ExamView+-+PQ1 - Name: _ Class: _ Date: _ ID: A Practice...

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Class: ___________________ Date: __________ ID: A 1 Practice Quiz for Ch 1-3 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The word “economy” comes from the Greek word oikonomos , which means a. “environment.” b. “production.” c. “one who manages a household.” d. “one who makes decisions.” ____ 2. The adage, "There is no such thing as a free lunch," means a. even people on welfare have to pay for food. b. the cost of living is always increasing. c. people face tradeoffs. d. all costs are included in the price of a product. ____ 3. A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between a. guns and butter. b. efficiency and equality. c. inflation and unemployment. d. work and leisure. ____ 4. Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations? a. There is no such thing as a free lunch. b. People buy more when prices are low than when prices are high. c. No matter how much people earn, they tend to spend more than they earn. d. Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes. ____ 5. The "invisible hand" directs economic activity through a. advertising. b. prices. c. central planning. d. government regulations. ____ 6. The term "market failure" a. means the same thing as "market power." b. refers to the dissolution of a market when firms decide to quit producing a certain product. c. refers to the failure of a market to produce an efficient allocation of resources. d.
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ExamView+-+PQ1 - Name: _ Class: _ Date: _ ID: A Practice...

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