Question 1

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 2

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 in economics means that resources are limited, and therefore, we cannot produce all the goods and services that we want. This leads to the need for individuals and societies to make choices about how to allocate resources. B, C, and D are not accurate descriptions of scarcity in economics.

Question 3

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 deals with the behavior and decision-making of individual actors (households, firms) within the economy, rather than the entire economy or large sectors of it (macroeconomics) and economic growth or GDP.

Question 4

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 refers to the limited availability of resources in relation to society's unlimited wants and needs. This means that we cannot produce all the goods and services that people demand, leading to competition for resources and choices about how to allocate them.

Question 5

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

Accepted Answer

Scarcity refers to the limited availability of resources, which means we cannot have everything we want. Therefore, we are forced to make choices about how to allocate those scarce resources.

Question 6

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 resource in the production of rice. It is a medium of exchange used to acquire the necessary resources. The other options, fertile land, labor, and capital equipment, are all essential resources in the production of rice.

Question 7

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. Although it may be abundant in certain places, the demand for freshwater exceeds its supply in many regions of the world. Additionally, factors such as population growth, climate change, and pollution further exacerbate water scarcity issues. Therefore, it is important to prioritize the conservation and sustainable use of freshwater resources. Choices A, C, and D are incorrect because they are either false or unrelated to the issue of freshwater scarcity.

Question 8

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 have to make choices, it is because we are faced with scarcity. We have limited resources (such as time, money, and energy) and have to decide how to allocate them among different options. This is a fundamental concept in economics known as scarcity.

Question 9

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 deals with the study of the economy as a whole, including topics such as national income, inflation, and recessions. The other choices (A, B, and D) are examples of topics that are studied in microeconomics, which focuses on the behavior of individual consumers, firms, and markets.

Question 10

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 exists when individuals have to make choices between two or more alternatives because resources are limited. This means that individuals can have more of one good only by giving up something else, which is the definition of opportunity cost. Therefore, option C is the correct answer.

Question 11

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 is a universal issue that all societies, regardless of their level of industrialization or economic system, must face. It arises from the fact that resources are limited while wants and needs are unlimited, leading to the need for individuals and societies to make choices about how to allocate scarce resources.

Question 12

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 is the study of the overall economy, including indicators such as GDP, inflation, and unemployment. Therefore, the primary emphasis in macroeconomics is on the national economy as a whole.

Question 13

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 falls under the branch of microeconomics, which focuses on individual economic agents such as households and firms.

Question 14

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 the study of individual economic units such as households, firms, and markets. Its main concern is to analyze the choices made by individuals and how those choices affect the market. The other options are not accurate descriptions of microeconomics.

Question 15

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, such as for drinking, agriculture, and industrial uses.

Question 16

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 refers to any input used to produce goods and services. It can be natural resources like water, land, and minerals, or human-made resources like machinery, technology, and labor. The key characteristic of a resource is that it is used to create something else, and therefore has value in the production process.

Question 17

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, which means that there are not enough resources available to provide for all human wants and needs, and thus, there is an opportunity cost associated with the use of these resources. Option B, C, and D are incorrect because resources always have an opportunity cost, are valued by consumers, and have limited supply.

Question 18

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 limited resources to provide all the goods and services people want. This means that choices need to be made about what to produce and how to allocate those resources. If resources were unlimited, there would be no need to make choices about production. If the government owned all resources, there would still be choices to be made about what to produce and how to allocate those resources, as governments have limited budgets and need to prioritize spending.

Question 19

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 deals with the functioning and performance of the entire economy or large sectors of it, including variables such as inflation, employment, GDP, and government policies. It looks at the big picture and tries to understand how different factors impact the economy as a whole. It is different from microeconomics, which focuses on individual decision-making and the behavior of specific markets.

Question 20

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 central concept in economics known as scarcity. People have unlimited wants, but there are limited resources to satisfy those wants. This leads to the need for trade-offs and choices about how resources are allocated.

Quiz 1: First Principles

How people choose among the alternatives available to them is:

Scarcity in economics means that:

Microeconomics deals with:

Scarcity in economics means that:

We are forced to make choices because of:

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

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

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

Which of the following is studied in macroeconomics?

Scarcity exists when:

The problem of scarcity is confronted by:

The primary emphasis in macroeconomics is on:

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

The basic concern of microeconomics is:

Freshwater is considered a scarce good because:

A resource is anything that:

If resources are scarce, it means that they:

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

Macroeconomics deals with:

A key theme fundamental to all of economics is that: