Question 1

If someone gives you a free ticket to the movies,then there is no opportunity cost involved with going to the movies.

Accepted Answer

Even if the ticket is free, there is still an opportunity cost involved. The time spent at the movies could have been used for alternative activities, such as studying, working or spending time with family and friends. Therefore, the opportunity cost is the value of the next best alternative forgone.

Question 2

A rationing device is a method used to resolve who gets what of available goods and resources.

Accepted Answer

A rationing device is indeed a method used to resolve who gets what of available goods and resources.

Question 3

The resource termed labor consists of the physical,but not the mental,talents that people contribute to the production process.

Accepted Answer

This statement is false. Labor includes both physical and mental talents that people contribute to the production process.

Question 4

Scarcity affects everyone,even billionaires.

Accepted Answer

Scarcity refers to the limited availability of resources compared to the unlimited wants and needs of people. This means that there will always be some level of scarcity even for those who are extremely wealthy. While billionaires may have more resources available to them than the average person, they still face constraints and choices about how to allocate those resources, and cannot have everything they may want or need.

Question 5

According to economists,one of the four broad categories of resources is money.

Accepted Answer

Money is not considered a resource, but rather a medium of exchange that represents the value of resources. The four broad categories of resources are land, labor, capital, and entrepreneurship.

Question 6

Price is the only rationing device that can be used in a modern economy.

Accepted Answer

There are other rationing devices that can be used in a modern economy, such as quantity restrictions, waiting lists, and lottery systems. However, price is the most common rationing device.

Question 7

Economists use the terms resource and input as synonyms.

Accepted Answer

Economists often use the terms "resource" and "input" interchangeably to refer to any good or service used in the production of other goods and services.

Question 8

In economics,capital is defined as a financial asset such as stocks and bonds.

Accepted Answer

In economics, capital refers to physical assets such as machinery and equipment or human capital such as skilled labor. Financial assets such as stocks and bonds are considered as financial capital.

Question 9

Economists use the word utility to describe the satisfaction one receives from a good.

Accepted Answer

Economists commonly use the term "utility" to refer to the level of satisfaction or pleasure that a consumer derives from the use or consumption of a product or service.

Question 10

When a person is making a decision at the margin he or she is comparing the total benefits from that activity to the total costs of the proposed action.

Accepted Answer

Making a decision at the margin involves comparing the additional benefits of an action to the additional costs, not the total benefits to the total costs.

Question 11

Economists sometimes refer to the resource category land as natural resources.

Accepted Answer

Economists include the resource category land under the broader category of natural resources, which also includes minerals, water, and other resources found in nature.

Question 12

The effect of a decrease in interest rates upon economic growth is an example of positive economics.

Accepted Answer

This statement is an example of positive economics because it is a statement of fact that can be tested and proved. It suggests that a decrease in interest rates leads to economic growth, which can be researched and verified through empirical evidence.

Question 13

Macroeconomics deals with issues involving large corporations,while microeconomics exclusively deals with issues involving small businesses.

Accepted Answer

Macroeconomics and microeconomics both deal with the economy, but macroeconomics focuses more on the economy as a whole, while microeconomics focuses on how individuals and businesses make decisions within the economy. Both can deal with issues involving corporations and small businesses.

Question 14

Some economic studies have shown that mandatory seat belt laws do not lead to a reduction in traffic fatalities.

Accepted Answer

Some studies suggest that while seat belt laws increase seat belt usage, they may not significantly reduce fatalities due to factors like risk compensation, where drivers may engage in riskier behavior when they feel safer.

Question 15

If variable X rises as a result of variable Y falling,then X and Y have an inverse relationship.

Accepted Answer

Inverse relationship between two variables means that as one variable increases, the other variable decreases. Hence, if X rises as a result of Y falling, it indicates an inverse relationship between X and Y.

Question 16

The branch of economics that studies the decisions made by individuals and firms is called macroeconomics.

Accepted Answer

The statement is false. The branch of economics that studies the decisions made by individuals and firms is called microeconomics, not macroeconomics. Macroeconomics is the branch of economics that studies the behavior of the economy as a whole, including economic growth, inflation, and unemployment.

Question 17

To an economist,the terms factor and output are synonyms.

Accepted Answer

Factors refer to the resources used in the production process, such as labor, land, and capital, while output refers to the end result of the production process, such as goods or services. They are not considered synonymous terms in economics.

Question 18

The higher the opportunity cost of doing something,the more likely it will be done.

Accepted Answer

The statement is incorrect. The higher the opportunity cost of doing something, the less likely it will be done because it means the alternative option has a higher potential benefit or reward. Opportunity cost refers to the value of the alternative action or decision that is foregone in order to pursue a particular choice. Therefore, if the opportunity cost of an action is high, it means there is a significant sacrifice involved in choosing that option and it may not be worth it.

Question 19

The slope of a straight line is always equal to either 1.0 or -1.0.

Accepted Answer

The slope of a straight line can be any real number, not just 1.0 or -1.0.

Question 20

In the textbook,economics is defined as the "science of scarcity."

Accepted Answer

Economics studies how scarce resources are allocated and utilized to fulfill unlimited human wants and needs.

Quiz 1: What Economics Is About