Question 1

Since resources are abundant,we do not have to make choices about their use.

Accepted Answer

Resources are not unlimited, which means we have to make choices about how to use them. This is the basic principle of economics known as scarcity.

Question 2

To an economist,individuals are acting "rationally" if they are striving to do their best to achieve their goals.

Accepted Answer

Rationality in economics refers to individuals making decisions and taking actions that are based on their best interests and achieving their goals. Therefore, if individuals are striving to do their best to achieve their goals, they are considered rational according to economic theory.

Question 3

Scarcity forces us to choose,and choices are costly because we must give up other opportunities that we value

Accepted Answer

This statement accurately reflects the economic principle of scarcity and the concept of opportunity cost, where we must choose between limited options and forego alternative choices that also have value.

Question 4

Scarcity applies to decision makers in macroeconomics but not in microeconomics.

Accepted Answer

Scarcity applies to decision makers in both macroeconomics and microeconomics. In both cases, limited resources must be allocated among competing wants and needs, leading to the necessity of making choices and trade-offs.

Question 5

If we choose more work we sacrifice leisure.

Accepted Answer

This statement is true as if one chooses to work more, they will have less time for leisure activities.

Question 6

Economists believe that only a small part of human behavior can be explained and predicted by assuming that most people act as if they are motivated by their own self-interest in an effort to increase their expected personal satisfaction.

Accepted Answer

Economists widely accept that a significant portion of human behavior can be explained and predicted by assuming that individuals act out of self-interest to increase their personal satisfaction, a principle foundational to many economic theories and models.

Question 7

When people make choices they typically know with certainty which choice is best.

Accepted Answer

People often face uncertainty when making choices and do not always know with certainty which choice is best. They may weigh pros and cons, consider potential risks and benefits, and make educated guesses, but there is usually some level of uncertainty involved in decision making.

Question 8

It is possible to completely eliminate scarcity.

Accepted Answer

Scarcity is essentially the concept of having limited resources but unlimited wants, needs or desires. As long as human wants are infinite and resources remain limited, scarcity cannot be completely eliminated.

Question 9

Economists believe that most people's actions are rational and purposeful not random and chaotic.

Accepted Answer

Economists assume that individuals make decisions based on their own self-interest and try to maximize their utility or well-being, which is considered rational behavior.

Question 10

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Accepted Answer

Microeconomics focuses on how individual consumers, producers, and firms make decisions and allocate resources in order to meet their needs and achieve their goals, given the scarce resources they have available. It analyzes the behavior of small economic units and how they interact in markets to influence prices, quantities, and production levels. In contrast, macroeconomics examines the broader performance of the economy as a whole, including issues such as inflation, unemployment, growth, and monetary and fiscal policies.

Question 11

Economic models are of limited use since they cannot be tested empirically.

Accepted Answer

Economic models can be tested empirically using real-world data to see if their predictions match with actual outcomes. However, their accuracy is limited by the simplifications and assumptions made in the modeling process.

Question 12

Economics is the study of choices we make among our many wants and desires.

Accepted Answer

Economics is concerned with the allocation of scarce resources among alternative ends, which involves making choices among competing wants and needs.

Question 13

Self-interest could never include benevolence.

Accepted Answer

Self-interest can include benevolence if a person believes that being kind and helping others will ultimately benefit them in some way, such as improving their reputation or building strong relationships.

Question 14

Economists presume that when making a decision,individuals consider both the current action and the future consequences of that action.

Accepted Answer

This is a fundamental principle of economics, known as time preference. Individuals weigh the costs and benefits of a decision not just in the present moment, but also in relation to the future potential outcomes.

Question 15

A good economic theory is more useful when it includes detailed facts even if the facts are not relevant to the questions being investigated.

Accepted Answer

Including irrelevant facts in an economic theory can actually decrease its usefulness, as it may confuse or distract from the main points being investigated. A good economic theory should have relevant, accurate, and precise facts that support its arguments and conclusions.

Question 16

Economists assume that most individuals act as if they are motivated by self-interest and respond in predictable ways to changing circumstances.

Accepted Answer

This is the basic assumption of the economic theory of rational choice.

Question 17

Wealthy consumers do not have to make decisions on what to buy or how much to save.

Accepted Answer

Wealthy consumers still have to make decisions on what to buy and how much to save. While they may have more financial resources available to them, they still face choices and trade-offs in their spending and saving decisions.

Question 18

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

Accepted Answer

Microeconomics is actually the branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of limited resources. Inflation and unemployment are topics studied in macroeconomics, which analyzes the overall performance and behavior of the economy on a larger scale.

Question 19

One topic that microeconomics explores is how prices are determined in individual markets,while macroeconomics is concerned with issues such as the economy's overall rate of inflation,economic growth and unemployment.

Accepted Answer

This statement accurately describes the differences between microeconomics and macroeconomics.

Question 20

Living in a world of scarcity involves trade-offs.

Accepted Answer

This is a fundamental concept in economics that recognizes the limited resources available to individuals, organizations, and society as a whole, forcing them to make choices about how to allocate those resources. These choices involve trade-offs, where selecting one option necessitates sacrificing another, and are an essential component of decision-making in every aspect of life.

Quiz 1: The Role and Method of Economics