Deck 1: What Economics Is About

Question 1

A rationing device is a method used to resolve who gets what of available goods and resources.

Answer 1

True

Question 2

In economics, capital is defined as a financial asset such as stocks and bonds.

Answer 2

False

Question 3

According to economists, one of the four broad categories of resources is money.

Answer 3

False

Question 4

Scarcity affects everyone, even billionaires.

Question 5

To an economist, the terms factor and output are synonyms.

Question 6

If variable X rises as a result of variable Y falling, then X and Y have an inverse relationship.

Question 7

The effect of a decrease in interest rates upon economic growth is an example of positive economics.

Question 8

Some economic studies have shown that mandatory seat belt laws do not lead to a reduction in traffic fatalities.

Question 9

The resource termed labor consists of the physical, but not the mental, talents that people contribute to the production process.

Question 10

Macroeconomics deals with issues involving large corporations, while microeconomics exclusively deals with issues involving small businesses.

Question 11

Economists use the terms resource and input as synonyms.

Question 12

Economists use the word utility to describe the satisfaction one receives from a good.

Question 13

The branch of economics that studies the decisions made by individuals and firms is called macroeconomics.

Question 14

Price is the only rationing device that can be used in a modern economy.

Question 15

Economists sometimes refer to the resource category land as natural resources.

Question 16

The higher the opportunity cost of doing something, the more likely it will be done.

Question 17

In the textbook, economics is defined as the "science of scarcity."

Question 18

When a person is making a decision at the margin he or she is comparing the total benefits from that activity to the total costs of the proposed action.

Question 19

The slope of a straight line is always equal to either 1.0 or -1.0.

Question 20

If someone gives you a free ticket to the movies, then there is no opportunity cost involved with going to the movies.

Question 21

Produced goods used as inputs for the production of other goods comprise the resource known as

A)natural resources.
B)services.
C)capital.
D)entrepreneurship.

Question 22

When economists speak of scarcity, they are referring to the

A)condition in which society is not employing all its resources in an efficient way.
B)condition in which people's wants outstrip the limited resources available to satisfy those wants.
C)economic condition that exists in only very poor countries of the world.
D)condition in which society produces too many frivolous goods and not enough socially desirable goods.

Question 23

Minerals, water, and forests are all considered to be part of the broad resource category known as

A)capital.
B)entrepreneurship.
C)labor.
D)land.
E)none of the above

Question 24

The opportunity cost of attending college is

A)the money one spends on college tuition, books, and so forth.
B)the highest valued alternative one forfeits to attend college.
C)the least valued alternative one forfeits to attend college.
D)equal to the salary one will earn when one graduates from college.

Question 25

The higher the opportunity cost of attending college,

A)the more likely an individual will go to college.
B)the more economics classes an individual will take at college.
C)the fewer economics classes an individual will take at college.
D)the less likely an individual will go to college.

Question 26

The headline in the newspaper reads "County Supervisors Debate Building New Schools." The headline relates closest to which economic concept?

A)goods and bads
B)utility
C)choice
D)efficiency

Question 27

The slope of a (nonlinear) curve varies from one point to another.

Question 28

The higher the opportunity cost of making a new friend, the more likely one is to make a new friend, ​ceteris paribus​.

Question 29

Many years ago, chemists at 3M Corporation were trying to create a super-strong glue. Somehow they got their molecules twisted and came up with one of the weakest glues ever made. But, rather than pouring it down the drain, they tried coating some paper with it, and the "Post-It Note" was born. In this case, 3M was acting as a(n)

A)utility.
B)rationer.
C)entrepreneur.
D)abstraction.

Question 30

The author of the textbook defines economics as the

A)science of efficiency.
B)science of scarcity.
C)study of markets.
D)study of human activity.

Question 31

Economists use the terms resource and input as synonyms.

Question 32

Attempts to determine "what is" are part of __________ economics.

A)positive
B)normative
C)positive and normative
D)neither positive nor normative

Question 33

The physical and mental talents people bring to production processes comprise the resource called

A)entrepreneurship.
B)natural resources.
C)capital.
D)labor.

Question 34

It usually takes less time to buy a six-pack of Pepsi, a loaf of bread, and a bag of potato chips at a small convenience store (such as 7-Eleven) than at a large, full-service grocery store. Which of the following persons is most likely to buy these items at a convenience store?

A)a person with a high opportunity cost of time
B)a person with a low opportunity cost of time
C)a person who is out of work
D)a person who works at a full-service grocery store

Question 35

Here are three things you could do if you do not attend your economics class: watch television with some friends (you value this at $25), read a good book (you value this at $17), or go to work (you could earn $20 during the economics class). The opportunity cost of going to your economics class is

A)$20, because this is the only alternative of the three where you would actually receive a monetary payment.
B)$17, because this is the lowest valued alternative forfeited.
C)$25, because this is the highest valued alternative forfeited.
D)$62, because this is the total dollar sum of the three forfeited alternatives.

Question 36

Entrepreneurship is

A)the talent for organizing the use of land, labor and capital, among other things.
B)skill in influencing government regulators and legislators.
C)accumulated technical knowledge in using labor and capital.
D)knowledge of the particular natural resources to be found in a given area.

Question 37

Scarcity occurs in both wealthy societies and poor societies.

Question 38

The slope of a horizontal line is always equal to zero.

Question 39

Which of the following is not one of the four broad categories of resources?

A)labor
B)government
C)capital
D)entrepreneurship
E)land

Question 40

Which of the following is an example of a positive economic statement?

A)The U.S.public should devote more resources to education.
B)The poor should pay lower taxes and the rich should pay higher taxes.
C)Soap operas should be taken off television.
D)If you drop a ball from the top of a building, it will fall to the ground.

Question 41

Positive economics is concerned with

A)value judgments.
B)cause-effect relationships.
C)observations that cannot be proved.
D)both b and c

Question 42

Economists believe that people's wants are

A)finite.
B)infinite.
C)irrational.
D)unimportant because needs are more important than wants.

Question 43

Which of the following is a positive macroeconomics statement?

A)The central bank should increase the nation's money supply.
B)The increase in the nation's money supply helped push the nation's unemployment rate down in the short run.
C)Ford Motor Company's new advertising campaign ended up hurting General Motors' sales.
D)The local government ought to spend more on recreational facilities.

Question 44

In all cases, positive economics deals with

A)what is.
B)what should be.
C)relatively small units in the economy.
D)aggregates or the entire economy.

Question 45

Opportunity cost is the value of __________________ when a choice is made.

A)the most highly valued forfeited alternative
B)the alternative chosen
C)a free good
D)the sum of all forfeited alternatives

Question 46

The need to make choices is most closely related to the economic concept of

A)opportunity cost.
B)efficiency.
C)inefficiency.
D)utility.
E)disutility.

Question 47

In all cases, normative economics deals with

A)what is.
B)what should be.
C)relatively small units in the economy.
D)the entire economy.

Question 48

In every economy people vie for the economy's rationing device, a process called

A)competition.
B)entrepreneurship.
C)marginal benefit.
D)positive economics.

Question 49

In economics, a synonym for utility is

A)usefulness.
B)satisfaction.
C)sacrifice.
D)a service.

Question 50

Which of the following is a normative macroeconomics statement?

A)The central bank should increase the nation's money supply.
B)The increase in the nation's money supply helped push the nation's unemployment rate down in the short run.
C)Ford Motor Company's new advertising campaign ended up hurting General Motors' sales.
D)The local government ought to spend more on recreational facilities.

Question 51

Microeconomics is the branch of economics that deals with

A)highly aggregated markets or the entire economy.
B)the production side of the economy, exclusively.
C)the buying side of the economy, exclusively.
D)human behavior and choices as they relate to relatively small units --- an individual, a firm, an industry.

Question 52

The condition in an economy that makes a "rationing device" a necessity is:

A)the economy is organized around free markets.
B)the economy is centrally planned by the government.
C)scarcity exists.
D)there are fewer types of goods than there are people in the economy.

Question 53

In all cases, macroeconomics deals with

A)what is.
B)what should be.
C)relatively small units in the economy.
D)the entire economy.

Question 54

Normative economics is concerned with

A)value judgments.
B)opinions.
C)cause-effect relationships.
D)observations that can be proved.
E)both a and b

Question 55

Which of the following is a microeconomics topic?

A)the study of how prices are determined in the computer industry
B)the study of unemployment in the economy
C)the study of how changes in the nation's money supply affect the nation's output
D)a and c
E)b and c

Question 56

Which of the following is a positive microeconomics statement?

A)The central bank should increase the nation's money supply.
B)The increase in the nation's money supply helped push the nation's unemployment rate down in the short run.
C)Ford Motor Company's new advertising campaign ended up hurting General Motors's sales.
D)The local government ought to spend more on recreational activities.

Question 57

Scarcity means

A)wants are greater than the limited resources available to satisfy these wants.
B)wants are less than the limited resources available to satisfy these wants.
C)resources are infinite.
D)wants are limited.
E)both c and d

Question 58

What is the most prominent rationing device you will likely find at your campus bookstore?

A)dollar price
B)brute force
C)anti-theft tags on the high-priced items
D)none of the above

Question 59

The latest Taylor Swift album is available to be downloaded for $12.99. Is this price a rationing device?

A)No, the album will be sold to anyone having the required number of dollars.
B)Yes, because the album will only be purchased by people who are willing and able to pay $12.99.
C)No, for price to be a rationing device, it must be so high that only one unit of the item is sold.
D)Yes, since that is a reasonable price.

Question 60

In all cases, microeconomics deals with

A)what is.
B)what should be.
C)relatively small units in the economy.
D)the entire economy.

Question 61

Which of the following issues is most unlikely to be addressed by an economist practicing positive economics?

A)the relationship between the minimum wage and the number of unemployed unskilled workers
B)the effect of a minimum wage increase on inner-city crime rates
C)the desirability of a minimum wage increase
D)the consequences of implementing a minimum wage law in China

Question 62

A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers fatalities per accident from 0.10 to 0.07 while raising the number of accidents per period from 35,000 to any more than

A)35,000.
B)38,500.
C)37,450.
D)50,000.

Question 63

A mandatory seat-belt law ends up raising the number of traffic fatalities if it lowers fatalities per accident from 0.05 to 0.03 while raising the number of accidents per period from 30,000 to greater than ___________ accidents per period.

A)48,000
B)50,000
C)500,000
D)45,000

Question 64

The synonym economists commonly use for additional is

A)capital.
B)rational.
C)marginal.
D)economic.

Question 65

The branch of economics that studies the decisions of individuals and firms is called

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

Question 66

A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers fatalities per accident from 0.11 to 0.08 while raising the number of accidents per period from 100,000 to any more than

A)108,000.
B)111,111.
C)137,500.
D)110,000.

Question 67

Amy's opportunity cost of going to the movies is

A)the price of the ticket.
B)zero, if she has a gift card that covers the cost of the movie.
C)the price of the ticket plus the value to Amy of what she would have chosen to do with her time had she not chosen to go to the movies.
D)both b and c

Question 68

If it is discovered that using drugs enhances a person's chance of contracting a fatal disease, the cost of using drugs

A)increases.
B)decreases.
C)is not affected.
D)is irrelevant, since they are illegal anyway.

Question 69

Which of the following would NOT be considered a macroeconomic topic?

A)the reasons for a decline in the price of crude oil
B)the cause of a downturn in the economy
C)the effect of the government budget deficit on inflation
D)the causes of inflation and unemployment

Question 70

Prior to attending college, Marvin is offered a lucrative four-year contract as an actor on a daytime soap opera. Assuming that acting and attending college are Marvin's preferred alternatives and that he must choose between these two options, his opportunity cost of attending college after receiving the offer on the soap opera ________________, making him ____________ likely to attend college than before he received the offer.

A)increases; less
B)decreases; more
C)stays the same; equally likely
D)increases; more
E)decreases; less

Question 71

All sellers may be tempted to raise the price of what they sell, but a negative unintended effect for the seller of raising the price could be __________ in units sold that is large enough to __________ the seller's total revenue earned.

A)an increase; raise
B)an increase; lower
C)a decrease; raise
D)a decrease; lower

Question 72

Most states have instituted mandatory seatbelt laws to reduce traffic fatalities. An economist may point out that an unintended effect of these laws is

A)an increase in the price of automobiles, further reducing fatalities.
B)an increase in driving speed, reducing the number of accidents.
C)a decrease in driving speed, further reducing fatalities.
D)an increase in risky driving behavior, increasing fatalities.

Question 73

In economics,one of the effects of scarcity is

A)disutility.
B)utility.
C)choice.
D)inefficiency.
E)a, c, and d

Question 74

Several years ago, a bookstore chain extended its closing time from 9 p.m. to 10 p.m. Now it is considering a further extension to 11 p.m. In making this marginal decision, the results of having gone from 9 p.m. to 10 p.m. are

A)no longer relevant to the current decision.
B)relevant if the marginal costs and benefits were unequal.
C)relevant since they are part of the calculation of total costs and benefits.
D)relevant if the marginal costs and benefits were equal.

Question 75

The question of how a tax change might impact U.S. economic output is most closely associated with the study of

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

Question 76

Which of the following is a positive economic statement?

A)The temperature is too high today.
B)The temperature is 105 degrees today.
C)It is too hot to jog today.
D)I enjoy summer evenings when it cools off.

Question 77

At the optimal or efficient level of an activity, the activity's marginal benefit must

A)be zero.
B)be greater than zero.
C)equal the marginal cost of the activity.
D)exceed the marginal cost of the activity.

Question 78

Decision making "at the margin" means making a choice based on __________ of a decision.

A)the total benefits
B)the total costs
C)comparing the total benefits and costs
D)comparing the additional benefits and costs

Question 79

The opportunity cost of attending college

A)consists of the tuition costs only.
B)consists of the tuition costs plus the costs of room and board and other expenses.
C)is zero, if the student receives a scholarship that covers the costs of tuition, room and board, and other expenses.
D)varies from person to person.
E)both b and c

Question 80

Which of the following statements is false?

A)There are always opportunity costs to making choices.
B)Because of scarcity, choices must be made.
C)Elementary education at public schools is free.
D)When government builds a new highway, taxpayers end up with less of some of the things they would otherwise have.