question
According to economists, economic self-interest:
A) is a reality that underlies economic behavior.
B) has the same meaning as selfishness.
C) is more characteristic of men than of women.
D) is usually self-defeating.
A) is a reality that underlies economic behavior.
B) has the same meaning as selfishness.
C) is more characteristic of men than of women.
D) is usually self-defeating.
answer
A) is a reality that underlies economic behavior.
question
A person should consume more of something when its marginal:
A) benefit exceeds its marginal cost.
B) cost exceeds its marginal benefit.
C) cost equals its marginal benefit.
D) benefit is still positive.
A) benefit exceeds its marginal cost.
B) cost exceeds its marginal benefit.
C) cost equals its marginal benefit.
D) benefit is still positive.
answer
A) benefit exceeds its marginal cost.
question
The study of economics is primarily concerned with:
A) keeping private businesses from losing money.
B)demonstrating that capitalistic economies are superior to socialistic economies.
C) choices that are made in seeking the best use of resources.
D) determining the most equitable distribution of society's output.
A) keeping private businesses from losing money.
B)demonstrating that capitalistic economies are superior to socialistic economies.
C) choices that are made in seeking the best use of resources.
D) determining the most equitable distribution of society's output.
answer
C) choices that are made in seeking the best use of resources.
question
The assertion that "There is no free lunch" means that:
A) there are always tradeoffs between economic goals.
B) all production involves the use of scarce resources and thus the sacrifice of alternative goods.
C) marginal analysis is not used in economic reasoning.
D) choices need not be made if behavior is rational.
A) there are always tradeoffs between economic goals.
B) all production involves the use of scarce resources and thus the sacrifice of alternative goods.
C) marginal analysis is not used in economic reasoning.
D) choices need not be made if behavior is rational.
answer
B) all production involves the use of scarce resources and thus the sacrifice of alternative goods.
question
Which of the following most closely relates to the idea of opportunity costs?
A) tradeoffs.
B) economic growth.
C) technological change.
D) capitalism.
A) tradeoffs.
B) economic growth.
C) technological change.
D) capitalism.
answer
A) tradeoffs
question
The scientific method is:
A) not applicable to economics, because economics deals with human beings.
B) also known as the economic perspective.
C) analysis that moves from broad generalizations called laws to theories and then to hypotheses.
D) used by economists and other social scientists, as well as by physical scientists and life scientists.
A) not applicable to economics, because economics deals with human beings.
B) also known as the economic perspective.
C) analysis that moves from broad generalizations called laws to theories and then to hypotheses.
D) used by economists and other social scientists, as well as by physical scientists and life scientists.
answer
D) used by economists and other social scientists, as well as by physical scientists and life scientists.
question
Which of the following is associated with macroeconomics?
A) an examination of the incomes of Harvard Business School graduates
B) an impirical investigation of the general price level and unemployment rates since 1990
C) a study of the trend of pecan prices since the Second World War
D) a case study of pricing and production in the textbook industry
A) an examination of the incomes of Harvard Business School graduates
B) an impirical investigation of the general price level and unemployment rates since 1990
C) a study of the trend of pecan prices since the Second World War
D) a case study of pricing and production in the textbook industry
answer
B) an impirical investigation of the general price level and unemployment rates since 1990
question
The four factors of production are:
A) land, labor, capital, and money
B) land, labor, capital, and entrepreneurial ability
C) labor, capital, technology, and entrepreneurial ability
D) labor, capital, entrepreneurial ability, and money
A) land, labor, capital, and money
B) land, labor, capital, and entrepreneurial ability
C) labor, capital, technology, and entrepreneurial ability
D) labor, capital, entrepreneurial ability, and money
answer
B) land, labor, capital, and entrepreneurial ability
question
The production possibilities curve illustrates the basic principle that:
A) the production of more of any one good will in time require smaller and smaller sacrifices of other goods.
B) an economy will automatically obtain full employment of its resources.
C) if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.
D) an economy's capacity to produce increases in proportion to its population size.
A) the production of more of any one good will in time require smaller and smaller sacrifices of other goods.
B) an economy will automatically obtain full employment of its resources.
C) if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.
D) an economy's capacity to produce increases in proportion to its population size.
answer
C) if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.
question
A production possibilities curve illustrates:
A) scarcity.
B) market prices.
C) consumer preferences.
D) the distribution of income
A) scarcity.
B) market prices.
C) consumer preferences.
D) the distribution of income
answer
A) scarcity.
question
A nation's production possibilities curve is bowed out from the origin because:
A) resources are not generally equally efficient in producing every good.
B) the originator of the new idea drew it this way and modern economists follow this convention.
C) resources are scarce.
D) wants are virtually unlimited.
A) resources are not generally equally efficient in producing every good.
B) the originator of the new idea drew it this way and modern economists follow this convention.
C) resources are scarce.
D) wants are virtually unlimited.
answer
A) resources are not generally equally efficient in producing every good.
question
Answer the question on the basis of the given data given in the following production possibilities table. Refer to the table above. If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be:
A) 4 units of capital goods.
B) 2 units of capital gods.
C) 3 units of capital goods.
D) 1/3 of a unit of capital goods.
A) 4 units of capital goods.
B) 2 units of capital gods.
C) 3 units of capital goods.
D) 1/3 of a unit of capital goods.
answer
D) 1/3 of a unit of capital goods.
question
Refer to the above table. As compared to production alternative D, the choice of alternative C would:
A) tend to generate more rapid growth.
B) be unattainable.
C) entail unemployment.
D) tend to generate a slower growth rate.
A) tend to generate more rapid growth.
B) be unattainable.
C) entail unemployment.
D) tend to generate a slower growth rate.
answer
A) tend to generate more rapid growth.
question
Refer to the table above. A total output of 3 units of capital goods and 4 units of consumer goods:
A) is irrelevant because the economy is capable of producing a larger total output.
B) will result in the maximum rate of growth available to this economy.
C) would involve in an efficient use to the economy's scarce resources.
D) is unobtainable in this economy.
A) is irrelevant because the economy is capable of producing a larger total output.
B) will result in the maximum rate of growth available to this economy.
C) would involve in an efficient use to the economy's scarce resources.
D) is unobtainable in this economy.
answer
C) would involve in an efficient use to the economy's scarce resources.
question
Refer to the above table. For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must:
A) achieve economic growth.
B) use its resources more efficiently than the data in the table now indicate.
C) allocate its available resources most efficiently among alternative uses.
D) achieve the full employment of available resources.
A) achieve economic growth.
B) use its resources more efficiently than the data in the table now indicate.
C) allocate its available resources most efficiently among alternative uses.
D) achieve the full employment of available resources.
answer
A) achieve economic growth.
question
Refer to the table above. For these data the law of increasing opportunity costs is reflected in the fact that:
A) the amount of consumer goods that must be sacrificed to get more capital goods diminishes beyond a point.
B) larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
C) the production possibilities data would graph as a straight down-sloping line.
D) the economy's resources are presumed to be scarce.
A) the amount of consumer goods that must be sacrificed to get more capital goods diminishes beyond a point.
B) larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
C) the production possibilities data would graph as a straight down-sloping line.
D) the economy's resources are presumed to be scarce.
answer
B) larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
question
Refer to the above diagram. Other things equal, this economy will achieve the most rapid rate of growth if:
A) the ratio of capital to consumer goods is minimized.
B) it chooses point C.
C) it chooses point B.
D) it chooses point A.
A) the ratio of capital to consumer goods is minimized.
B) it chooses point C.
C) it chooses point B.
D) it chooses point A.
answer
D) it chooses point A.
question
Refer to the above diagram. This economy will experience unemployment if it produces at point:
A) A.
B) B.
C) C.
D) D.
A) A.
B) B.
C) C.
D) D.
answer
D) D.
question
Refer to the above tables. Suppose that the amount and quality of resources are the same in both countries. We can conclude that:
A) Duckistan is technologically better than Herbania at producing military goods.
B) Herbania is technologically better than Herbania at producing both military goods and civilian goods.
C) the total opportunity cost of producing 4 units of military goods is the same in both countries.
D) Herbania is technologically superior to Duckistan in producing goods.
A) Duckistan is technologically better than Herbania at producing military goods.
B) Herbania is technologically better than Herbania at producing both military goods and civilian goods.
C) the total opportunity cost of producing 4 units of military goods is the same in both countries.
D) Herbania is technologically superior to Duckistan in producing goods.
answer
D) Herbania is technologically superior to Duckistan in producing goods.
question
Refer to the above tables. Suppose that technology and the quality of resources are the same in both countries. We can conclude that:
A) Duckistan has more resources than Herbania.
B) Herbania has more resources than Duckistan.
C) Duckistan has greater opportunity costs than Herbania.
D) Prices are twice as high in Herbania as in Duckistan.
A) Duckistan has more resources than Herbania.
B) Herbania has more resources than Duckistan.
C) Duckistan has greater opportunity costs than Herbania.
D) Prices are twice as high in Herbania as in Duckistan.
answer
B) Herbania has more resources than Duckistan.
question
Refer to the above tables. Opportunity costs of producing military goods are:
A) increasing in Duckistan but constant in Herbania.
B) constant in both Duckistan and Herbania.
C) larger in Duckistan than in Herbania.
D) smaller in Duckistan than Herbania.
A) increasing in Duckistan but constant in Herbania.
B) constant in both Duckistan and Herbania.
C) larger in Duckistan than in Herbania.
D) smaller in Duckistan than Herbania.
answer
D) smaller in Duckistan than Herbania.
question
Refer to the above tables. Opportunity costs are:
A) constant in both Duckistan and Herbania.
B) larger in Duckistan than in Herbania.
C) increasing in both Duckistan and Herbania.
D) increasing in Duckistan and constant in Herbania.
A) constant in both Duckistan and Herbania.
B) larger in Duckistan than in Herbania.
C) increasing in both Duckistan and Herbania.
D) increasing in Duckistan and constant in Herbania.
answer
C) increasing in both Duckistan and Herbania.
question
Refer to the above tables. Supposed that Duckistan and Herbania are each producing 14 units of civilian goods and 2 units of military goods. Then:
A) Duckistan is fully employing its resources but Herbania is not.
B) both Duckistan and Herbania are fully employing their resources.
C) Herbania is fully employing its resources but Duckistan is not.
D) neither Duckistan nor Herbania are fully employing their resources.
A) Duckistan is fully employing its resources but Herbania is not.
B) both Duckistan and Herbania are fully employing their resources.
C) Herbania is fully employing its resources but Duckistan is not.
D) neither Duckistan nor Herbania are fully employing their resources.
answer
A) Duckistan is fully employing its resources but Herbania is not.
question
The simple circular flow model shows that:
A) households are on the buying side of both product and resource markets.
B) business are on the selling side of both product and resource markets.
C) households are on the selling side of the resource market and on the buying side of the product market.
D) businesses are on the buying side of the product market and on the selling side of the resource market.
A) households are on the buying side of both product and resource markets.
B) business are on the selling side of both product and resource markets.
C) households are on the selling side of the resource market and on the buying side of the product market.
D) businesses are on the buying side of the product market and on the selling side of the resource market.
answer
C) households are on the selling side of the resource market and on the buying side of the product market.
question
Refer to the above diagram. Flow (3) represents:
A) wage, rent, interest, and profit income.
B) land, labor, capital, and entrepreneurial ability.
C) goods and services.
D) consumer expenditures.
A) wage, rent, interest, and profit income.
B) land, labor, capital, and entrepreneurial ability.
C) goods and services.
D) consumer expenditures.
answer
C) goods and services.
question
Refer to the above diagram. Points A, B, C, D, and E show:
A) that the opportunity cost of bicycles increases, while that of computers is constant.
B) combinations of bicycles and computers that society can produce by using its resources efficiently.
C) that the opportunity cost of computers increase, while that of bicycles is constant.
D) that society's demand for computers is greater than its demand for bicycles.
A) that the opportunity cost of bicycles increases, while that of computers is constant.
B) combinations of bicycles and computers that society can produce by using its resources efficiently.
C) that the opportunity cost of computers increase, while that of bicycles is constant.
D) that society's demand for computers is greater than its demand for bicycles.
answer
B) combinations of bicycles and computers that society can produce by using its resources efficiently.
question
Refer to the diagram above. The combination of computers and bicycles shown by point F:
A) is unattainable, given currently available resources and technology.
B) is attainable, but implies that the economy is not using all it resources.
C is irrelevant because it is inconsistent with consumer preferences.
D) suggests that opportunity costs are constant.
A) is unattainable, given currently available resources and technology.
B) is attainable, but implies that the economy is not using all it resources.
C is irrelevant because it is inconsistent with consumer preferences.
D) suggests that opportunity costs are constant.
answer
B) is attainable, but implies that the economy is not using all it resources.
question
Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost:
A) will be 4 units of bicycles.
B) will be 2 units of bicycles.
C) will be zero because unemployed resources are available.
D) of doing so cannot be determined from the information given.
A) will be 4 units of bicycles.
B) will be 2 units of bicycles.
C) will be zero because unemployed resources are available.
D) of doing so cannot be determined from the information given.
answer
A) will be 4 units of bicycles.
question
Refer to the above diagram. The combination of computers and bicycles shown by point G is:
A) attainable, but too costly.
B) unattainable, given currently available resources and technology.
C) attainable, but involves unemployment.
D) irrelevant because it is inconsistent with consumer preferences.
A) attainable, but too costly.
B) unattainable, given currently available resources and technology.
C) attainable, but involves unemployment.
D) irrelevant because it is inconsistent with consumer preferences.
answer
A) attainable, but too costly.
question
Refer to the above diagram. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles:
A) cannot be achieved because resources are fully employed.
B) will cost 1 unit of computers.
C) will cost 2 units of computers.
D) will cause some resources to become unemployed.
A) cannot be achieved because resources are fully employed.
B) will cost 1 unit of computers.
C) will cost 2 units of computers.
D) will cause some resources to become unemployed.
answer
B) will cost 1 unit of computers.
question
The term laissez-faire suggests that:
A) land and other natural resources should be privately owned, but capital should be publicly owned.
B) land and other natural resources should be publicly owned, but capital should be privately owned.
C) government should not interfere with the operation of the economy.
D) government action is necessary if the economy is to achieve full employment and full production.
A) land and other natural resources should be privately owned, but capital should be publicly owned.
B) land and other natural resources should be publicly owned, but capital should be privately owned.
C) government should not interfere with the operation of the economy.
D) government action is necessary if the economy is to achieve full employment and full production.
answer
C) government should not interfere with the operation of the economy.
question
The market system's answer to the fundamental question "Who will get the goods and services?" is essentially:
A) "Those willing and able to pay for them."
B) "Those who physically produced them."
C) "Those who most need them."
D) "Those who get utility from them."
A) "Those willing and able to pay for them."
B) "Those who physically produced them."
C) "Those who most need them."
D) "Those who get utility from them."
answer
A) "Those willing and able to pay for them."
question
33. Refer to the above diagram. Flow (1) represents:
A) wage, rent, interest, and profit income.
B) land, labor, capital, and entrepreneurial ability.
C) goods and services.
D) consumer expenditures.
A) wage, rent, interest, and profit income.
B) land, labor, capital, and entrepreneurial ability.
C) goods and services.
D) consumer expenditures.
answer
A) wage, rent, interest, and profit income.
question
Refer to the above diagram. Flow (2) represents:
A) wage, rent, interest, and profit income.
B) land, labor, capital, and entrepreneurial ability.
C) goods and services.
D) consumer expenditures.
A) wage, rent, interest, and profit income.
B) land, labor, capital, and entrepreneurial ability.
C) goods and services.
D) consumer expenditures.
answer
B) land, labor, capital, and entrepreneurial ability.
question
Refer to the above diagram. Flow (3) represents:
A) wage, rent, interest, and profit income.
B) land, labor, capital, and entrepreneurial ability.
C) goods and services.
D) consumer expenditures.
A) wage, rent, interest, and profit income.
B) land, labor, capital, and entrepreneurial ability.
C) goods and services.
D) consumer expenditures.
answer
B) land, labor, capital, and entrepreneurial ability.
question
Refer to the above diagram. Flow (4) represents:
A) wage, rent, interest, and profit income.
B) land, labor, capital, and entrepreneurial ability.
C) goods and services.
D) consumer expenditures.
A) wage, rent, interest, and profit income.
B) land, labor, capital, and entrepreneurial ability.
C) goods and services.
D) consumer expenditures.
answer
D) consumer expenditures.
question
Refer to the above diagram. Arrows (1) and (2) represent:
A) goods and resources respectively.
B) money incomes and output respectively.
C) output and money incomes respectively.
D) resources and goods respectively.
A) goods and resources respectively.
B) money incomes and output respectively.
C) output and money incomes respectively.
D) resources and goods respectively.
answer
D) resources and goods respectively.
question
Refer to the above diagram. Arrows (3) and (4) represent:
A) goods and services respectively.
B) incomes and consumer expenditures respectively.
C) resources and goods respectively.
D) consumer expenditures and income respectively.
A) goods and services respectively.
B) incomes and consumer expenditures respectively.
C) resources and goods respectively.
D) consumer expenditures and income respectively.
answer
B) incomes and consumer expenditures respectively.
question
Refer to the above diagram. Arrows (1) and (3) are associated with:
A) the money market.
B) the resource market.
C) the product market.
D) international trade.
A) the money market.
B) the resource market.
C) the product market.
D) international trade.
answer
B) the resource market.
question
Which of the following best illustrates the circular flow model in action?
A) Bobbie goes to work and builds cars, and uses the income she receives to buy food at the grocery store.
B) Evan buys a new couch; the owner of the furniture store uses some of the money from the sale to pay her supplier, and uses the rest to take her family out to dinner.
C) Boeing experiences a surge in orders for new airplanes, prompting the company to hire more workers.
D) All of these answers illustrate the workings of the circular flow model.
A) Bobbie goes to work and builds cars, and uses the income she receives to buy food at the grocery store.
B) Evan buys a new couch; the owner of the furniture store uses some of the money from the sale to pay her supplier, and uses the rest to take her family out to dinner.
C) Boeing experiences a surge in orders for new airplanes, prompting the company to hire more workers.
D) All of these answers illustrate the workings of the circular flow model.
answer
D) All of these answers illustrate the workings of the circular flow model.
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