Question 1

Scarcity in economics means that:
A) we often do not have sufficient resources to achieve our objectives.
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 in economics means that there are limited resources but unlimited wants and needs. This means that we often do not have sufficient resources to achieve all of our objectives. Option B is partially correct as wants may be limited but needs are not. Option C is incorrect as scarcity does not necessarily mean that there must be poor people in rich countries. Option D is also not completely correct as shortages may occur in some markets but not in all.

Question 2

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

Accepted Answer

Microeconomics is concerned with studying the choices people make, particularly regarding how they allocate their limited resources in order to satisfy their unlimited wants. Its focus is on analyzing the behavior of individuals and firms within markets, including how they set prices and make production decisions. Options A, B, and D are not accurate descriptions of the basic concern of microeconomics.

Question 3

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. This means that it is a factor of production that can be combined with other factors, such as labor and capital, to create goods and services. Examples of resources include natural resources like land, human resources like labor, and physical resources like capital goods.

Question 4

Which topic 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 studies the economy as a whole, including topics such as recessions, inflation, and economic growth. Option A is a microeconomic topic as it focuses on the behavior of a specific market. Option B is also a microeconomic topic as it addresses the impact of a policy change on a single business. Option D is a labor economics topic, which is a subfield of microeconomics that studies the behavior of workers and firms in the labor market.

Question 5

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

If resources are scarce, it means that there is a limited supply of them, which implies that they are insufficient to provide enough goods and services to satisfy all human material wants and needs. This is the basic economic problem that every society faces. Therefore, the concept of scarcity implies that there is an opportunity cost associated with the use of resources, as people have to make choices about how to allocate them among alternative uses. Resources that are not scarce, such as air or sunshine, do not have an opportunity cost because they are abundant and freely available.

Question 6

Which factor can BEST be considered to be a resource used in the production of computers?
A) money from investors
B) wages of computer engineers
C) computer engineers
D) taxes on the profits from the sale of the computers

Accepted Answer

Computer engineers are the resource used in the production of computers, as they are the ones who design and develop the hardware and software components. While money from investors, wages of computer engineers, and taxes on profits may be involved in the production process, none of these can be considered a resource.

Question 7

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 8

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 limited availability of resources relative to the unlimited wants and needs of individuals. Therefore, individuals can have more of one good but only by giving up something else, which is the definition of opportunity cost. This makes choice necessary, as individuals must decide what they are willing to give up in order to obtain what they want. Options A and B both suggest that no choices need to be made, which is not reflective of the reality of scarcity. Option D is incorrect because resources are not unlimited, as they are finite and can be depleted over time.

Question 9

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 needs.

Question 10

We have to make choices because:
A) we have unlimited income.
B) resources are scarce.
C) resources are infinite.
D) with good planning,trade-offs can be avoided.

Accepted Answer

Resources are scarce, meaning that there are limited amounts of resources available to satisfy unlimited wants and needs. Therefore, choices must be made in order to allocate resources efficiently and effectively.

Question 11

Which resource is NOT one that pertains to the production of rice?
A) fertile land
B) labour
C) capital equipment
D) money

Accepted Answer

Money is a resource that can be used in the production of rice, but it is not a resource that pertains specifically to it. Fertile land is necessary to grow the crop, labour is required to plant and harvest it, and capital equipment such as tractors and irrigation systems can enhance the efficiency of the production process.

Question 12

Which factor is NOT an example of a resource?
A) land
B) labour
C) capital
D) production

Accepted Answer

Production is not a resource, but rather the result of combining resources (land, labor, and capital) to create goods and services.

Question 13

A central and fundamental theme in economics is that:
A) wants are limited.
B) Canada 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 basic concept in economics known as scarcity. People have unlimited wants but limited resources to satisfy them, leading to the need for choices and trade-offs.

Question 14

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

Scarcity refers to the limited resources while the unlimited wants, which makes us choose and prioritize among alternative uses of resources. Therefore, when we are forced to make choices, we are facing the concept of scarcity.

Question 15

When a chef prepares a dinner for a customer,which factor is physical capital?
A) the chef
B) the oven
C) the food ingredients
D) the chef's training and experience

Accepted Answer

Physical capital refers to the tools, machinery, and equipment used in the production of goods and services. In this case, the oven would be considered physical capital as it is an important tool for the chef in preparing the dinner. The chef, food ingredients, and training and experience would fall under human capital, which refers to the knowledge, skills, and abilities of individuals working in the production process.

Question 16

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

Freshwater is scarce because there is not enough of it to meet all needs. While it may be abundant in certain areas, there are many other areas, particularly those that are arid or drought-prone, where freshwater is in short supply. This is further complicated by issues such as pollution and overuse, which can further reduce the available supply of freshwater.

Question 17

Manny is attending university and majoring in economics.By doing so,Manny is improving his:
A) land.
B) labour.
C) capital.
D) human capital.

Accepted Answer

By attending university and majoring in economics Manny is improving his human capital, which refers to the knowledge, skills, and abilities that a person acquires through education, training, and experience. This will make him more productive and valuable in the labor market, and increase his potential for higher earnings and career advancement.

Question 18

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, or the limited availability of resources in relation to human wants and needs, is a fundamental economic challenge that is faced by all societies, regardless of their level of industrialization or political philosophy. It is a universal problem that requires individuals, organizations, and governments to make decisions about how to allocate scarce resources in the most efficient and effective ways possible.

Question 19

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 arises because there are limited resources to meet unlimited wants and needs. Therefore, choices need to be made about which goods and services are most essential to produce.

Question 20

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

Accepted Answer

The reason why we are forced to make choices is due to scarcity. Resources are limited and can only be allocated in certain ways, leading individuals and society as a whole to make choices about how to use them.

Quiz 1: First Principles

Scarcity in economics means that:

The basic concern of microeconomics is to:

A resource is anything that:

Which topic is studied in macroeconomics?

If resources are scarce,it means that they:

Which factor can BEST be considered to be a resource used in the production of computers?

How people choose among the alternatives available to them is:

Scarcity exists when:

Freshwater is considered a scarce good because:

We have to make choices because:

Which resource is NOT one that pertains to the production of rice?

Which factor is NOT an example of a resource?

A central and fundamental theme in economics is that:

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

When a chef prepares a dinner for a customer,which factor is physical capital?

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

Manny is attending university and majoring in economics.By doing so,Manny is improving his:

The problem of scarcity is confronted by:

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

We are forced to make choices because of: