Question 1

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

Accepted Answer

At the optimal or efficient level of an activity, the marginal benefit of the activity should equal its marginal cost. If the marginal benefit of the activity is greater than its marginal cost, then the activity should be increased until this equality is achieved. If the marginal benefit is less than the marginal cost, then the activity should be decreased until this equality is achieved. Therefore, the optimal or efficient level of an activity occurs where the marginal benefit equals the marginal cost, which is answer choice C.

Question 2

The synonym economists commonly use for additional is

Accepted Answer

Economists commonly use the term "marginal" to refer to additional units of a good or service. It represents a small incremental change or addition, such as the cost or benefit of producing or consuming one more unit of a good. Therefore, C is the best choice as a synonym for additional in this context.

Question 3

Economists believe that people's wants are

Accepted Answer

Economists believe that people's wants are infinite because there is always something more that someone desires. People's wants are only limited by their imagination and thus can never be completely satisfied.

Question 4

In economics,a synonym for utility is

Accepted Answer

Utility in economics refers to the total satisfaction received from consuming a good or service.

Question 5

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

Accepted Answer

A rationing device is something that limits the amount of a good or service that is available to buyers. In this case, the price of $12.99 is high enough to discourage some potential buyers who cannot afford it, thereby rationing the album to those who are willing and able to pay for it. Therefore, option B is the correct choice.

Question 6

Scarcity means

Accepted Answer

Scarcity is the fundamental economic problem that arises because people have unlimited wants but resources are limited. This means that wants are greater than the limited resources available to satisfy these wants. Option B is incorrect because it implies that resources are greater than wants, which is not true. Option C is incorrect because resources are not infinite but rather limited. Option D is partly correct but incomplete since it does not take into account that there are limited resources available to satisfy these wants. Option E is incorrect because resources are not infinite.

Question 7

Opportunity cost is the value of

Accepted Answer

Opportunity cost is the value of the best (or most highly valued) forfeited alternative. It is the cost of choosing one option over another. Therefore, the best choice is A because it accurately defines opportunity cost.

Question 8

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

Accepted Answer

A rationing device is a mechanism that determines who gets what goods and in what quantity when there is scarcity. If there were no scarcity, there would be no need for a rationing device. Therefore, the presence of scarcity in an economy makes a rationing device a necessity.

Question 9

Positive economics is concerned with

Accepted Answer

Positive economics is concerned with cause-effect relationships, meaning it is based on observable and testable facts. It does not involve value judgments or unprovable observations.

Question 10

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

Accepted Answer

"Decision making at the margin" means comparing the additional benefits and costs of a decision. Therefore, the best choice is D, as it correctly describes the concept. A, B, and C do not fully capture the idea of making choices based on the incremental benefits and costs.

Question 11

Which of the following is a positive economic statement?

Accepted Answer

A positive economic statement refers to a statement that can be objectively verified or proven true or false. Option B can be verified by checking the thermometer, making it a positive economic statement. The rest of the options are opinions and cannot be objectively verified.

Question 12

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

Accepted Answer

The decision to extend closing time from 10 p.m. to 11 p.m. is a marginal decision, meaning it is based on the additional costs and benefits of staying open an extra hour beyond 10 p.m., not on the costs and benefits incurred from previous changes in hours. Therefore, the results of the previous extension from 9 p.m. to 10 p.m. are no longer relevant to this new decision.

Question 13

Normative economics is concerned with

Accepted Answer

Normative economics involves value judgments and opinions about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal, making both A and B correct.

Question 14

In all cases,microeconomics deals with

Accepted Answer

Microeconomics deals with the behavior of individual consumers, firms, and markets in the economy, rather than the entire economy as a whole. It focuses on the interactions between supply and demand for specific goods and services, the pricing decisions of firms, and the decisions made by consumers in response to those prices.

Question 15

In all cases,positive economics deals with

Accepted Answer

Positive economics is concerned with explaining what is happening in the economy, such as describing how prices and quantities are determined in markets, and how different policies or events affect economic outcomes. It is based on empirical evidence and does not make value judgments or normative recommendations about what should be done. Therefore, option A is the correct answer as it reflects the focus of positive economics.

Question 16

In all cases,normative economics deals with

Accepted Answer

Normative economics deals with what should be, as opposed to descriptive or positive economics which deals with what is.

Question 17

In all cases,macroeconomics deals with

Accepted Answer

Macroeconomics deals with the entire economy, including national income, unemployment, inflation, and government policies.

Question 18

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

Accepted Answer

Dollar price is the primary rationing device used in most market transactions, including those at a campus bookstore. It determines who can purchase an item based on their willingness and ability to pay the set price.

Question 19

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

Accepted Answer

The concept of having to make choices is most closely related to opportunity cost, which refers to the cost of forgoing the next best alternative when making a decision. When individuals or firms make choices, they must weigh the benefits of that choice against what they are giving up by not choosing an alternative. This is the essence of opportunity cost and highlights the importance of making efficient or optimal choices. Choosing the option with the highest utility or benefit and lowest opportunity cost will result in the best outcome.

Question 20

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

Accepted Answer

Competition is the process by which individuals and firms compete for limited resources and market share in an economy. This includes vying for the economy's rationing device, such as allocation of goods and services, investment opportunities, and employment positions. Entrepreneurship, marginal benefit, and positive economics are related concepts, but do not refer specifically to the process of competing for resources in the economy.

Quiz 1: What Economics Is About