Deck 1: Introducing the Economic Way of Thinking

Question 1

The perpetual problem in economics is:

A) our inability to work together effectively.
B) our inability to satisfy everyone's wants with the available resources.
C) a recognition of continual class differences.
D) our inability to utilize resources efficiently.
E) likely to be solved in resource-rich countries.

Answer 1

B

Question 2

Which of the following illustrates the concept of scarcity?

A) There is usually more than one use of your "free" time in the evening.
B) More clean air is wanted than is available in large polluted metropolitan areas such as Los Angeles.
C) There are many competing uses for the annual budget of your city, county, or state.
D) All of the answers are correct.
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Answer 2

D

Question 3

Which of the following is the factors of production?

A) The outputs generated by the production process of transforming land, labor, and capital into goods and services.
B) The land resources, such as natural resources, that are unimproved by human economic activity.
C) Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories).
D) Labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services.

Answer 3

C

Question 4

When economists say scarcity, they mean:

A) there are only a limited number of consumers who would be interested in purchasing goods.
B) the human desire for goods exceeds the available supply of time, goods and resources.
C) most people in poorer countries do not have enough goods.
D) goods are so expensive that only the rich can afford it.

Question 5

Scarcity:

A) exists because resources are unlimited while human wants are limited.
B) means we are unable to have as much as we would like to have.
C) will likely be eliminated as technology continues to expand.
D) is not an issue addressed in economics.

Question 6

Scarcity is a problem:

A) measured by the amount of goods available.
B) of the poor, but not the rich.
C) because human wants are unlimited while resources are limited.
D) only in industrialized economies.

Question 7

Human wants:

A) are unfilled only in the poorer countries of the world.
B) can be completely satisfied by advancing technology.
C) can never be fully satisfied.
D) only apply to necessities.
E) exist only if we are selfish.

Question 8

When economists say goods are scarce, they mean:

A) consumers are too poor to afford the goods and services available.
B) consumers are unwilling to buy goods unless they have very low prices.
C) goods are generally freely available from nature in most countries.
D) the desire for goods and services exceeds our ability to produce them with the limited resources available.

Question 9

Economists believe that scarcity forces everyone to:

A) satisfy all their wants.
B) abandon consumer sovereignty.
C) lie about their wants.
D) create unlimited resources.
E) make choices.

Question 10

The condition of scarcity:

A) cannot be eliminated.
B) prevails in poor economies.
C) prevails in rich economies.
D) All of these.

Question 11

Which of the following would an economist classify as capital?

A) 100 shares of Microsoft stock.
B) $50 bill.
C) credit card.
D) lawyer's personal computer.

Question 12

The finite nature of the economy's resource base:

A) will be solved if only we would learn to conserve.
B) is only a problem in developing countries.
C) will be solved as technology advances.
D) will always be with us.

Question 13

Which of the following would eliminate scarcity as an economic problem?

A) Moderation of people's competitive instincts.
B) Discovery of sufficiently large new energy reserves.
C) Resumption of steady productivity growth.
D) None of these.

Question 14

People are forced to make choices because of:

A) unlimited wants and unlimited resources.
B) limited wants and unlimited resources.
C) unlimited wants and limited resources.
D) limited wants and limited resources.
E) irrational wants and limited resources.

Question 15

Which of the following is true of resources?

A) Resources are inputs used to produce goods and services.
B) Labor is the mental and physical capacity of workers to produce goods and services.
C) Entrepreneurship organizes resources to produce goods and services.
D) All of these are true.

Question 16

Natural resources are:

A) not considered scarce because no one pays for them.
B) only desired for use in producing other goods.
C) included in the category of resources called land.
D) available in unlimited quantities.

Question 17

Scarcity is a(n):

A) problem only in industrialized economies.
B) condition measured by the quantity of goods available.
C) subjective concept that human wants can never be satisfied.
D) problem only in poor economies.

Question 18

Scarcity can be eliminated if:

A) people satisfy needs rather than wants.
B) sufficient new resources were discovered.
C) output of goods and services were increased.
D) none of these.

Question 19

The perpetual state of insufficiency of resources to satisfy people's unlimited wants is:

A) apparent only in poor countries.
B) completely unrealistic.
C) present in modern economies, but not in the past.
D) the definition of scarcity.

Question 20

Scarcity:

A) is a problem only in the poorer countries of the world.
B) can be solved by rapid advances in technology.
C) is a problem that exists in every economy.
D) is not a problem for the very rich.

Question 21

Which of the following is the best example of a nonrenewable resource?

A) Forests.
B) Oil.
C) Clean air.
D) Fish in the ocean.

Question 22

A chain saw is an example of:

A) Land.
B) Labor.
C) Capital.
D) None of these.

Question 23

The sun is an example of:

A) a natural resource.
B) capital.
C) labor.
D) none of these.

Question 24

An entrepreneur is a(n):

A) individual who has much education.
B) organizer who seeks profitable opportunities and is willing to accept risks.
C) business organization that uses inputs to produce output.
D) depot or warehouse for commercial products.

Question 25

All of the following are examples of capital except:

A) the robot used to help produce your car.
B) a computer used by your professor to write this exam.
C) the factory that produces the costume jewelry you buy.
D) the inventory of unsold goods at your local hardware store.
E) an uncut diamond that you discover in your backyard.

Question 26

Which of the following would not be classified as a capital resource?

A) The Empire State Building.
B) A Caterpillar bulldozer.
C) A Macintosh computer.
D) 100 shares of stock in General Motors.

Question 27

A textbook is an example of:

A) capital.
B) a natural resource.
C) labor.
D) all of these.

Question 28

Which of the following are factors of production? ​

A) ​The outputs generated by the production process transforming land, labor, and capital in to goods and services.
B) ​Restricted to the land resources such as natural resources that are unimproved by human economic activity.
C) ​Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories).
D) ​Just labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services.

Question 29

Which of the following is not a resource? ​

A) Land.
B) Labor.
C) Money.
D) Capital.

Question 30

An economics textbook is an example of:

A) capital.
B) labor.
C) a natural resource.
D) entrepreneurship.

Question 31

The three basic categories of resources are land, labor, and:

A) money.
B) time.
C) energy.
D) capital.

Question 32

Which of the following is not an example of a factor of production?

A) A forest.
B) A computer program.
C) A labor leader.
D) Dollars.

Question 33

A factor of production is the same as:

A) the amount of a good produced.
B) the price of a good.
C) a profit of a firm.
D) an opportunity cost.
E) a resource.

Question 34

Which of the following is the best example of an activity that would be undertaken by an entrepreneur?

A) Buying and selling of stocks and bonds.
B) Starting a new business.
C) Working on an assembly line.
D) Running for political office.

Question 35

Computer programs or software are an example of:

A) land.
B) labor.
C) capital.
D) none of these.

Question 36

The silly clothes worn by a circus clown are an example of:

A) a natural resource.
B) capital goods.
C) labor.
D) entrepreneurship.

Question 37

Which of the following is true about renewable resources? ​

A) Land resources include oil, coal, and natural gas that have a fixed stock.
B) ​Land resources include irrigation networks and wastewater treatment plants that utilize water.
C) ​Land resources include air filtration systems in buildings that renew and refresh polluted air from the outside.
D) ​Land resources include forests, range lands, and marine fisheries that naturally regenerate.

Question 38

The creative ability of persons to combine and direct resources to produce new products is known as:

A) economizing.
B) entrepreneurship.
C) value judgment.
D) product sensitivity.

Question 39

Which of the following is not an example of a capital input?

A) ​A person's skills and abilities, which can be employed to produce valuable goods and services.
B) ​Factories and offices where goods and services are produced.
C) ​Tools and equipment.
D) ​Computers used by a company to record inventory, sales, and payroll. ​

Question 40

Which of the following is not a factor of production?

A) A computer chip.
B) The service of a lawyer.
C) Dollars.
D) All of these are factors of production.

Question 41

Which of the following would be of particular interest to a microeconomist?

A) The price of fruit the typical household consumes.
B) The nation's inflation rate.
C) The nation's rate of unemployment.
D) The budget of the national government.
E) The growth of the economy.

Question 42

The basic difference between macroeconomics and microeconomics is:

A) microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade.
B) microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms.
C) microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
D) microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.

Question 43

Microeconomics approaches the study of economics from the viewpoint of:

A) individual or specific markets.
B) the national economy.
C) government units.
D) economywide markets.

Question 44

Which of the following is the best example of a microeconomic topic?

A) The impact that the money supply has on inflation.
B) The reasons for increases in the price of soft drinks.
C) The effect that federal budget deficits have on the interest rate.
D) The tradeoff between inflation and unemployment.

Question 45

The person who assumes the risks and uncertainties of starting a new business is considered to be:

A) the manager.
B) the out-resourcer.
C) a sales representative.
D) an entrepreneur.

Question 46

The most fundamental concepts underlying the discipline of economics are:

A) scarcity and choice.
B) supply and demand.
C) money, stocks, and bonds.
D) inflation and unemployment.

Question 47

The central question in economics is how to:

A) deal with the problem of scarcity.
B) change government economic policy.
C)change people's wants to match their needs.
D)manage money and become wealthy.

Question 48

Microeconomics approaches the study of economics from the viewpoint of:

A) inflation, unemployment, and economic growth.
B) the federal government.
C) individual economic units, such as consumers, firms, and units of government.
D) the economy as a whole.

Question 49

Which one of the following is the most accurate definition of economics?

A) Economics is the study of stocks and bonds.
B) Economics is the study of how people allocate unlimited resources.
C) Economics is the study of how consumers choose to spend their income.
D) Economics is the study of how society chooses to allocate scarce resources.

Question 50

An entrepreneur is:

A) an employee in a factory.
B) the manager of a factory.
C) the person who conceives and starts a business.
D) the person who contracts to work for a specific price.
E) the person who does not assume any risk in business.

Question 51

Entrepreneurs can delegate every one of the following tasks to labor except:

A) hiring and training new employees.
B) assuming business risk and uncertainty.
C) supervision of the production process.
D) researching ideas for new products.
E) marketing the goods and services produced.

Question 52

The sub-discipline of economics that focuses especially on individual markets is:

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

Question 53

Microeconomics is concerned with:

A) some specific market in the economic system.
B) the entire economic system.
C) reducing national unemployment and inflation rates.
D) what causes changes in the overall level of economic activity.

Question 54

Economics is the study of how people:

A) vote for political leaders who decide what is to be produced.
B) make choices to produce and consume goods and services.
C) establish social institutions that maximize well-being.
D) develop value systems that affect their consumption choices.

Question 55

Determining the price of compact discs is a concern of:

A) macroeconomics.
B) microeconomics.
C) both macroeconomics and microeconomics.
D) neither macroeconomics nor microeconomics.

Question 56

The study of microeconomics and macroeconomics differ in that:

A) microeconomics is concerned with the domestic economy and macroeconomics is concerned only with the international economy.
B) microeconomics examines the individual markets of the economy while macroeconomics studies the whole economy.
C) microeconomics studies the actions of households and macroeconomics studies the actions of business firms.
D) microeconomics examines the whole economy while macroeconomics studies the individual units of the economy.

Question 57

Economics, according to its definition, studies how people:

A) earn and spend money.
B) invest in the stock and bond markets.
C) make choices in the face of scarcity.
D) supply goods in response to demand.

Question 58

Which of the following is the best definition of economics?

A) Economics is the study of how to manage corporations to generate the greatest return on shareholder investment.
B) Economics is the study of how to manage city and country government to generate the greatest good to its citizens.
C) Economics is the study of how society chooses to allocate its scarce resources.
D) Economics is the study of how to track revenues and costs within a business.

Question 59

ANSWER:
a
The subject of economics is primarily the study of:

A) the government decision-making process.
B) how to operate a business successfully.
C) decision-making because of the problem of scarcity.
D) how to make money in the stock market.

Question 60

Labor resources:

A) include only physical activities.
B) are only counted as a resource if used in the production of other resources.
C) include only skilled labor.
D) include both physical and mental activities.
E) include human effort involved in the production of goods, but not services.

Question 61

A review of the performance of the economy during the Bush administration is the concern of:

A) macroeconomics.
B) microeconomics.
C) both macroeconomics and microeconomics.
D) neither macroeconomics nor microeconomics.

Question 62

Which of the following is included in the study of macroeconomics?

A) Salaries of college professors.
B) Computer prices.
C) Unemployment in the nation.
D) Silver prices.

Question 63

Which of the following is a macroeconomics topic?

A) Wages of textile workers in the Northeast.
B) The cost of producing 10,000 bookcases.
C) The economy's annual growth rate.
D) National demand for fish.
E) Effects of farm subsidies on food prices.

Question 64

A model is defined as a:

A) description of all variables affecting a situation.
B) positive analysis of all variables affecting an event.
C) simplified description of reality to understand and predict an economic event.
D) prediction based on historical evidence.

Question 65

Which of the following is a macroeconomic subject?

A) Shipping rates.
B) Price of corporate stock.
C) Market price of Japanese cars.
D) Unemployment rate in the nation.

Question 66

The branch of economics that focuses on decision making for the economy as a whole is called:

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

Question 67

An economist at the University of Alaska at Anchorage has been asked to explain why the price of Alaskan crude oil has fallen recently. In order to develop a model, the professor should take which steps?

A) Identify the problem, develop a model based on simplifying assumptions and test the model to formulate a conclusion.
B) Gather data on crude oil prices and seemingly unrelated variables in order to look for associations, then formulate a hypothesis based on those unexpected associations.
C) Ask people in Alaska why they are not purchasing oil.
D) None of these. The oil industry is controlled by a cartel; therefore price changes in the industry cannot be explained using economic theories.

Question 68

The branch of economics that focuses on economywide variables like inflation and unemployment is called:

A) macroeconomics.
B) microeconomics.
C) free-market economics.
D) aggregate economics.

Question 69

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

A) Why do national economies grow?
B) What percentage of consumer income is spent on entertainment?
C) Why do workers prefer the 4-day workweek?
D) How is the electric industry harmed by the passage of new clean air legislation?

Question 70

Macroeconomics deals with the analysis of all of the following questions except:

A) why do national economies grow.
B) what determines a nation's savings and investments.
C) how does a central bank influence inflation.
D) why does a country experience recessions.
E) how does Microsoft price its software packages.

Question 71

Which of the following is included in the study of macroeconomics?

A) Wage rate of college students.
B) Prices of automobiles.
C) Unemployment in the nation.
D) Price of silver and gold.

Question 72

Policies to lower the price level of goods in the nation are a concern of:

A) macroeconomics.
B) microeconomics.
C) both microeconomics and macroeconomics.
D) political science.

Question 73

A sub-discipline of economics that looks at the economy as a whole is:

A) macroeconomics.
B) microeconomics.
C) positive economics.
D) normative economics.
E) impossible to model.

Question 74

The basic purpose of economic models is to:

A) construct simplifying assumptions about the real world.
B) explain reality in all its complexity.
C) construct situations where controlled experiments can be carried out.
D) provide explanations for, and predictions of the relationship between variables.

Question 75

Economists use models to:

A) abstract from the complexities of the world.
B) understand economic behavior.
C) explain and help predict human behavior.
D) do all of these.

Question 76

Which of the following markets is closely related to macroeconomics?

A) Cattle futures market.
B) Fulton's fish market.
C) Skilled labor market.
D) Nation's unemployment rate.

Question 77

Microeconomics deals with the analysis of all the following questions except how:

A) the wages of carpenters are determined.
B) high did unemployment rise during the Great Depression.
C) does Ford decide how to price its cars.
D) does a college student decide how to spend her income.
E) do monopolies and competitive markets differ.

Question 78

Which of the following is a microeconomics topic?

A) A price of a new home.
B) The inflation rate.
C) The economy's growth rate.
D) The unemployment rate.
E) Forecasts of a recession next year.

Question 79

The television network newscaster reports that the national inflation rate the past year equaled 4 percent. This report would be of particular interest to a ____.

A) microeconomist.
B) normative economist.
C) macroeconomist.
D) Ceteris paribus.
E) social science economist.

Question 80

Policies to create jobs in the nation are the concern of:

A) macroeconomics.
B) microeconomics.
C) both microeconomics and macroeconomics.
D) neither microeconomics nor macroeconomics.