Deck 1: Economics: the Study of Choice

Question 1

Economics is a:

A) social science that studies goods with no alternative uses.
B) natural science that studies goods with no alternative uses.
C) social science concerned chiefly with how people choose among alternatives.
D) social science concerned chiefly with reasons why society has unlimited resources.

Answer 1

social science concerned chiefly with how people choose among alternatives.

Question 2

Economics, generally speaking, is primarily concerned with:

A) the operation of the bond and stock markets.
B) the issues of income inequality or income equality.
C) how people choose among the alternatives available to them.
D) ceteris paribus, the scientific method, and the margin.

Answer 2

how people choose among the alternatives available to them.

Question 3

The basic concern of economics is to:

A) keep business firms from losing money.
B) prove that capitalism is better than socialism.
C) study the choices people make.
D) use unlimited resources to produce goods and services to satisfy limited wants.

Answer 3

study the choices people make.

Question 4

Scarcity exists when:

A) a choice must be made among two or more alternatives.
B) we face the notion of "all other things unchanged."
C) countries and people find themselves facing poverty.
D) the notions of normative economics come into play.

Question 5

Economics is a:

A) social science that deals with making choices among alternatives.
B) natural science that concerns itself with allocating relatively scarce resources among alternative ends.
C) science that has no theories or models based on the scientific method.
D) humanities course that mainly concerns itself with limited wants versus unlimited resources.

Question 6

Which of the following is most likely an example of a free good?

A) Sand in aquarium
B) Sand in the middle of a desert
C) Sand in a children's sandbox
D) Sand at the beach

Question 7

Although water is very abundant in most places, it is scarce because:

A) it has no alternative uses.
B) it has two or more alternative uses.
C) it is a free good and not expensive.
D) scarce goods in general are not all that costly.

Question 8

The problem of scarcity is confronted by:

A) industrialized societies.
B) pre-industrialized societies.
C) societies governed by communist philosophies.
D) all societies.

Question 9

A scarce resource is one that:

A) has two or more alternative uses.
B) exhibits the basic properties of a free good.
C) is confronted only under socialist conditions.
D) has an unlimited supply.

Question 10

According to the textbook, economics is a:

A) social science.
B) study of business decisions, not social decisions.
C) part of operations and management science.
D) part of humanities.

Question 11

Scarcity in economics means:

A) not having sufficient resources to produce all the goods and services we want.
B) the wants of people are limited.
C) there must be poor people in rich countries.
D) economists are clearly not doing their jobs.

Question 12

A scarce resource is one that:

A) is free.
B) is abundant.
C) has alternative uses.
D) has no alternative uses.

Question 13

The existence of alternative uses of a resource implies that it is:

A) free.
B) scarce.
C) expensive.
D) plentiful.

Question 14

The concept of scarcity indicates that:

A) most goods have no alternative uses.
B) almost all goods have alternative uses.
C) most decisions can be made without sacrificing alternatives.
D) certain societies are able to overcome the constraints imposed by alternative uses of resources.

Question 15

A(n) _______ does not pose the problem of scarcity; one use of the good is not an alternative to another use.

A) free good
B) scarce good
C) economic good
D) monetary good

Question 16

The study of how people choose among the alternatives available to them is the:

A) definition of economics.
B) model of demand.
C) theory of opportunity costs.
D) method of distinguishing between microeconomics and macroeconomics.

Question 17

A key theme fundamental to all of economics is:

A) there are limited wants.
B) we are a rich country but are simply not aware of it.
C) people have unlimited wants facing limited means to satisfy them.
D) there are unlimited resources.

Question 18

When we are forced to make choices we are facing the concept of:

A) ceteris paribus.
B) free goods.
C) scarcity.
D) the margin.

Question 19

Water is considered a scarce good rather than a free good because:

A) it has alternative uses.
B) it does not have alternative uses.
C) scarce goods are less expensive than free goods.
D) free goods are more expensive than scarce goods.

Question 20

The opportunity cost of going to a movie is:

A) the money spent on the ticket only.
B) all of the other movies that could have been seen instead.
C) the time spent in the theater only.
D) the next best use of the time and the money spent.

Question 21

An answer to the question "How are goods produced?" determines:

A) who receives the goods that are produced.
B) how tastes and preferences are determined.
C) how resources are combined in the production of goods.
D) the types and quantities of goods and services produced.

Question 22

One question that arises when determining for whom goods and services should be produced is:

A) Who gets how much of the economic pie?
B) How can we import more goods for domestic consumption?
C) How can we reduce exports so as to leave more goods for domestic consumption?
D) Should society outlaw child labor?

Question 23

A free good is different from a scarce good because it is:

A) not tradable.
B) not produced.
C) not scarce.
D) found only in nature.

Question 24

An answer to the question "For whom" determines:

A) tastes and preferences.
B) how resources are combined in production.
C) the kinds and quantities of goods produced.
D) who gets the goods and services produced.

Question 25

The problem of determining how goods and services should be produced is a problem of deciding:

A) the best combinations of resources to be used for producing goods and services.
B) the extent to which imports should be reduced relative to exports.
C) the extent to which exports should be reduced relative to imports.
D) who owns the resources.

Question 26

The statement that "there is no such thing as a free lunch" means:

A) there are no tradeoffs between economic goals.
B) any production requires the use of scarce resources, and thus the sacrifice of another alternative.
C) choices need not be made in rational behavior.
D) scarcity only exists in poor societies.

Question 27

The problem of determining what goods and services society should produce exists because:

A) resources are plentiful.
B) resources are scarce.
C) most of our resources are privately rather than socially owned.
D) most of our resources are socially rather than privately owned.

Question 28

The problem of determining what goods and services society should produce:

A) exists because we can produce more than we need or want.
B) exists because there are not enough resources to provide all the goods and services that people want to purchase.
C) would not exist if all goods and services were scarce.
D) would not exist if government owned all of the resources.

Question 29

Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume. This primarily addresses the economic question of:

A) How will each good be produced?
B) For whom shall the goods be produced?
C) Why will the resources be used to produce goods?
D) What goods and services should a society produce?

Question 30

The answer to, "What goods are to be produced?" deals with:

A) who gets the goods.
B) how tastes and preferences are determined.
C) how resources are combined to produce goods and services.
D) the kinds and quantities of goods and services produced.

Question 31

The fundamental economic questions that every economic system must answer are:

A) what, how, and for whom.
B) what, why, and for whom.
C) when, why, and for whom.
D) how, when, and how much.

Question 32

Whenever a choice is made:

A) the cost of that choice could be referred to as opportunity cost.
B) the cost is easy to measure in dollar terms.
C) a free good must be involved.
D) scarcity is not the problem.

Question 33

Opportunity cost is:

A) the costs of all sacrifices not chosen when a choice is made.
B) the highest valued other choice that could have been made.
C) the result of having made a bad choice.
D) the result of not making choices at the margin.

Question 34

The three fundamental economic questions of what, how, and for whom:

A) exist because of scarcity.
B) are much more serious in a socialist system.
C) are not serious in a capitalistic system.
D) are not relevant in the industrialized world of today.

Question 35

In the 1970s, the Organization of Petroleum Exporting Countries (OPEC) tripled the price of petroleum, causing automobile manufacturers to look for ways to produce more fuel-efficient cars by substituting aluminum and plastic for steel. This was primarily a response to the economic question of:

A) When will each good be produced?
B) For whom shall the goods be produced?
C) What goods and services should a society produce?
D) How should goods and services be produced?

Question 36

In the 1930s, the federal government established the social security system to provide a minimum level of income to elderly and disabled people. This primarily addressed the economic question of:

A) When will each good be produced?
B) For whom shall the goods be produced?
C) What goods and services should a society produce?
D) How should the resources be organized for production?

Question 37

The problem of determining for whom to produce exists because:

A) government regulations prevent firms from producing the kinds of goods that consumers want.
B) a decision that one person or group will receive a good or service usually means that another person or group will not.
C) taxes on firms make it more costly for them to produce all the goods that people want.
D) taxes on consumers make it more difficult for them to buy all the goods they want.

Question 38

A free good is:

A) also a scarce good.
B) a relatively abundant good.
C) a good with no opportunity cost.
D) a good with relatively low opportunity cost.

Question 39

Whenever a choice is made:

A) the value of all the other choices that could have been made is called opportunity cost.
B) normative economics is encountered.
C) the problem of "all other things unchanged" results.
D) the opportunity cost of that choice is the highest-valued other choice that could have been made.

Question 40

The problem of determining how goods and services should be produced exists because:

A) we do not have enough skilled workers relative to the number of unskilled workers.
B) we do not have enough unskilled workers relative to the number of skilled workers.
C) corporations want to avoid changing their methods of production.
D) most goods can be produced with different combinations of resources.

Question 41

The economic way of thinking includes:

A) more attention paid to benefits rather than the costs involved in any choice.
B) the assumption that individuals choose to average out some objective.
C) emphasis on how choices are made at the margin.
D) the notion that the industrialized nations have solved the problem of scarcity.

Question 42

The study of a single firm and how it determines prices would fall under:

A) macroeconomics.
B) microeconomics.
C) the study of inflation.
D) normative economics.

Question 43

The BEST example of making a choice at the margin is:

A) buying a new car.
B) quitting your job.
C) a coffee drinker drinking another cup of coffee.
D) attending college.

Question 44

Making choices that are expected to achieve the highest possible value for some objective is termed:

A) maximizing.
B) minimizing.
C) sanitizing.
D) satisfying.

Question 45

Unemployment and inflation are:

A) not relevant in the U.S. economy today.
B) major topics in macroeconomics.
C) unique only to capitalistic economies.
D) very important in the study of microeconomics.

Question 46

The branch of economics that examines the choices of consumers and firms is:

A) positive economics.
B) normative economics.
C) macroeconomics.
D) microeconomics.

Question 47

Economics is different from other social sciences because it gives special emphasis to the study of ______; it is similar to other social sciences because they are all concerned with the study of _______.

A) unlimited resources; economic systems
B) human interactions; limited resources
C) opportunity costs; choices
D) social behavior; scarcity

Question 48

The opportunity cost of something is:

A) greater during periods of rising prices.
B) equal to the money cost.
C) less during periods of falling prices.
D) what is given up to acquire it.

Question 49

Microeconomics deals with:

A) the working of the entire economy or large sectors of it.
B) employment, growth, and inflation.
C) individual units in the economy.
D) normative economics for the most part.

Question 50

The economic way of thinking has to do with:

A) analyzing benefits but not costs.
B) analyzing costs but not benefits.
C) making choices at the margin.
D) making the distinction between microeconomics and macroeconomics.

Question 51

A choice made _______ is a choice whether to do a little more or a little less of something.

A) at the front end
B) in the beginning
C) at the margin
D) all of the above.

Question 52

The primary emphasis in macroeconomics is on:

A) how firms set prices.
B) aggregates in the economy.
C) marginal analysis and normative economics.
D) international trade and environmental economics.

Question 53

Macroeconomics deals with:

A) bits and pieces of the economy.
B) the question of how a business unit should operate profitably.
C) the analysis of the aggregate values in the economy.
D) ceteris paribus.

Question 54

The economic way of thinking includes:

A) more attention paid to benefits rather than the costs involved in any choice.
B) the assumption that individuals choose to maximize some objective.
C) emphasis on how choices affect total values rather than marginal values.
D) the notion that the world has solved the problem of scarcity.

Question 55

The economic way of thinking includes:

A) attention paid to the opportunity costs involved in any choice.
B) the assumption that individuals choose to average out some objective.
C) concern with the biological make up of decision makers.
D) emphasis on how choices affect total values rather than marginal values.

Question 56

The sacrifice of an alternative is called:

A) revenue.
B) benefit.
C) opportunity cost.
D) production.

Question 57

A feature that distinguishes economists' approach to making choices is (are):

A) assigning opportunity costs a major role in their analyses of choices.
B) assuming individuals make choices to maximize objectives.
C) emphasizing that choices are made at the margin.
D) all of the above.

Question 58

Which of the following would be a part of macroeconomics? A study of:

A) the change in automobile sales due to a change in the price of automobiles.
B) a tax reduction impact on the profits of a business.
C) inflation.
D) the unemployment of workers displaced by technological change in the typesetting industry.

Question 59

The concept of the margin deals with:

A) making incremental choices.
B) one more or one less of something.
C) doing a little more or a little less.
D) all of the above.

Question 60

Opportunity cost is:

A) zero for the use of a free combo meal offer.
B) the dollar payment for a product.
C) the benefit derived from a product.
D) the value of the best alternative forgone in making any choice.

Question 61

Economists concerned about the behavior of individual households, firms, and industries are studying:

A) microeconomics.
B) macroeconomics.
C) neither macroeconomics nor microeconomics.
D) the "forest" of economic behavior, rather than the "trees."

Question 62

Microeconomics is most likely to be concerned with the:

A) economy as a whole.
B) activity of large segments of the economy.
C) economic behavior of specific parts or units of the economy.
D) economy-wide trends in unemployment, prices, and production.

Question 63

A systematic set of procedures through which knowledge is created is:

A) the economy.
B) the scientific method.
C) a market.
D) a model.

Question 64

Economic models are:

A) created and used in order to duplicate virtually every aspect of the real world.
B) useless if they are simple.
C) made generally of wood, plastic, and/or metal.
D) built using assumptions.

Question 65

According to the text, which of the following is true?

A) Scientists can prove a hypothesis is true.
B) Scientists can show that a hypothesis is false.
C) Economists really don't try to use the scientific method.
D) None of the above is true.

Question 66

Macroeconomics is most likely to be concerned with the:

A) amount of unemployment in a specific industry.
B) economic behavior of a particular household.
C) economic behavior of specific parts or units of the economy.
D) aggregates in the economy.

Question 67

The Case in Point on the Simpsons indicated that time is:

A) a scarce resource.
B) a resource without alternative uses.
C) a ubiquitous resource.
D) not a resource.

Question 68

A hypothesis is an assertion that can be:

A) proven to be false.
B) proven to be true.
C) proven to be true or false.
D) tested only in the normative sense.

Question 69

A model or theory in economics is:

A) based mostly on value judgments.
B) built using relevant observations, assumptions, and abstractions.
C) only useful if it correctly portrays the real world and its complexities.
D) useful only if it is based on normative economic statements.

Question 70

Anything whose value can change is a:

A) variable.
B) constant.
C) hypothesis.
D) all of the above.

Question 71

Something whose value does not change is a:

A) variable.
B) constant.
C) hypothesis.
D) all of the above.

Question 72

A proposition about the relationship between two variables that can be proven false is called:

A) a hypothesis.
B) a law.
C) a theory.
D) the scientific method.

Question 73

The branch of economics that examines the impact of choices on aggregates in the economy is:

A) positive economics.
B) normative economics.
C) macroeconomics.
D) microeconomics.

Question 74

Which of the following statements is (are) true?

A) A model is a set of simplifying assumptions about some aspect of the real world.
B) Models are based on assumed conditions that are simpler than those of the real world.
C) A model cannot be a complete representation of the real world.
D) All of the above are true.

Question 75

The scientific method is more difficult for economists than, say, chemists, because:

A) controlled laboratory conditions are more problematic in economics.
B) it is difficult to hold other factors that may affect the variables being studied constant in economics.
C) economic conditions may change quickly and unexpectedly.
D) all of the above.

Question 76

In economics, the function of theories, laws, and hypotheses is to:

A) prevent any misunderstanding of economic behavior.
B) divide topics between microeconomics and macroeconomics.
C) generate a complete and unchanging description of economic behavior.
D) discover relationships between events that are important to economic behavior.

Question 77

The Case in Point on the Simpsons indicated that even fictional characters face:

A) diminishing marginal product.
B) opportunity costs.
C) the fallacy of false cause.
D) positive statements.

Question 78

The models used in economics:

A) are usually limited to variables that are directly related.
B) are essentially not reliable because they are not testable in the real world.
C) are of necessity unrealistic and have no relationship to the real world.
D) emphasize basic relationships by abstracting from complexities in the everyday world.

Question 79

A hypothesis that has been tested extensively without being rejected and has won widespread acceptance is a:

A) model.
B) constant.
C) variable.
D) theory.

Question 80

Economists concerned about economy-wide trends in the unemployment of labor, the rate of inflation, and the level of economic production are studying:

A) microeconomics.
B) macroeconomics.
C) specific units or parts of the economy.
D) the "trees" of economic behavior, rather than the "forest."