Deck 1: Getting Started

Question 1

Which of the following best defines economics?

A)Economics teaches how to limit our wants.
B)Economics studies how to choose the best alternative when coping with scarcity.
C)Economics helps you earn as much money as possible.
D)Economics analyzes all aspects of human behavior in general.
E)Economics is concerned with prices and quantities of goods and services, both at the individual level and at the industry level.

Answer 1

B

Question 2

Which of the following statements best describes the study of economics? Economics studies how

A)to organize production so that scarcity does not occur.
B)firms make profits.
C)we make choices in the face of scarcity.
D)to create incentives so that scarcity does not exist.
E)businesses reach decisions.

Answer 2

C

Question 3

Scarcity exists because

A)human wants exceed the resources available to satisfy them.
B)some individuals have low income.
C)the costs of production are high.
D)some people make bad economic decisions.
E)people take too much leisure time.

Answer 3

A

Question 4

The primary focus of microeconomics is

A)to examine the operation of the entire (aggregate)economy.
B)to examine the behavior and operation of the individual units or sectors that make up the economy.
C)our government's monetary policy.
D)the levels of employment and inflation.
E)to study how we managed to eliminate scarcity.

Question 5

Microeconomics includes the study of the

A)aggregate effects on the national economy.
B)recessions and inflation in the global economy.
C)choices made by individuals and businesses.
D)reasons why the government changes interest rates.
E)nationwide unemployment rate.

Question 6

Economics is best defined as the social science that studies

A)how a person can get everything he or she wants.
B)the reason money exists.
C)the way to eliminate choices in our decisions.
D)the choices that societies, and the people and institutions that make up societies, make in dealing with the issue of scarcity.
E)how choices made in the social interest must conflict with choices made in the self-interest.

Question 7

The study of economics is best described as a study of

A)the factors that influence the stock and bond markets.
B)capitalism.
C)the choices made in producing goods and services.
D)coping with scarcity, and choices made as a result of scarcity in a society.
E)how people earn a living.

Question 8

Economics is the social science that studies

A)the real reasons people buy goods and services.
B)the psychology of individuals and businesses.
C)whether a nation has enough natural resources.
D)how people make choices to cope with scarcity.
E)how choices made in the social interest could eliminate scarcity.

Question 9

Which of the following statements best describes the study of economics? Economics studies how

A)to organize production so that scarcity does not occur.
B)firms make profits.
C)we make choices in the face of scarcity.
D)to create incentives so that scarcity does not exist.
E)businesses reach decisions.

Question 10

Scarcity forces people to

A)choose among available alternatives.
B)cheat and steal.
C)be unwilling to help others.
D)live at a low standard of living.
E)consume as much as they can as quickly as they can.

Question 11

Which of the following is a microeconomic issue?

A)The price of gasoline increases in the United States this year.
B)The Brazilian economy experiences rapid economic growth.
C)The unemployment rate soars in Spain.
D)Inflation skyrockets in Russia.
E)The U.S. government cuts taxes to combat a recession.

Question 12

Which of the following is a microeconomic issue?

A)Growth in the U.S. economy slowed.
B)Increased federal government expenditures have lowered the unemployment rate.
C)The inflation rate fell this year.
D)The quantity of wheat grown in the United States increases this year.
E)The U.S. government cuts taxes to combat a recession.

Question 13

Because human wants are insatiable and unlimited while available resources are limited, people are said to face the problem of

A)scarcity.
B)why to produce.
C)macroeconomics.
D)microeconomics.
E)social interest versus self-interest.

Question 14

What is the reason that all economic issues and problems occur?

A)All nations use some form of money to buy and sell goods and services.
B)Humans are always wasteful and inefficient in production and consumption.
C)Powerful governments are able to control production and consumption.
D)Human wants exceed the resources available to satisfy them.
E)People seek only their own self-interest.

Question 15

Scarcity

A)is the inability to satisfy all our wants.
B)leads to higher prices.
C)applies only to people living in poverty.
D)is not something that affects very rich people.
E)used to exist everywhere but has been eliminated in advanced economies.

Question 16

Scarcity requires that we

A)produce efficiently.
B)learn to limit our wants.
C)have the most rapid economic growth possible.
D)have unlimited resources.
E)make choices about what goods and services to produce.

Question 17

Scarcity means that

A)what we can produce with our resources is greater than our material wants.
B)resources are unlimited.
C)wants are greater than what we can produce with out resources.
D)governments must make up for shortages in resources.
E)choices made in self-interest cannot be the same as those made in the social interest.

Question 18

Which of the following is a microeconomic topic?
I∙K-Mart's decision to close stores that are not making a profit
Ii∙Home Depot's choice to hire more full-time employees because its sales increased
Iii∙Delta Airlines changes its fares.

A)i only
B)ii only
C)i and iii
D)ii and iii
E)i, ii, and iii

Question 19

Which of the following is a microeconomic topic?

A)Northwest Airlines analyzes the benefits of adding one more flight to Salt Lake City.
B)Unemployment soars as taxes increase.
C)The government leaves interest rates unchanged as the economy improves.
D)Germany's government increases taxes to avoid a budget deficit.
E)Chinese economic growth slows.

Question 20

Scarcity means we must

A)consume less.
B)produce less.
C)make choices.
D)earn more.
E)work more.

Question 21

When a third string NFL quarterback earns more than a police officer, society answers the ________ question.

A)for whom
B)what
C)how
D)why
E)social interest vs. self-interest

Question 22

Which of the following is a macroeconomic topic?

A)The federal government's decision to spend more on environmental protection
B)The county government's decision to increase the sales tax for your county
C)Why did production and jobs expand slowly in 2011?
D)General Motors decides what prices to set for their new models.
E)The effect of floods in the growing areas on the price and quantity of wheat

Question 23

The question of "What goods and services get produced?" most closely relates to which of the following issues?

A)the distribution of goods and services in the economy
B)producing goods and services in the least costly manner
C)building a missile defense system, or putting a computer in every elementary school classroom
D)obtaining specialized training to increase one's income
E)taxing high income workers to give payments to poor households

Question 24

Which economic question depends on the incomes that people earn and the prices they pay for goods and services?

A)What?
B)How?
C)For whom?
D)Why?
E)Where?

Question 25

The question of "How are goods and services produced?" most closely addresses which of the following issues?

A)Should Ford build SUVs or luxury cars?
B)Should Ford use expensive industrial robots or inexpensive Mexican autoworkers to produce SUVs?
C)Should contractors building residential housing or shopping malls?
D)Is income distributed fairly in the United States?
E)Why are Christmas trees popular only in December?

Question 26

When you make the decision to spend your time attending class, which economic question are you answering?

A)What?
B)How?
C)For whom?
D)Why?
E)Social interest

Question 27

When Ford decides to increase production of hybrid cars, it directly answers the ________ question.

A)what
B)how
C)for whom
D)where
E)why

Question 28

Which of the following is a macroeconomic topic?
I∙China increases interest rates to slow its economic growth.
Ii∙Congress lowers tax rates to try and lower the unemployment rate.
Iii∙Nissan decides to produce more electric Leaf models and fewer Altima sedans.

A)i and ii
B)i, ii and iii
C)iii only
D)i and iii
E)ii and iii

Question 29

Which of the following is a topic studied in macroeconomics?

A)The pricing decisions in the computer hardware industry
B)The effect on economic growth if the government raises taxes
C)How the wheat industry determines how much wheat to grow
D)The impact of labor unions on wages
E)The impact of higher prices for gasoline on the number of SUVs people buy

Question 30

Macroeconomics is the study of

A)the actions of individual consumers.
B)national or global economies.
C)the actions of individual businesses.
D)the government.
E)how ceteris paribus affects causation.

Question 31

Of the three major economic questions, which of the following is the best example of a "How?" question?

A)Should we produce more heavy fleece coats?
B)Should we collect tolls on turnpikes using human toll collectors or mechanized toll machines?
C)Should we build log homes or build factories from bricks?
D)Should we spend more on health care?
E)Should we eat more oatmeal?

Question 32

When Delta decides to quit flying to Lithuania, it directly answers the ________ question.

A)what
B)why
C)for whom
D)how
E)when

Question 33

Which of the following is a microeconomic topic?
I∙Gas prices increase after a hurricane hits the gulf coast.
Ii∙Xavier starts a new business designing web pages.
Iii Abby decides to practice an extra hour of soccer instead of studying.

A)i, ii and iii
B)i only
C)ii and iii
D)ii only
E)i and ii

Question 34

When a home builder decides to computerize all of its production schedule, it directly answers the ________ question.

A)for whom
B)what
C)where
D)how
E)why

Question 35

When Fresh Express Salads decides to mechanically pick all of its lettuce, it directly answers the ________ question.

A)what
B)how
C)for whom
D)where
E)when

Question 36

Which of the following BEST describes macroeconomics?

A)It analyzes the aggregate effects on the national economy of the choices made by individuals, firms, and governments.
B)It studies the choices that individuals and businesses make when coping with scarcity.
C)It examines how the choices that individuals affect governments.
D)It is not a social science because its predictions cannot be tested.
E)Proving causation is never a problem for macroeconomics.

Question 37

When the federal government decides to pay senators more than it pays soldiers, it answers the ________ question.

A)why
B)how
C)for whom
D)what
E)where

Question 38

Of the three major economic questions, which of the following is the best example of a "What?" question?

A)Should automobiles be produced using workers or robots?
B)Should higher-income or lower-income people buy SUVs?
C)Should we make faster microprocessors or pest-resistant corn?
D)Should migrant workers or domestic workers be used to pick grapes?
E)What should doctors be paid?

Question 39

When the power company decides to use manpower to bury its lines, it directly answers the ________ question.

A)what
B)for whom
C)how
D)why
E)when

Question 40

Which of the following is a macroeconomic issue?

A)The price of a ticket to Walt Disney World in Orlando is increased.
B)The National Football League signs a new television contract.
C)The number of jobs and production in Zimbabwe increase.
D)The Iowa corn harvest is smaller than normal.
E)Utilities are required to install more anti-pollution devices.

Question 41

People must make choices because

A)most people enjoy shopping.
B)of scarcity.
C)there are many goods available.
D)the question "What goods and services are produced?" is not adequately answered.
E)making choices is in the social interest.

Question 42

All economic questions and problems arise from

A)the fact that society has more than it needs.
B)turmoil in the stock market.
C)the unequal distribution of income.
D)a society's wants exceeding what its scarce resources can produce.
E)the difference between self-interest and social interest.

Question 43

Whether a company produces fishing rods mostly by hand or using high-tech machinery is a question of

A)for whom will goods be produced.
B)when will the goods be produced.
C)where will the goods be produced.
D)how will the goods be produced.
E)why will the goods be produced.

Question 44

The question "Should economics majors or sociology majors earn more after they graduate?" is an example of a ________ question.

A)what
B)how
C)for whom
D)where
E)why

Question 45

Choices that are best for the society as a whole are choices in pursuit of

A)answering the "how" question.
B)the social interest.
C)self interest.
D)incentives.
E)answering the "for whom" question.

Question 46

To economists, scarcity means that

A)limited wants cannot be satisfied by the unlimited resources.
B)a person looking for work is not able to find work.
C)the number of people without jobs rises when economic times are bad.
D)there can never be answers to the what, how or for whom questions.
E)unlimited wants cannot be satisfied by the limited resources.

Question 47

Scarcity results from the fact that

A)people's wants exceed the resources available to satisfy them.
B)not all goals are desirable.
C)we cannot answer the major economic questions.
D)choices made in self-interest rare not always in the social interest.
E)the population keeps growing.

Question 48

Which of the following statements is true regarding scarcity?

A)Scarcity affects poorer countries only.
B)An economy experiences scarcity only when the incomes of its citizens decline.
C)Poor people experience scarcity more often than do rich people.
D)All citizens in a wealthy economy experience scarcity.
E)Scarcity could be overcome if people would make all choices in the social interest.

Question 49

Microeconomics includes the study of

A)how countries decide to fund their budget deficits.
B)the choices that individuals and businesses make.
C)how a nation promotes economic growth.
D)the effect on the national economy of the choices that individuals make.
E)the overall amount of production within the economy.

Question 50

When Ferrari decides to produce 1,200 360 Modenas each year, Ferrari is answering the ________ question.

A)for whom
B)how
C)what
D)why
E)scarcity

Question 51

The question "Should we produce LCD televisions or computer monitors?" is an example of a ________ question.

A)what
B)how
C)for whom
D)where
E)why

Question 52

Choices that are best for the individuals that make them are choices in pursuit of

A)the social interest.
B)efficiency.
C)incentives.
D)self interest.
E)equity.

Question 53

Which of the following is a microeconomic issue?

A)Why has unemployment risen nationwide?
B)Why has economic growth been rapid in China?
C)What is the impact on the quantity of Pepsi purchased if consumers' tastes change in favor of non-carbonated drinks?
D)Why is the average income lower in Africa than in Latin America?
E)Why did overall production increase within the United States last year?

Question 54

The characteristic from which all economic problems arise is

A)political decisions.
B)providing a minimal standard of living for every person.
C)how to make a profit.
D)hunger.
E)scarcity.

Question 55

Self interest

A)reflects choices that are best for society as a whole.
B)reflects choices that are best for the individual who makes them.
C)has nothing to do with determining what goods are produced.
D)occurs only when wants exceed available resources.
E)cannot be used to determine how goods are produced.

Question 56

When a landscaping company decides to use drafting software and computers instead of hiring designers to draw design plans by hand, it is answering the ________ question.

A)how
B)what
C)for whom
D)opportunity cost
E)why

Question 57

The question "Should we produce houses using bricks or wood?" is an example of a ________ question.

A)what
B)how
C)for whom
D)where
E)why

Question 58

If a decision is made and it is the best choice for society, the decision is said to be

A)a valid economic choice.
B)made in self-interest.
C)made in social interest.
D)consist with scarcity.
E)a want-maximizing choice.

Question 59

When unskilled teens earn less than college graduates, society answers the ________ question.

A)how
B)what
C)for whom
D)why
E)social interest versus self-interest

Question 60

Canada has nationalized health care, so that everyone, regardless of their ability to pay, has some access to health care.Based on this observation, Canada has decided that "everyone, regardless of their ability to pay" is the answer to what microeconomic question?

A)What type of health care will be produced and in what quantity?
B)How will health care be produced?
C)For whom will health care be produced?
D)Why will we offer health care?
E)Must we offer health care?

Question 61

You have chosen to take a trip during spring break.If you had not gone, you would either have worked at a temporary job or studied for exams.The opportunity cost of your trip is

A)the wages you would have earned from working.
B)the lower grade earned by not studying.
C)the wages you would have earned from working and the lower grade earned by not studying.
D)the value of the trip.
E)We cannot determine what the opportunity cost is without knowing which alternative, working or studying, you would have preferred.

Question 62

The opportunity cost of a decision is measured in terms of

A)time.
B)the price of the alternative we choose.
C)the next best thing given up.
D)the price of a new opportunity that arises.
E)sunk cost.

Question 63

Mothers Against Drunk Drivers (MADD)campaigned to increase the legal penalties of drunk driving.This successful campaign ________ of drunk driving.

A)increased the marginal benefit
B)decreased the marginal benefit
C)increased the marginal cost
D)decreased the marginal cost
E)had no effect on the marginal cost or marginal benefit but did affect the total benefit

Question 64

What is NOT true about rational choice?

A)It can result in different decisions for different individuals.
B)It involves comparing costs and benefits.
C)It might turn out not to have been the best choice after the event.
D)It is a choice that uses the available resources to best achieve the objective of the person making the choice.
E)It is the same for all individuals.

Question 65

A rational choice is one that

A)always turns out for the best for the decision maker.
B)creates no costs for the decision maker.
C)must be made with perfect information.
D)uses the available resources to most effectively satisfy the wants of the person making the choice.
E)is made in the social interest rather than the self-interest.

Question 66

The opportunity cost of a one-unit increase in an activity

A)is greater than the marginal benefit.
B)is called rational cost.
C)decreases as you do more of it.
D)is called marginal cost.
E)is measured by what the person is willing to give up to get one more unit of the activity.

Question 67

Suppose you take a trip during Spring Break.To determine the benefit of taking the trip, you

A)calculate the opportunity cost of the trip.
B)measure what you are willing to give up to take the trip.
C)determine the sunk cost of taking the trip.
D)calculate the value of the next best alternative foregone.
E)must measure what the trip is worth to you and then subtract the cost of the trip.

Question 68

The value of the best thing that a person must give up when making a decision is known as the ________ cost.

A)direct
B)benefit's
C)opportunity
D)explicit
E)sunk

Question 69

The benefit from a good or service that you purchase is measured by

A)the dollar amount that is paid for the good or service.
B)the dollar amount you can get by selling the good or service.
C)what you are willing to give up to obtain the good or service.
D)how strong the incentives were that lead to buying the good or service.
E)None of the above answers is correct because there is no way to measure the benefit you receive from purchasing a good or service.

Question 70

Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time.Your opportunity cost of taking the test is the

A)forgone work.
B)forgone party.
C)forgone working and partying.
D)forgone working or partying, depending on which was your next best choice.
E)test because you are taking it.

Question 71

In economics, cost is measured as ________, and benefit is measured as ________.

A)what you must give up to get something; what you are willing to give up to get it
B)what you are willing to give up to get it; what you must give up to get something
C)the amount of money that you pay for something; the amount of money that someone else is willing to pay you
D)what you are willing to pay on the margin; what the government pays you when you are unemployed or retired
E)the amount of money that you pay on the margin; the amount of money that you receive on the margin

Question 72

The marginal cost of an activity ________ as you do more of it.

A)increases
B)decreases
C)doesn't change
D)changes only if the marginal benefit of the activity does not change
E)changes only if the marginal benefit of the activity changes

Question 73

Economists measure opportunity cost

A)only when it is on the margin.
B)as the best thing given up.
C)as the sum of all forgone opportunities.
D)as the same as marginal benefit.
E)as equal to the sum of all the sunk costs.

Question 74

A professor changes the penalty for cheating on exams from getting a 0 on the exam to getting an F in the course.The professor has

A)increased the marginal cost of cheating.
B)decreased the marginal benefit of cheating.
C)made all the students act in the social interest.
D)recognized that students don't respond to incentives.
E)recognized that students don't make rational choices.

Question 75

The cost of a one-unit increase in an activity is called the

A)opportunity benefit.
B)rational cost.
C)marginal cost.
D)marginal benefit.
E)margin.

Question 76

An opportunity cost is

A)the dollar amount that is paid.
B)anything the decision maker believes costs to be.
C)the benefits of the highest-valued alternative forgone.
D)whatever is paid out and cannot be reduced or reversed.
E)another term for all the sunk costs.

Question 77

Rational choice

A)is a choice that uses the available resources to best achieve the objective of the person making the choice.
B)is always efficient.
C)is what you must give up to get what you want.
D)is made by comparing different incentives.
E)provides the answer to only the "how" question.

Question 78

The benefit of a one-unit increase in an activity

A)is called marginal cost.
B)is always greater than the opportunity cost of that activity.
C)decreases as you do more of it.
D)is measured by what you must give up.
E)is called rational-choice benefit.

Question 79

If Jessie studies economics for two hours instead of going to the movies with her friends, then

A)the benefit of studying is the missed movie.
B)the opportunity cost of studying is the missed movie.
C)Jesse definitely is making a rational choice.
D)Jessie is ignoring a sunk cost.
E)Jessie is not responding to any incentives.

Question 80

Ali decides to attend the one-hour review session for microeconomics instead of working at his job.His job pays him $10 per hour.Ali's opportunity cost of attending the review session is

A)the $10 he could have earned at his job.
B)the value of the session minus the $10 he could have earned at his job.
C)nothing, because the review session does not cost anything.
D)equal to the benefit he gets from the review session.
E)the one-hour review session.