Question 1

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

Accepted Answer

The concept of opportunity cost recognizes that making a choice means giving up the opportunity to choose something else. Therefore, the need to make choices is closely related to the concept of opportunity cost.

Question 2

In all cases,normative economics deals with

Accepted Answer

Normative economics deals with what should be, which involves making value judgments and recommendations for how the economy should be structured or operate. This is different from positive economics, which deals with what is and focuses on providing descriptive analyses of economic phenomena.

Question 3

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

Accepted Answer

Price can act as a rationing device when it limits the quantity demanded of a product. In this case, the price of $12.99 may limit the number of people who are willing and able to purchase the album, making it a rationing device.

Question 4

Which of the following is a positive economic statement?

Accepted Answer

This statement provides a specific fact that can be measured and verified. It does not make a value judgment or express a personal preference.

Question 5

Economists believe that people's wants are

Accepted Answer

Economists believe that people's wants are infinite, meaning that there is always something else that a person desires, and they will never run out of things they want. This is a fundamental assumption that guides much of economic theory and analysis.

Question 6

In all cases,macroeconomics deals with

Accepted Answer

Macroeconomics deals with the study of the entire economy including its performance, structure, and behavior. It is concerned with the aggregate variables such as national income, unemployment, inflation, and economic growth. It is different from microeconomics which deals with individual economic actors such as households, firms, and markets. A, B, and C are incorrect because macroeconomics does not deal with what should be, but rather focuses on analyzing the current state of the economy. It also deals with relatively large units in the economy, unlike microeconomics which deals with relatively small units.

Question 7

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

Accepted Answer

At the optimal level of an activity, the marginal benefit should equal the marginal cost since if the marginal benefit is less than the marginal cost, it implies that the activity is not providing enough benefit compared to the cost incurred, and vice versa. Thus, for efficiency, the optimal level is reached where the marginal cost and marginal benefit of the activity are equal.

Question 8

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 9

Positive economics is concerned with

Accepted Answer

Positive economics is concerned with objective statements and cause-effect relationships, rather than subjective value judgments. While observations may not always be directly provable, positive economics still seeks to make empirical observations and testable hypotheses about economic phenomena.

Question 10

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

Accepted Answer

Making decisions "at the margin" means comparing the additional benefits and costs of a decision. Therefore, the best choice is option D.

Question 11

Opportunity cost is the value of

Accepted Answer

Opportunity cost refers to the value of the best alternative that is forgone in order to pursue a certain action. Therefore, the correct answer is A, as it represents the most highly valued forfeited alternative. The other options, B, C, and D, do not accurately reflect the concept of opportunity cost.

Question 12

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 13

In all cases,positive economics deals with

Accepted Answer

Positive economics deals with describing and explaining economic phenomena as they exist without making judgments or value statements about what should or ought to be done.

Question 14

In all cases,microeconomics deals with

Accepted Answer

Microeconomics deals with the study of individual economic units such as households, firms, and industries rather than the entire economy as a whole.

Question 15

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

Accepted Answer

A rationing device becomes necessary because scarcity exists, meaning the demand for goods and services exceeds the available supply. In other words, there are not enough resources to produce everything that people want or need, so methods of allocating those resources must be used.

Question 16

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 17

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

Accepted Answer

Competition refers to people competing for limited resources or goods and services in an economy. The allocation of these resources through the competition process is a form of rationing. The other options, entrepreneurship, marginal benefit, and positive economics, do not directly relate to the idea of rationing in an economy.

Question 18

The synonym economists commonly use for additional is

Accepted Answer

Economists commonly use the term "marginal" to describe additional or incremental changes in an economic variable, such as cost or benefit. This term helps to analyze the trade-offs and decision-making processes involved in economic behavior.

Question 19

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 20

Scarcity means

Accepted Answer

Scarcity refers to a situation where there are limited resources to meet unlimited wants. Option A correctly defines the concept. Option B is incorrect as it suggests that wants are less than available resources, which is not the case in a scarce situation. Option C is incorrect because resources are not infinite, which is a fundamental premise of economics. Option D is partially correct as wants are limited, but that alone does not define scarcity. Option E is also incorrect for the same reason as option C.

Quiz 1: What Economics Is About