Ch1PQ - Practice Questions CH. 1 1. When a society cannot...

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Practice Questions – CH. 1 1. When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing a. scarcity. b. shortages. c. inefficiencies. d. inequities. 2. The adage, "There is no such thing as a free lunch," is used to illustrate the principle that a. goods are scarce. b. people face tradeoffs. c. income must be earned. d. households face many decisions. 3. Which of the following phrases best captures the notion of efficiency? a. absolute fairness b. equal distribution c. minimum waste d. equitable outcome 4. What you give up to obtain an item is called your a. opportunity cost. b. explicit cost. c. true cost. d. direct cost. 5. Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. The opportunity cost of this decision is a. the value to Maurice of the option he would have chosen had Option B not been available.
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This note was uploaded on 02/15/2012 for the course ENGLISH 100 taught by Professor Sarah during the Spring '07 term at California State University Los Angeles .

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Ch1PQ - Practice Questions CH. 1 1. When a society cannot...

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