costs under strict control
answer
D
question
What part of federal government spending has grown the most slowly in recent decades?
a. national defense
b. welfare
c. interest on the national debt
d. social security and medicare
e. all other forms of federal government spending
a. national defense
b. welfare
c. interest on the national debt
d. social security and medicare
e. all other forms of federal government spending
answer
A
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
