Question 1

The basic reason we study economics is because material wants and needs are:
A) limited and so are resources.
B) limited but resources are not.
C) unlimited and so are resources.
D) unlimited but resources are not.

Accepted Answer

The fundamental reason we study economics is that while our material wants and needs are unlimited, the resources available to satisfy these wants and needs are limited. This discrepancy necessitates choices and prioritization in the allocation of resources.

Question 2

The basic problem that gives rise to the study of economics is the need to:
A) control the effects of actions by foreign governments.
B) be sure all the goods and services produced in an economy get sold.
C) use scarce resources to satisfy people's unlimited material wants and needs.
D) control people's tastes and wishes so that the available resources can produce all the goods and services they want.

Accepted Answer

The fundamental problem of economics is scarcity: the world has limited resources to meet people's unlimited wants and needs. This scarcity requires the use of economic principles to allocate resources efficiently.

Question 3

The basic concern of economics is:
A) to provide stable economic conditions to ensure political stability.
B) to match limited resources to people's limited material wants and needs.
C) the scarcity problem created because people's desires for material things exceed the ability to produce them.
D) to encourage society to acquire enough goods and services so that everybody has a job.

Accepted Answer

Economics primarily deals with the problem of scarcity, which arises because human desires for goods and services exceed the resources available to produce them.

Question 4

Economics is concerned with:
A) earning as much money as possible.
B) limiting individuals' wants so that our scarce resources will not be used up.
C) using scarce resources to satisfy virtually limitless material wants and needs.
D) using as many workers as possible to produce any given level of output.

Accepted Answer

Economics is fundamentally about how societies use scarce resources to satisfy unlimited wants and needs, which involves making choices on allocation, production, and distribution.

Question 5

The "economic problem"exists because:
A) for the first time in history, people are earning more money than they can spend.
B) resources are limited while wants and needs for goods and services are virtually limitless.
C) people are unwilling to put forth the effort required to attain the goods and services they want.
D) there are more goods and services being produced than people want, causing some businesses to go bankrupt.

Accepted Answer

The economic problem, also known as the problem of scarcity, arises because resources (such as time, money, and raw materials) are limited, but the wants and needs of people for goods and services are virtually unlimited. This discrepancy necessitates choices about how to allocate resources effectively.

Question 6

There would be no need to study economics if:
A) there were no government controls on people's actions.
B) people were free to do whatever they wanted with their lives.
C) there were enough resources to produce all the goods and services people would like to obtain.
D) all of the above.

Accepted Answer

Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people. The need to study economics would be eliminated if there were enough resources to produce all the goods and services people desire, as scarcity is the fundamental economic problem that gives rise to the study of economics.

Question 7

Which of the following statements is FALSE?
A) Economics is the study of decision making in a world of scarcity.
B) Scarcity is faced by all individuals, businesses, and societies.
C) Scarcity arises because people's wants and needs are virtually unlimited, while the resources available to satisfy those wants and needs are not.
D) Scarcity could be overcome if people were willing to work harder to produce all the goods and services that would satisfy their material wants and needs.

Accepted Answer

Scarcity is a fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It cannot be overcome simply by working harder because resources (such as time, labor, and raw materials) are inherently limited, and human wants are virtually unlimited. Working harder does not create more resources; it just reallocates existing resources.

Question 8

Scarcity is a problem faced by:
A) households, but not businesses and governments.
B) households and businesses, but not governments because they can pass laws to get the goods and services they need.
C) households and governments, but not businesses because they are the ones that produce the goods and services that people want.
D) households, businesses and governments.

Accepted Answer

Scarcity is a fundamental economic problem faced by all entities, including households, businesses, and governments, due to limited resources and unlimited wants.

Question 9

In economics, scarcity refers to the fact that there are not enough:
A) goods and services to completely satisfy everyone's wants and needs.
B) hours in the day to consume all the goods and services available in the economy.
C) goods and services produced to allow everyone wanting to work to hold down a full-time job.
D) dollars for spending on goods that have already been produced and directly satisfy our wants, such as food and clothing.

Accepted Answer

Scarcity in economics refers to the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources. It means there are not enough resources to fulfill all our wants and needs, leading to the necessity of making choices on how to allocate these limited resources.

Question 10

We study economics to:
A) understand how an economy operates.
B) develop more sophisticated thought processes.
C) develop skills which can be used in our careers.
D) all of the above.

Accepted Answer

Studying economics helps us understand how economies function, enhances critical thinking, and provides valuable skills applicable in various careers.

Question 11

Because resources are scarce, individuals must:
A) learn to do without.
B) make value judgments.
C) try to be more efficient.
D) all of the above.

Accepted Answer

Because resources are scarce, individuals must learn to do without certain things, make value judgments about what is most important to them, and try to use resources as efficiently as possible.

Question 12

Because of scarcity:
A) individuals and societies are not able to choose which material wants and needs to satisfy.
B) individuals and societies must choose which material wants and needs to satisfy.
C) all choices about satisfying wants and using resources must be made by the government.
D) choices can be made about which wants to satisfy, but not about which resources to use.

Accepted Answer

Scarcity means that there are limited resources, but unlimited wants and needs. This forces individuals and societies to make choices about which of those wants and needs to satisfy with the available resources.

Question 13

Economics is concerned with tradeoffs caused by scarcity. "Tradeoffs"refers to:
A) the alternatives given up when making choices.
B) recycling old goods into new goods to reduce the scarcity problem.
C) the buying and selling that occurs when unwanted goods are exchanged for goods that are desired.
D) the decisions about whether households or businesses should bear the entire burden of the scarcity problem.

Accepted Answer

Tradeoffs in economics refer to the concept of opportunity cost, where choosing one option means giving up others. This is a fundamental principle in economics, highlighting the cost of what is foregone to pursue a certain action or decision.

Question 14

The relative importance a person assigns to various actions or alternatives:
A) reflects the person's value judgments.
B) is the same for all people who earn the same income.
C) depends only on the dollar prices of the actions or alternatives.
D) all of the above.

Accepted Answer

The relative importance a person assigns to various actions or alternatives reflects their personal value judgments, which are subjective and can vary widely among individuals, regardless of income or the dollar prices of options.

Question 15

The choices that are made because of scarcity:
A) are always correct if solved mathematically.
B) differ when they involve people's wants, but are similar when they involve people's needs.
C) depend on the decision maker's value judgments about the relative importance of different alternatives.
D) are important in poor countries, but not in economically advanced countries where people earn high incomes.

Accepted Answer

Choices made due to scarcity depend on the decision maker's value judgments, as they must prioritize between different alternatives based on their perceived importance.

Question 16

The opportunity cost of a purchase or a decision is:
A) the lowest possible cost to make that purchase or decision.
B) the highest cost that must be paid to make that purchase or decision.
C) the actual amount paid to make that purchase or decision.
D) what had to be given up to make that purchase or decision.

Accepted Answer

The opportunity cost of a purchase or a decision is what had to be given up to make that purchase or decision. It represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Question 17

The cost of a purchase or decision measured by what is given up to make the purchase or carry out the decision is its:
A) sunk cost.
B) hidden cost.
C) overhead cost.
D) opportunity cost.

Accepted Answer

Opportunity cost refers to the value of the next best alternative that is foregone as a result of making a decision. It represents what is given up to undertake a certain action or purchase.

Question 18

The opportunity cost of going to school rather than working is the:
A) cost of food and clothing.
B) cost of tuition and housing.
C) cost of getting to and from school.
D) wages which could have been earned.

Accepted Answer

The opportunity cost of going to school rather than working is the wages which could have been earned if one had chosen to work instead. This represents the foregone income that one sacrifices in order to pursue education.

Question 19

An opportunity cost:
A) exists only for decisions involving expenditures of money.
B) exists because there is only one way money and time can be spent.
C) is equal to the value of what is given up to make a purchase or take an action.
D) accompanies every decision made by individuals and businesses, but not by government because that reflects the wishes of society.

Accepted Answer

Opportunity cost is the value of the next best alternative that is foregone when a decision is made. It's not just about money but also about time, resources, or any other factor that has value. It applies to all decision-makers, including individuals, businesses, and governments.

Question 20

The opportunity cost to a student of preparing for an examination is:
A) impossible to measure.
B) the alternative use of the time required to prepare for the exam.
C) high for a student with a high GPA and low for a student with a low GPA.
D) zero since the tuition has already been paid for the course and there is not an extra fee to take the exam.

Accepted Answer

The opportunity cost to a student of preparing for an examination is the alternative use of the time that could have been spent doing something else, such as working, leisure activities, or studying for another subject.

Quiz 1: Introduction to Economics

The basic reason we study economics is because material wants and needs are:

The basic problem that gives rise to the study of economics is the need to:

The basic concern of economics is:

Economics is concerned with:

The "economic problem"exists because:

There would be no need to study economics if:

Which of the following statements is FALSE?

Scarcity is a problem faced by:

In economics, scarcity refers to the fact that there are not enough:

We study economics to:

Because resources are scarce, individuals must:

Because of scarcity:

Economics is concerned with tradeoffs caused by scarcity. "Tradeoffs"refers to:

The relative importance a person assigns to various actions or alternatives:

The choices that are made because of scarcity:

The opportunity cost of a purchase or a decision is:

The cost of a purchase or decision measured by what is given up to make the purchase or carry out the decision is its:

The opportunity cost of going to school rather than working is the:

An opportunity cost:

The opportunity cost to a student of preparing for an examination is: