Deck 1: Economics and Life

Question 1

Decisions about how to allocate resources are made by:

A)individuals.
B)businesses.
C)governments.
D)Resource allocation decisions are made by all of these.

Answer 1

Resource allocation decisions are made by all of these.

Question 2

Which of the following could be considered a microeconomic issue?

A)A family decides to drive their child to school instead of relying on a school bus.
B)Apple releases a new version of the iPhone.
C)Coors Light packages alcohol in bottles that turn blue when cold.
D)All of these are examples of microeconomic issues.

Answer 2

All of these are examples of microeconomic issues.

Question 3

The two broad fields that make up the subject of economics are:

A)microeconomics and macroeconomics.
B)personal investments and business investments.
C)fiscal policy and monetary policy.
D)imports and exports.

Answer 3

microeconomics and macroeconomics.

Question 4

Which of the following could be considered a microeconomic issue?

A)Chinese economic growth has declined.
B)The Federal Reserve cuts key interest rates in order to stimulate lending.
C)Walmart decides to add more self-checkout machines as the cost of labor rises.
D)India experiences a reduction in unemployment after opening its borders to trade.

Question 5

Which of the following is not considered an economic resource?

A)Real estate
B)Personal relationships
C)Cash
D)These are all examples of a resource.

Question 6

Economics is the study of:

A)the government's decision making process.
B)why state and federal governments disagree.
C)the study of how people manage resources.
D)All of these are true.

Question 7

Disney World decides to charge local residents a lower price than other park visitors.This would fall under which field of economics?

A)Macroeconomics
B)Public policy
C)Customer service
D)Microeconomics

Question 8

Which of the following questions would a macroeconomist most likely try to answer?

A)What stage of the business cycle is our economy currently in?
B)Why do broadway musicals and airlines have different price discrimination strategies?
C)How much would marijuana consumption change if the market became legal?
D)Should the 5-Hour Energy firm increase its distribution from nationally to internationally?

Question 9

The field of _____________ would most likely study how all consumers respond to a hike in cigarette taxes,and the field of ______________ would most likely study how Bob responds to the tax.

A)microeconomics;microeconomics
B)microeconomics;macroeconomics
C)macroeconomics;microeconomics
D)macroeconomics;macroeconomics

Question 10

Which of the following could be considered a macroeconomic topic?

A)iTunes raises the price of all its music.
B)iTunes raises the price of its pop artists music only.
C)Jay-Z decides to sell his Brooklyn Nets minority ownership.
D)The labor force participation rate fell by 1 percent in 2010.

Question 11

Which of the following could be an example of a question that would be studied in microeconomics?

A)Why did our economic growth rate slow down during the 2000s?
B)How did the recession end in 2009 if unemployment continued to rise?
C)How will the legalization of marijuana affect the market for cigarettes?
D)When should Congress raise taxes in order to tackle the debt crisis?

Question 12

The study of economics can help us:

A)be a smarter voter.
B)better understand the impacts of public policies.
C)make the best choices around how to spend our time and money.
D)All of these are true.

Question 13

The principles of economics can explain:

A)why people choose to work or go to college.
B)why a country might prosper.
C)why the value of money changes over time.
D)Economics can explain all of these things.

Question 14

Which of the following could be considered a macroeconomic issue?

A)T-Mobile and MetroPCS finalize a merger.
B)Twinkies goes bankrupt,and the entire snack industry experiences losses.
C)The unemployment rate falls to 7.5 percent from 7.7 percent during the month of June.
D)All of these are examples of macroeconomic issues.

Question 15

Which of the following could be considered microeconomic issue?

A)The local university decides to raise tuition for online course offerings.
B)Zimbabwe has experienced a decline in inflation.
C)The economic growth rate was reported at 2.4 percent in the first quarter of 2013 for the United States.
D)The unemployment rate in Greece is 22.8 percent.

Question 16

Which of the following statements best describes the study of economics?

A)Economics studies how the Federal Reserve handles fluctuation in business cycles.
B)Economics studies how individuals and groups manage resources.
C)Economics studies how people maximize returns in the stock market.
D)Economics studies how governments determine appropriate tax rates.

Question 17

Which of the following would be considered a microeconomic topic?

A)The review of quarterly national income accounting data
B)A firm decides to purchase pay per click online advertising
C)The Federal Reserve decides to increase the discount rate
D)The CPI reports a rise in inflation during July

Question 18

Alan could apply the principles of economic decision making to:

A)decide how to spend his paycheck.
B)which girl to marry.
C)what to have for dinner.
D)All of these are true.

Question 19

Which broad field of economics would most likely study how consumers respond to a hike in cigarette taxes?

A)Microeconomics
B)Marginal economics
C)Macroeconomics
D)Monetary economics

Question 20

The Bureau of Economic Analysis releases last quarter's growth rate in real GDP.This release would most likely have been written by what kind of an economist?

A)A monetary economist
B)A macroeconomist
C)A microeconomist
D)An labor economist

Question 21

The economic concept of scarcity refers to the fact that:

A)the United States will always have a battle to fight hunger.
B)resources are often wasted and shortages are often the result.
C)income must be redistributed through taxation in order to address income disparity.
D)limited resources require economies to make choices among production alternatives.

Question 22

Scarcity can best be defined as a situation in which:

A)consumers looking for bargains.
B)producers are selfish with resources.
C)people respond to incentives.
D)all wants cannot be satisfied due to resource constraints.

Question 23

When we believe the best result will come from the decision we have made,we are being:

A)gullible.
B)short-sighted.
C)rational.
D)considerate.

Question 24

Which is not one of the three basic questions used by economists to break down problems?

A)What do others think?
B)What are the trade-offs?
C)How will others respond?
D)Why isn't everyone already doing it?

Question 25

Which of the following is one of the basic questions used by economists to break down problems?

A)What are the wants and constraints of those involved?
B)How will individuals feel about the change?
C)Why has the market failed?
D)Economists don't ask any of these questions.

Question 26

Which of the following economic decisions would most likely be studied by a macroeconomist?

A)Domino's Pizza decides to provide quantity discounts in order to increase revenue.
B)A local entrepreneur decides to open a Waffle House in the local Walmart parking lot.
C)The government of Estonia implements a flat rate personal income tax for all citizens.
D)Prices for train fares rise as labor unions negotiate higher wage rates.

Question 27

Mitt Romney argued in a debate with President Obama that the economy had grown more slowly in each year of the President's term than in the previous year.This claim is most related to the field of:

A)microeconomics.
B)public policy.
C)macroeconomics.
D)financial economics.

Question 28

Macroeconomics includes the study of:

A)how the economy works on a regional,national,or international scale.
B)how rent ceilings impact the construction rates of new apartments.
C)how the increase in the labor force participation rate by females impacts childhood obesity.
D)how grocery cart rental fees impact parking lot accident rates.

Question 29

When we assume that consumers want to pay the lowest price possible,we assume that consumers are:

A)cheap.
B)deceitful.
C)rational.
D)informed.

Question 30

The assumption of rational behavior:

A)offers a perfect framework for economists to evaluate human decision making.
B)helps economists explain a lot about the real world by assuming that people behave in the way that will best achieve their goals.
C)explains why people voluntarily engage in decisions for which costs exceed benefits.
D)is best applied to psychology and should not be used in the science of economics.

Question 31

Which of the following describes a problem created by scarcity?

A)The course you need to take in the fall is offered at times that conflict with your work schedule.
B)The White House eliminates tours due to budget constraints.
C)Your cell phone battery is low and you decide to screen a phone call from your friend just in case that special someone calls later.
D)All of these.

Question 32

Scarcity reflects our inability to satisfy wants due to:

A)unlimited resources.
B)limited resources.
C)inefficient political systems.
D)unemployed workers.

Question 33

Scarcity is:

A)a fact of life.
B)not a problem for Bill Gates because he is a billionaire.
C)can be eliminated by rational decision making.
D)is a problem studied in microeconomics but is not a macroeconomic concern.

Question 34

Which of the following is a question that an economist would use to break down a problem?

A)Will the average income per person for the society increase?
B)Does the decision maker have a track record of being rational?
C)Is there a scarce resource that must be allocated?
D)None of these.

Question 35

Which of the following is a topic studied in macroeconomics?

A)Gasoline price changes
B)Unemployment rates over time
C)Taxation strategies of major corporations
D)Consumer participation in Facebook

Question 36

Which of the following is a direct result of scarcity?

A)Buildings in New York City are taller than buildings in Greenville,SC due to fewer acres of land per person.
B)Due to high gas prices,Shana decides to trade her Chevy Tahoe for a Honda Accord.
C)A college student misses a test review in order to sleep in.
D)All of these.

Question 37

The problem created by "scarcity":

A)could be solved if more people worked overtime.
B)is not a concern for the top income earners.
C)is an individual concern but not a concern on the macro level.
D)applies to everyone because it is a fact of life.

Question 38

Scarcity requires that we:

A)make sure we only want things that we are capable of consuming and producing.
B)change our fiscal policy until the situation of scarcity is eliminated.
C)make decisions in order to arrange our resources rationally.
D)adopt economic policies that will lead to unlimited resources.

Question 39

A rational choice is one that:

A)allows individuals to reach their goals.
B)involves the use of strategic decision making in an effort to reach a goal.
C)does not involve self-interested behavior.
D)is usually optimized when decision makers are poorly informed about alternatives.

Question 40

Individuals,firms,and societies are limited in the amount of goods and services that they can produce.This is a direct result of:

A)unemployment.
B)waste.
C)irrational Behavior.
D)scarcity.

Question 41

When making a decision,it is easier to identify and evaluate which of the following?

A)Costs associated with the decision.
B)Benefits associated with the decision.
C)Costs and benefits are equally easy to identify and evaluate.
D)Neither of these is often easy to identify and evaluate.

Question 42

You are shopping at the local mall with an $80 gift certificate.Only three items catch your attention.The items include a Justin Bieber sheet set,a remote control helicopter,and an "Amazing Ab Belt." You would be willing to give up $60 for the sheets,$70 for the belt,and $80 for the helicopter.Knowing this,you decide to purchase the helicopter.The opportunity cost of the helicopter was:

A)$130,the combined value of the alternatives forgone.
B)$80,the amount of the gift certificate spent.
C)$70,the value of the ab belt.
D)$60,the value of the sheets.

Question 43

Opportunity Cost:

A)only includes explicit,out of pocket expenses.
B)is the value of your next best alternative.
C)is never provided in dollar values.
D)would not include the wages lost from working when deciding to take a vacation.

Question 44

In the early 1990s,before pay at the pump was an option,a gas station decides to force people to pre-pay due to drive-offs.The opportunity cost of this decision may include:

A)the value of the gas that is no longer stolen.
B)not having to look outside for people waving at you to turn on the pump.
C)the revenue lost because people will "low ball" how much they think their tank will hold in an effort to avoid having to come back into the store to get change from overpayment.
D)a loss of snack sales because people are coming into the store to pay for gas before pumping versus after pumping.

Question 45

The greatest constraint faced by banks considering the alternative of lending to Bangladeshi villagers is:

A)not having qualified loan officers.
B)having limited funds available for loans.
C)not being able to determine appropriate currency exchange rates.
D)counterfeit Carfax reports that make it difficult to properly assess collateral.

Question 46

"There is no such thing as a free lunch." This is an example of which economic concept?

A)Maximization
B)Trade-offs
C)Basic necessities
D)Income effect

Question 47

Trade-offs are:

A)associated with every decision.
B)do not exist if we receive something for free.
C)always result in market-failure.
D)can be avoided through economic planning.

Question 48

You decide to drive your car on a long road trip of 1,500 miles.The opportunity cost of driving your car:

A)is the amount of money spent on gas.
B)is zero because the car is paid for.
C)includes lost wages that you could have earned instead of driving.
D)None of these.

Question 49

Cameron can spend the afternoon playing golf,driving his boat,or cleaning his house.Although he enjoys golf,he sometimes becomes frustrated when playing.He decides to enjoy a more relaxing afternoon on his boat.Cameron never thought about cleaning the house but did give golf some serious consideration.Cameron's opportunity cost of taking his boat out was:

A)a dirty house.
B)the enjoyment he would have gotten from playing golf.
C)a dirty house and not playing golf.
D)enjoying a relaxing day on the lake.

Question 50

Purchasing a smart phone data plan,premium movie channels,and University of Alabama football season tickets result in you having to drop your health insurance plan.This can be described as:

A)home field advantage
B)a trade-off
C)irrational decision making
D)healthy living

Question 51

If Johnny weren't in economics class this morning,he'd be sleeping.The value Johnny places on sleeping represents his:

A)marginal benefit.
B)incentives.
C)sunk cost.
D)opportunity cost.

Question 52

The only rental house available at your favorite lake on July 4^th is out of your price range.This is an example of:

A)a constraint.
B)why you should have a yard sale.
C)why everyone isn't already doing it.
D)an infringement upon your freedoms enjoyed as a patriotic American.

Question 53

Your school offers seniors one "free" college course.Is this course also free to society?

A)Yes,because the seniors live in society.
B)Yes,because the school has satisfied the assumption of making a rational choice.
C)No,because if one senior takes the last seat in the class,it means a paying student will not have the opportunity to take it.
D)No,because some students will not take a free class seriously and will ultimately become less productive workers.

Question 54

People choose to do something:

A)when they believe the benefits outweigh the costs of the decision.
B)when they believe the costs outweigh the benefits of the decision.
C)when they believe equilibrium will be reached.
D)when they believe it won't harm anyone and will better themselves.

Question 55

The problem of having unlimited wants under the constraint of limited resources can describe the problem of:

A)opportunity cost.
B)sunk costs.
C)scarcity.
D)the marginal principle.

Question 56

A local fast-food restaurant mails out coupons for a free sandwich to every home in the community.The opportunity cost of redeeming the sandwich may include:

A)lost wages due to spending time in a long line instead of eating a Healthy Choice meal in your office.
B)not eating because you are on a "get fit for the summer" diet plan.
C)eating a "Tough Man's Burger," which is one of your favorite fast food options.
D)Any of these could be an opportunity cost,depending on which alternative would have been taken if you did not have a coupon for a free sandwich.

Question 57

Jimmy is very excited about the costume party with a 1990s theme.He is planning to dress up as MC Hammer but is also considering going as a lifeguard from Baywatch.His opportunity cost of arriving dressed like MC Hammer is:

A)the cost of parachute pants.
B)the savings from not purchasing red swimming trunks.
C)giving up the alternative of dressing like a lifeguard.
D)there is no opportunity cost because he attended the party either way.

Question 58

Saturday afternoon you can either attend a street festival,work and earn $100,or study for your midterm exam.You flip a coin between the street festival and studying,but did not really consider working.The coin flip determined that you would stay home and study.The opportunity cost of the time spent studying includes:

A)the loss of $100 worth of wages and going to the street festival.
B)earning a high score on your midterm.
C)the benefit that could have been received at the street festival.
D)None of these.

Question 59

Your sister always brags about how savvy of a grocery shopper she is.She believes that she saves lots of money from paying with coupons and making her grocery purchases at multiple stores to get the lowest prices on all goods.She may overestimate her savings because:

A)she does not count the value of the time it took to sort and clip coupons as a cost.
B)she does not count the cost of the gas used driving extra miles to multiple grocery stores.
C)she does not count the value of the extra time it takes standing in multiple lines at multiple stores,using multiple coupons,rather than a trip to one store with no coupons.
D)All of these.

Question 60

The Federal Drug Administration slows the pace at which helpful medications reach the marketplace.The alternative of having the medication available to consumers earlier is an example of:

A)the opportunity cost of the Federal Drug Administration's regulation.
B)how easy it is to identify and evaluate costs.
C)the marginal benefit of the Federal Drug Administration.
D)promoting consumer health.

Question 61

A local street festival that previously sold bracelets in exchange for unlimited alcohol consumption is now concerned about the overconsumption of alcohol.If they switch to selling tickets per drink,will overall consumption at next year's festival decrease?

A)No,because the marginal cost per extra beer will decrease for consumers.
B)No,because the marginal cost per extra beer will increase for consumers.
C)Yes,because the marginal cost per extra beer will increase for consumers.
D)Yes,because the marginal benefit per extra beer will increase for consumers.

Question 62

The extra cost associated with producing or consuming the next unit is called the:

A)variable cost.
B)marginal cost.
C)utility cost.
D)sunk cost.

Question 63

A car dealer advertises free satellite radio for one year with the purchase of a new car.This is an example of:

A)bait and switch.
B)marginal sales.
C)an incentive.
D)voluntary exchange.

Question 64

The price of pizza falls relative to the price of spaghetti,and so people buy more pizza instead of spaghetti.This is an example of responding to:

A)marginal science.
B)incentives.
C)disincentives.
D)sunk benefit.

Question 65

A movie costs you and your friend $15 each.After one hour of watching the movie,you have struggled to stay awake while your friend has been on Facebook and is also bored with the movie.You suggest that you and your friend leave the movie and go to the park.Your friend responds by stating that he is not going to waste his $15 that was previously spent on the movie.Your friend is considering:

A)an opportunity cost of the movie.
B)a sunk cost.
C)the marginal benefit.
D)depreciation.

Question 66

An Incentive is a concept that addresses which question used by economists?

A)What are the wants and constraints of those involved?
B)What are the trade-offs?
C)How will others respond?
D)Why isn't everyone already doing it?

Question 67

You have paid all expenses to travel to your favorite beach for a vacation.You made these payments early in order to receive a discount and all payments are nonrefundable.Unfortunately,a hurricane is likely to crash into the coast during your vacation dates.What should not be considered as you make a decision to take your trip or not?

A)The money that has already been spent on the trip
B)The satisfaction you are likely to receive at the beach during a hurricane
C)The best alternative use of your time if you do not take the trip
D)All of these should be considered.

Question 68

Judy would like to enjoy freshly grown vegetables from her own garden but also wants her daughter to enjoy summers with a swimming pool in the backyard.Despite having a green thumb,she chooses to use her extra land for a swimming pool.The opportunity cost of the swimming pool is:

A)equal to the cost of building and maintaining the pool.
B)the value she places on having her own garden.
C)the value of watching her daughter grow up enjoying a swimming pool.
D)the savings gained by not having to pay for fertilizer and vegetable plants.

Question 69

Your favorite team has a commanding lead toward the end of the ballgame.You suggest to your friend that you leave early to beat traffic.Your friend does not like the idea because he paid $50 to see the game.The $50 already spent on the game is an example of a(n):

A)implicit cost.
B)sunk cost.
C)normal cost.
D)variable cost.

Question 70

The deadline for your research paper is tomorrow and you still need a day of work to complete the paper.Unfortunately,you are scheduled to work all day in the cafeteria.You can turn the paper in one day late for a 10 percent penalty or take the day off of work and turn the paper in by the deadline.Losing a day of wages will cost you $90.The marginal cost of turning the paper in on time is:

A)10 percent deducted from your final score.
B)$90 in forgone wages.
C)not getting to lounge around all day.
D)None of these represent the marginal cost.

Question 71

After purchasing a coffee cup from your local gas station for $5.00,you can always refill your cup for $0.50.The sunk cost of the coffee purchased at the gas station is:

A)$0.50.
B)$5.00.
C)$10.00.
D)$5.50.

Question 72

You decided to take a college accounting course to brush up on your knowledge of the language of business.The tuition expense was $500.After the date has expired to receive a refund for the course,you are offered a job that would conflict with your class time.In making the decision to accept or decline the offer,the $500 is:

A)the opportunity cost of the job.
B)the expected gain in pay from taking the accounting course.
C)a sunk cost.
D)a sunk benefit.

Question 73

Many theaters sell empty seats at a deep discount just before showtime.What economic concept is displayed by this behavior?

A)Consumer demand
B)Sunk costs
C)Price optimization
D)Thinking at the margin

Question 74

Hardee's announces "buy one get one free" breakfast sandwiches.This is an example of:

A)the use of incentives.
B)a macroeconomic decision.
C)hoarding scarce resources.
D)this is not an example of any of these concepts.

Question 75

After purchasing a coffee cup from your local gas station for $5.00,you can always refill your cup for $0.50.The marginal cost of your 10^th cup of coffee purchased at the gas station is:

A)$0.50.
B)$5.00.
C)$10.00.
D)$5.50.

Question 76

A college student decides to spend the afternoon watching three movies rented from Red Box.The cost of each movie is $1.The student was willing to pay $4 to rent each of the first two movies and $2 to rent the third movie.What was the marginal benefit received by the student when renting the 2^nd movie?

A)$1
B)$8
C)$4
D)$2

Question 77

To provide an incentive for villagers to repay loans,Muhammad Yunus:

A)forced villagers to offer collateral for loans.
B)made loans using group responsibility.
C)threatened to call the borrower's mother.
D)would increase interest rates by 1 percent after each late payment.

Question 78

Entrepreneurs tend to take greater risks if low tax rates offer greater after-tax profit potentials.The government's decision to offer low tax rates to entrepreneurs is:

A)providing room for an economic expansion.
B)providing an incentive,in the hopes that more entrepreneurs will take risk and create economic growth.
C)providing a disincentive,in the hopes that more entrepreneurs will avoid risk and not grow.
D)providing a disincentive,in the hopes that entrepreneurs will not get into tax default after assuming too much risk.

Question 79

The extra benefit associated with producing or consuming the next unit is called the:

A)revenue product.
B)spillover.
C)marginal benefit.
D)economic benefit.

Question 80

Making a decision "on the margin" involves comparing:

A)additional benefits against additional costs.
B)total benefits against total costs,which include benefits and costs from past decisions.
C)sunk costs against opportunity costs.
D)All of these are true.