Question 1

Which of the following is correct about the economic decisions consumers,firms,and the government have to make?
A)Governments may face the problem of shortages but not scarcity in making economic decisions.
B)Only individuals face scarcity; firms and the government do not.
C)Firms and the government face scarcity,individuals only face shortages.
D)Each faces the problem of scarcity which necessitates trade-offs in making economic decisions.

Accepted Answer

Scarcity is a fundamental economic problem faced by all economic agents - consumers, firms, and the government. It means that there are limited resources and unlimited wants, which requires making trade-offs and choices in economic decisions. Therefore, choice D is the correct statement. The other choices are incorrect as they do not recognize that all economic agents face the problem of scarcity.

Question 2

It is necessary for all economic systems to provide people with goods and services and also restrict them from getting as much of these goods and services as they wish,because failure to do this could ________ the efficiency of the system by producing some goods and services that are ________.
A)reduce; not as highly valued as others
B)increase; not as highly valued as others
C)reduce; valued more than others
D)increase; valued more than others

Accepted Answer

If there were no restrictions on getting as much goods and services as people wanted, it could lead to inefficiencies in the system. For example, if everyone could have as much of a particular good as they wanted, then there could be a surplus of that item and a shortage of others. Additionally, some goods may not be as highly valued as others, so it would not make sense to produce an infinite amount of them. Therefore, it is necessary for economic systems to provide goods and services while also restricting access to ensure efficiency.

Question 3

What is an economic market?

Accepted Answer

The answer of What is an economic market?...

Question 4

Fast food restaurants produce a range of menu items such as hamburgers,chicken sandwiches,salads,and french fries.What fundamental economic question are they addressing by offering this range of items?
A)How to produce goods that consumers want?
B)Why produce a variety of menu items?
C)What to produce?
D)Who to produce the menu items for?

Accepted Answer

Fast food restaurants decide on the variety of menu items to offer based on consumer demand and preferences, addressing the fundamental economic question of "What to produce?" to meet market needs.

Question 5

Every society faces economic trade-offs.This means
A)some people live better than others do.
B)not everyone can have enough goods to survive.
C)producing more of one good means less of another good can be produced.
D)society's output cannot be made available to all.

Accepted Answer

Economic trade-offs refer to the fact that resources are limited and when society chooses to produce more of one good, it necessarily means producing less of another. This is a concept known as opportunity cost. Therefore, society must make choices about how to allocate its limited resources, resulting in economic trade-offs.

Question 6

What is scarcity,and why is it a fundamental concept in economics?

Accepted Answer

The answer of What is scarcity,and why is it a...

Question 7

Who receives the goods and services produced in the United States depends largely on
A)how income is distributed.
B)how the goods and services are produced.
C)what goods and services are produced.
D)government redistribution.

Accepted Answer

The distribution of income largely determines who receives the goods and services produced in the United States. If income is distributed equally, then goods and services are likely to be accessible to a wider array of people. However, if income is concentrated in the hands of a few, then only those few will have access to the goods and services produced.

Question 8

Which of the following is an example of an economic trade-off that a firm has to make?
A)whether it is cheaper to produce with more machines or with more workers
B)deciding why consumers want its products
C)whether or not consumers will buy its products
D)deciding what profit margin it desires for its products

Accepted Answer

A trade-off involves choosing between two or more alternatives. In this case, the firm has to decide whether it is more financially beneficial to invest in more machines and produce goods faster, or hire more workers and produce goods more slowly but at a lower cost. This decision will have an impact on the firm's costs, efficiency, and profitability. The other options listed do not involve a trade-off.

Question 9

Trade-offs force society to make choices when answering what three fundamental questions?
A)What will be the prices of goods and services; how will these goods and services be produced; and who will receive them?
B)What goods and services to produce; how will these goods and services be produced; and who receives them?
C)Who gets jobs; what wages do workers earn; and who owns what property?
D)How much will be saved; what will be produced; and how can these goods and services be fairly distributed?

Accepted Answer

The three fundamental questions of economics are what to produce, how to produce, and for whom to produce. Choice B correctly identifies these questions and provides trade-offs that society must make in answering them. Choice A only addresses the price of goods and services, which is not one of the fundamental questions. Choice C focuses on employment and property ownership, which are important but not the three fundamental questions. Choice D addresses saving and distribution, which are also important but not the three fundamental questions.

Question 10

Suppose the extra cost to a doctor of keeping her office open on Saturdays is $800.Then,the doctor should not stay open on Saturdays if keeping the office open can only bring in additional revenue of $800.

Accepted Answer

If keeping the office open on Saturdays can bring in additional revenue of $800 or more, then it would be beneficial for the doctor to stay open. However, if the additional revenue is less than $800, then it may not be worth the extra cost of keeping the office open.

Question 11

Which of the following statements is false?
A)Anytime you have to decide which action to take you are facing an economic trade-off.
B)Trade-offs do not apply when the consumers purchase a product for which there is excess supply,such as a stock clearance sale.
C)Every individual,no matter how rich or poor,is faced with making trade-offs.
D)Economics is a social science that studies the trade-offs we are forced to make because of scarcity.

Accepted Answer

Trade-offs apply to all economic decisions, even when consumers purchase products on clearance sales. The lowered price of the product may make it a more attractive choice, but the consumer is still making a trade-off between purchasing the discounted product and using that money for other potential purchases or savings.

Question 12

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

Accepted Answer

The answer of What does the word "marginal" mean in...

Question 13

How does a market system prevent people from getting as many goods and services as they wish?
A)Governments interfere with the market mechanism to influence the allocation of goods and services.
B)In a market system,firms can charge any price they want,thus preventing poor people from getting as many goods and services as they wish.
C)The market system allocates goods and services to those who are able to pay for those products and therefore income is a limiting factor.
D)The government imposes taxes on those who earn beyond a certain amount of income.

Accepted Answer

In a market system, goods and services are allocated according to the ability to pay. This means that income becomes a limiting factor, as those who cannot afford a product or service cannot obtain it. This is what prevents people from getting as many goods and services as they wish.

Question 14

Opportunity cost is defined as
A)the benefit of an activity.
B)the monetary expense associated with an activity.
C)the highest valued alternative that must be given up to engage in an activity.
D)the total value of all alternatives that must be given up to engage in an activity.

Accepted Answer

Opportunity cost is the value of the next best alternative that must be given up. It is not the benefit, monetary expense, or total value of alternatives, but rather the highest valued alternative that is forgone. Therefore, the answer is C.

Question 15

Ted quits his $60,000-a-year job to be a stay-at-home dad.What is the opportunity cost of his decision?
A)0 since he will no longer be earning a salary
B)depends on the "going rate" for stay-at-home dads
C)at least $60,000
D)the value he attributes to the joy of parenting

Accepted Answer

The opportunity cost of Ted's decision is the value of the next best alternative that he is giving up. In this case, the next best alternative would be his salary of $60,000 per year. Therefore, the opportunity cost of his decision is at least $60,000 per year.

Question 16

The Stogie Shop,a cigar store in the mall,sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each.What is the opportunity cost of buying a hand-rolled cigar?
A)4 machine-made cigars
B)1/4 of a machine-made cigar
C)$10.00
D)$2.50

Accepted Answer

The opportunity cost of buying a hand-rolled cigar is the value of the next best alternative, which in this case is the machine-made cigar. To determine the opportunity cost, we divide the cost of the hand-rolled cigar by the cost of the machine-made cigar: $10.00 ÷ $2.50 = 4. Therefore, the opportunity cost of buying a hand-rolled cigar is 4 machine-made cigars. Thus, the best choice is A.

Question 17

Suppose a doctor can earn an additional $10,000 in revenue per year from keeping her office open on Saturdays.What must the additional cost of keeping the office open on Saturdays be to make this decision economically rational?

Accepted Answer

The answer of Suppose a doctor can earn an additional...

Question 18

Consider the following economic agents: a.the government
B.consumers
C.producers
Who,in a modern mixed economy,decides what goods and services will be produced with the scarce resources available in that economy?
A)the government
B)producers
C)consumers
D)consumers and producers
E)the government,consumers and producers

Accepted Answer

In a modern mixed economy, the decision about what goods and services will be produced with the scarce resources available is influenced by the government, consumers, and producers. The government may set regulations or provide subsidies, consumers express their preferences through demand, and producers decide on the supply based on various factors including consumer demand and government policies.

Question 19

In a market economy,who decides what goods and services will be produced?
A)only the producers
B)only consumers
C)consumers and producers
D)the government

Accepted Answer

In a market economy, the decisions about what goods and services will be produced are made through the interaction between consumers and producers. Consumers create demand for goods and services and producers respond to that demand by producing the goods and services that consumers want to buy. This is known as the law of supply and demand. While government may play a role in regulating certain aspects of the market, such as safety standards or pricing practices, they generally do not decide what goods and services will be produced.

Question 20

If it costs Vijay $150 to design 5 websites and $175 to design 6 websites,then $175 is the marginal cost of producing the 6th Websites.

Accepted Answer

To calculate the marginal cost, we need to find the additional cost of producing one more unit.

In this case, the cost of producing the first 5 websites is $150, and the cost of producing the first 6 websites is $175.

Therefore, the marginal cost of producing the 6th website would be:

Marginal cost = Total cost of producing 6 websites - Total cost of producing 5 websites

Marginal cost = $175 - $150
Marginal cost = $25

So, the statement " $175 is the marginal cost of producing the 6th Websites" is false.

Quiz 1: Economics: Foundations and Models

Which of the following is correct about the economic decisions consumers,firms,and the government have to make?

It is necessary for all economic systems to provide people with goods and services and also restrict them from getting as much of these goods and services as they wish,because failure to do this could the efficiency of the system by producing some goods and services that are .

What is an economic market?

Fast food restaurants produce a range of menu items such as hamburgers,chicken sandwiches,salads,and french fries.What fundamental economic question are they addressing by offering this range of items?

Every society faces economic trade-offs.This means

What is scarcity,and why is it a fundamental concept in economics?

Who receives the goods and services produced in the United States depends largely on

Which of the following is an example of an economic trade-off that a firm has to make?

Trade-offs force society to make choices when answering what three fundamental questions?

Suppose the extra cost to a doctor of keeping her office open on Saturdays is $800.Then,the doctor should not stay open on Saturdays if keeping the office open can only bring in additional revenue of $800.

Which of the following statements is false?

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

How does a market system prevent people from getting as many goods and services as they wish?

Opportunity cost is defined as

Ted quits his $60,000-a-year job to be a stay-at-home dad.What is the opportunity cost of his decision?

The Stogie Shop,a cigar store in the mall,sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each.What is the opportunity cost of buying a hand-rolled cigar?

Suppose a doctor can earn an additional $10,000 in revenue per year from keeping her office open on Saturdays.What must the additional cost of keeping the office open on Saturdays be to make this decision economically rational?

Consider the following economic agents: a.the government B.consumers C.producers Who,in a modern mixed economy,decides what goods and services will be produced with the scarce resources available in that economy?

In a market economy,who decides what goods and services will be produced?

If it costs Vijay $150 to design 5 websites and $175 to design 6 websites,then $175 is the marginal cost of producing the 6th Websites.