EOC Answers Ch01

EOC Answers Ch01 - Chapter 1 The Role and Method of...

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Chapter 1: The Role and Method of Economics True or False 1. When our limited wants exceed our unlimited resources, we face scarcity. F 2. Choices are costly because we must give up other opportunities that we value. T 3. Living in a world of scarcity involves trade-offs. T 4. Self-interest cannot include benevolence. F 5. To say that people are rational is to assume that they never make mistakes. F 6. Adam Smith described how self-interest can be a force for the common good. T 7. According to the National Council of Economic Education, most adults tested in the United States performed well on economic literacy. F 8. Rationality implies that someone with a suspended driver’s license would not drive. F 9 . Economic theories do not abstract from the particular details of situations so they can better focus on every aspect of the behavior to be explained. F 10. Determining whether an economic hypothesis is acceptable is more difficult than in the natural or physical sciences because, unlike a chemist in a chemistry lab, an economist cannot control all the other variables that might influence human behavior. T 11 . Microeconomics would deal with the analysis of a small individual firm, while macroeconomics would deal with large global firms. F 12. A positive statement must be both testable and true. F 13. Normative analysis involves subjective, nontestable statements. T 14. The majority of disagreements in economics stem from normative issues. T 15. A hypothesis is a normative statement. F Multiple Choice 1. If a good is scarce, a. it only needs to be limited. b. it is not possible to produce any more of the good. c. our unlimited wants exceed our limited resources. d. our limited wants exceed our unlimited resources. 2. Which of the following is true of resources? a. Their availability is unlimited. b. They are the inputs used to produce goods and services. c. Increasing the amount of resources available could eliminate scarcity. d. Both b and c. 3. If scarcity were not a fact, a. people could have all the goods and services they wanted for free. b. it would no longer be necessary to make choices. c. poverty, defined as the lack of a minimum level of consumption, would also be eliminated. d. all of the above would be true. 4. Economics is concerned with a. the choices people must make because resources are scarce. b. human decision makers and the factors that influence their choices. c. the allocation of limited resources to satisfy unlimited wants. d. all of the above.
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This note was uploaded on 02/10/2011 for the course ECO 2251 taught by Professor Kirkland during the Spring '09 term at Troy.

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EOC Answers Ch01 - Chapter 1 The Role and Method of...

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