Question 1

Economics is the study of

Accepted Answer

Economics is the study of how society manages its scarce resources. It involves analyzing the production, distribution, and consumption of goods and services. It also involves studying the behavior of individuals and organizations in response to economic incentives. Economics is concerned with understanding how individuals, businesses, and governments allocate resources to meet their needs and wants.

Question 2

Approximately what percentage of the world's economies experience scarcity?

Accepted Answer

Scarcity is a fundamental economic problem that exists in all societies regardless of their level of development or economic system. Therefore, all economies in the world experience scarcity to some extent, making the answer 100%.

Question 3

Which of the following products would be considered scarce?

Accepted Answer

All of the above products would be considered scarce because they have a limited supply relative to the demand for them. Golf clubs and Picasso paintings are scarce because they are unique and desirable goods that do not have a readily available substitute. Apples are scarce because they have a finite supply, and as demand for them increases, prices may rise due to scarcity.

Question 4

The phenomenon of scarcity stems from the fact that

Accepted Answer

The phenomenon of scarcity arises because resources are limited, which means that there are not enough resources to produce all of the goods and services that people want and need. This leads to competition for resources, and choices have to be made about how to allocate them.

Question 5

The word "economy" comes from the Greek word oikonomos,which means

Accepted Answer

The Greek word oikonomos translates to "one who manages a household" in English. This is where the modern use of the word "economy" comes from, as it originally referred to the management of household resources and finances.

Question 6

The adage,"There is no such thing as a free lunch," is used to illustrate the principle that

Accepted Answer

The phrase "there is no such thing as a free lunch" means that everything has a cost, and people must make tradeoffs in order to get what they want. This idea is captured by choice B, which is the best answer. While goods may indeed be scarce (choice A), and income must be earned (choice C), these options do not fully capture the concept of tradeoffs that the adage is meant to convey. Similarly, while households do face many decisions (choice D), this option is not as closely related to the core message of the adage.

Question 7

In most societies,resources are allocated by

Accepted Answer

In most modern societies, resources are allocated through the market system, where millions of households and firms interact through prices, supply, and demand to determine the allocation of resources. The market system allows for decentralized decision making, individual choice, and the efficient use of resources. Therefore, the combined actions of millions of households and firms determine how resources are allocated in most societies.

Question 8

When a society cannot produce all the goods and services people wish to have,it is said that the economy is experiencing

Accepted Answer

Scarcity refers to the situation when unlimited wants exceed the limited resources available to fulfill those wants. Thus, when a society cannot produce all the goods and services people wish to have, it is because of scarcity. The other options (surpluses, inefficiencies, and inequalities) do not accurately capture this concept.

Question 9

In considering how to allocate its scarce resources among its various members,a household considers

Accepted Answer

A household should consider each member's abilities when allocating resources in order to ensure that each member receives what they need to succeed. They should also consider each member's efforts to determine who deserves more resources based on their contribution to the household. Finally, they need to consider each member's desires to ensure that everyone's needs are met and that the household functions smoothly. Therefore, all of the above choices are important considerations for a household when allocating resources.

Question 10

The adage,"There is no such thing as a free lunch," means

Accepted Answer

The adage "There is no such thing as a free lunch" means that there are always tradeoffs in life. Nothing is truly free and every action or decision has some kind of cost, whether it's monetary or otherwise. For example, if someone offers you a free lunch, there may be a catch or hidden cost that you are not aware of. This adage is often used to remind people that everything has a price and to be cautious of seemingly free offers.

Question 11

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out.Both the amplifier and the mp3 player cost $100,so he can only buy one.This illustrates the basic concept that

Accepted Answer

This scenario illustrates the basic concept of people facing trade-offs, as Mitch must choose between buying one item or the other with his limited budget. The other answer choices do not accurately apply to the situation presented.

Question 12

The overriding reason as to why households and societies face many decisions is that

Accepted Answer

The scarcity of resources is the fundamental reason why households and societies face many decisions. Resources are limited, while people's wants and needs are unlimited. Therefore, people must make choices and trade-offs to allocate resources efficiently and effectively.

Question 13

The word that comes from the Greek word for "one who manages a household" is

Accepted Answer

The word "economy" comes from the Greek word "oikonomia," which means "household management."

Question 14

Guns and butter are used to represent the classic societal tradeoff between spending on

Accepted Answer

Guns represent spending on national defense, while butter represents spending on consumer goods. This tradeoff is often analyzed in macroeconomics to demonstrate the opportunity cost of allocating resources to one area over another.

Question 15

The principle that "people face tradeoffs" applies to

Accepted Answer

The principle that "people face tradeoffs" applies to all individuals, families, and societies. Individuals face tradeoffs in how they allocate their time and money, families face tradeoffs in deciding how to divide resources among family members or invest in education or savings, and societies face tradeoffs in deciding how to allocate resources among different sectors like healthcare, education, and defense. This principle is fundamental to the study of economics as it underpins many of the decisions made by individuals, families, and societies.

Question 16

Sophia is planning her activities for a hot summer day.She would like to go to the local swimming pool and see the latest blockbuster movie,but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity.This illustrates the basic principle that

Accepted Answer

The situation described in the scenario demonstrates the concept of tradeoffs, as Sophia can only choose one activity to do at the expense of the other. She has to give up either going to the swimming pool or watching the movie, which shows that individuals must make choices as they face limited resources.

Question 17

Which of the following is correct?

Accepted Answer

Option B is correct. Economists do study the management of scarce resources. Option A is incorrect because the word economy comes from the Greek word "oikonomia," which means "household management" and not "rational thinker." Option C is also incorrect because economists are interested in how people interact, as it is a crucial factor in understanding economic decision-making.

Question 18

Which of the following statements best represents the principle represented by the adage,"There is no such thing as a free lunch"?

Accepted Answer

The answer of Which of the following statements best represents...

Question 19

Economics deals primarily with the concept of

Accepted Answer

Economics is the study of the allocation of scarce resources. Therefore, the concept of scarcity is central to the study of economics. Money, poverty, and banking are all related to economics, but they are not the primary focus.

Question 20

Resources are

Accepted Answer

Resources are always scarce, whether for households or economies. This is because of the limited availability of resources and the unlimited wants and needs of individuals and society as a whole. Therefore, neither households nor economies have plentiful resources, making option C the correct choice.

Quiz 1: Ten Principles of Economics