Question 1

Freshwater is considered a scarce good because:
A)not enough of it is available for all needs.
B)it does not have any uses.
C)scarce goods are not expensive.
D)not enough of it is available for all needs and because it is not expensive.

Accepted Answer

Freshwater is considered a scarce good because there is not enough of it available to meet all the needs for it. While it is not necessarily an expensive good, its scarcity is still a concern.

Question 2

We are forced to make choices because of:
A)exploitation.
B)efficiency.
C)scarcity.
D)the margin.

Accepted Answer

Scarcity is the root of all economic choices. Since resources such as time, money, and materials are limited, we must make choices about how to allocate them efficiently. This requires weighing the benefits and costs of each choice, and ultimately making the best decision given the available options.

Question 3

Although freshwater is very abundant in most places, it is scarce because:
A)it has no alternative uses.
B)there is not enough of it to meet all needs.
C)it is a free good.
D)scarce goods in general are not all that costly.

Accepted Answer

Although freshwater may be abundant in certain areas, it is still scarce because the demand for it exceeds the supply in many regions. This can be due to factors such as population growth, climate change, and unsustainable usage practices. Therefore, B is the best choice as it accurately reflects the reality of freshwater scarcity.

Question 4

Macroeconomics deals with:
A)bits and pieces of the economy.
B)how a business unit should operate profitably.
C)the working of the entire economy or large sectors of it.
D)how individuals make decisions.

Accepted Answer

Macroeconomics is concerned with the study of the entire economy or large sectors of it, such as inflation, unemployment, economic growth, and government policies that affect the overall functioning of the economy. It goes beyond the individual level and focuses on aggregate phenomena. Choice A is incorrect because macroeconomics does not deal with bits and pieces of the economy, but rather takes a broader view. Choice B is incorrect because microeconomics is concerned with how a business unit should operate profitably, not macroeconomics. Choice D is incorrect because microeconomics deals with how individuals make decisions, not macroeconomics.

Question 5

When we are forced to make choices, we are facing the concept of:
A)human capital.
B)inflation.
C)scarcity.
D)market failure.

Accepted Answer

When we are forced to make choices, we are faced with scarcity. This means that we have limited resources and unlimited wants and needs. Therefore, we must make choices about how to allocate our resources in the most efficient way possible. This concept is central to economics and is the reason why we must make choices and trade-offs in our everyday lives.

Question 6

Scarcity in economics means that:
A)we do not have sufficient resources to produce all of the goods and services we want.
B)the wants of people are limited.
C)there must be poor people in rich countries.
D)economists are clearly not doing their job.

Accepted Answer

Scarcity in economics means that there are limited resources to meet unlimited wants and needs. Therefore, we cannot produce all the goods and services we want. This is the basic economic problem that economists try to solve by studying how resources can be allocated efficiently to meet the maximum of society's wants and needs.

Question 7

The problem of scarcity is confronted by:
A)industrialized societies only.
B)preindustrial societies only.
C)societies governed by communist philosophies only.
D)all societies.

Accepted Answer

The problem of scarcity, which arises due to limited resources and unlimited wants, is faced by all societies, whether industrialized or preindustrial, capitalist or communist. It is a fundamental economic problem that affects all human societies.

Question 8

A resource is anything that:
A)can be used in production.
B)you pay for.
C)is in scarce supply.
D)can be consumed.

Accepted Answer

A resource is anything that can be used in production, including physical objects and intangible services. The other options - paying for it, scarcity, and consumption - are not essential criteria for defining a resource.

Question 9

A key theme fundamental to all of economics is that:
A)wants are limited.
B)the United States is a rich country, but we are simply not aware of it.
C)people have unlimited wants but limited means to satisfy them.
D)resources are unlimited.

Accepted Answer

This is a fundamental concept in economics that people have unlimited wants or desires, but the resources available to fulfill these wants are limited or scarce. This creates the problem of scarcity, which is at the heart of all economic decision-making. Option A is incorrect because although wants may be limited, the focus is on the fact that resources are limited. Option B is incorrect because it is irrelevant and untrue. Option D is incorrect because resources are finite and limited, not unlimited as suggested.

Question 10

Which of the following is studied in macroeconomics?
A)the change in automobile sales due to a change in the price of automobiles
B)the effect of a tax reduction on the profits of an individual business
C)recessions
D)the unemployment of workers displaced by technological change in the typesetting industry

Accepted Answer

Macroeconomics is the study of the overall performance and behavior of the economy. Recessions, which are periods of negative economic growth, are a key area of focus in macroeconomics. The other choices, such as changes in automobile sales or the unemployment of workers in a specific industry, are more likely to be studied in microeconomics, which focuses on individual markets and industries.

Question 11

If resources are scarce, it means that they:
A)are insufficient to provide enough goods and services to satisfy all human material wants and needs.
B)have no opportunity cost.
C)are probably not valued by consumers.
D)have an unlimited supply.

Accepted Answer

Scarce resources are limited in supply and cannot meet all of society's needs and wants, which leads to the need for economic decision-making and trade-offs. Therefore, option A is the correct choice. Option B is incorrect because all resources have an opportunity cost, which means that we have to give up something to obtain them. Option C is incorrect because the value of a resource is determined by its scarcity and usefulness. Option D is also incorrect because no resources have unlimited supply in the real world.

Question 12

Scarcity in economics means that:
A)we do not have sufficient resources to produce all of the goods and services we want.
B)the wants of people are limited.
C)there must be poor people in rich countries.
D)shortages exist in nearly all markets.

Accepted Answer

Scarcity refers to the basic economic problem of having unlimited wants and needs with limited resources to fulfill them. This means we cannot produce all the goods and services we want, leading to trade-offs and choices. Hence, option A is the correct definition of scarcity, while B, C, and D are not accurate descriptions.

Question 13

How people choose among the alternatives available to them is:
A)not part of the study of economics.
B)impossible to describe.
C)the study of microeconomics.
D)not important in the study of microeconomics.

Accepted Answer

The study of microeconomics focuses on how individuals and firms make decisions to allocate limited resources, including how they choose among the various alternatives available to them.

Question 14

The study of a single firm and how it determines prices falls under the study of:
A)macroeconomics.
B)microeconomics.
C)economic growth.
D)fiscal policy.

Accepted Answer

The study of a single firm and how it determines prices is a topic within microeconomics. Microeconomics focuses on individual consumers, producers, and markets, while macroeconomics looks at the overall performance of the economy as a whole. Economic growth and fiscal policy are also topics within macroeconomics and are not directly related to the study of a single firm determining prices.

Question 15

The primary emphasis in macroeconomics is on:
A)how firms set prices.
B)the national economy.
C)marginal analysis.
D)bits and pieces of the economy.

Accepted Answer

Macroeconomics focuses on the overall performance of the national economy, including factors like GDP, inflation, unemployment, and government policies that affect the economy as a whole. The other choices listed are more relevant to microeconomics, which is concerned with individual firms and markets.

Question 16

The basic concern of microeconomics is:
A)to keep business firms from losing money.
B)to prove that capitalism is better than socialism.
C)to study the choices people make.
D)to use unlimited resources to produce goods and services to satisfy limited wants.

Accepted Answer

Microeconomics is concerned with the study of individual economic agents, such as consumers, producers, and markets. It focuses on the choices people make, including how they allocate their resources (time, money, etc.) to maximize their satisfaction or profits. Options A and B are not accurate descriptions of the basic concern of microeconomics, while option D describes the opposite of what microeconomics aims to achieve.

Question 17

Microeconomics deals with:
A)the working of the entire economy or large sectors of it.
B)economic growth.
C)individual decision makers in the economy.
D)gross domestic product.

Accepted Answer

Microeconomics focuses on the behavior of individual consumers, firms, and industries, and the choices they make in allocating resources. It does not deal with the entire economy as a whole, which is the subject of macroeconomics.

Question 18

Scarcity exists when:
A)making choices among two or more alternatives is not necessary.
B)individuals can have more of any good without giving up anything.
C)individuals can have more of one good but only by giving up something else.
D)resources are unlimited.

Accepted Answer

Scarcity refers to the situation where resources are limited, while people's wants and needs are unlimited. Therefore, individuals can only have more of one good by giving up something else. This is the fundamental concept behind the economic problem of choice, as people must make trade-offs to satisfy their most urgent wants and needs with limited resources.

Question 19

Which of the following is NOT a resource in the production of rice?
A)fertile land
B)labor
C)capital equipment
D)money

Accepted Answer

Money is not a direct resource in the production of rice. It may be necessary to purchase other resources such as labor and capital equipment, but it is not a resource in itself.

Question 20

The problem of determining what goods and services society should produce:
A)exists because we can produce more than we need or want.
B)exists because there are not enough resources to provide all of the goods and services that people want.
C)would not exist if all goods and services were scarce.
D)would not exist if government owned all of the resources.

Accepted Answer

The problem of determining what goods and services society should produce exists because there are not enough resources to provide all of the goods and services that people want. This is also known as the problem of scarcity. If resources were unlimited, there would be no need to determine what to produce since everything could be produced. Therefore, the best answer is B.

Quiz 1: First Principles

Freshwater is considered a scarce good because:

We are forced to make choices because of:

Although freshwater is very abundant in most places, it is scarce because:

Macroeconomics deals with:

When we are forced to make choices, we are facing the concept of:

Scarcity in economics means that:

The problem of scarcity is confronted by:

A resource is anything that:

A key theme fundamental to all of economics is that:

Which of the following is studied in macroeconomics?

If resources are scarce, it means that they:

Scarcity in economics means that:

How people choose among the alternatives available to them is:

The study of a single firm and how it determines prices falls under the study of:

The primary emphasis in macroeconomics is on:

The basic concern of microeconomics is:

Microeconomics deals with:

Scarcity exists when:

Which of the following is NOT a resource in the production of rice?

The problem of determining what goods and services society should produce: