Economics Practice

Economics Practice - Economics of Production 11 3/2/12 3:10...

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3/2/12 3:10 PM Economics of Production 11 Page 1 of 47 http://econweb.rutgers.edu/sani/cook/121/121-sample%20test.htm 11:373:121 Practice Test Questions Chapter 1 1) An incentive A) could be a reward but could not be a penalty. B) could be a penalty but could not be a reward. C) could be either a reward or a penalty. D) is the opposite of a tradeoff. 2) Scarcity requires that people must A) cooperate. B) compete. C) trade. D) make choices. 3) Microeconomics focuses on all of the following EXCEPT A) the purchasing decisions that an individual consumer makes. B) the effect of increasing the money supply on inflation. C) the hiring decisions that a business makes. D) the effect of an increase in the tax on cigarettes on cigarette sales. 4) Studying the determination of prices in individual markets is primarily a concern of A) positive economics. B) negative economics. C) macroeconomics. D) microeconomics. 5) When an economy produces more houses and fewer typewriters, it is answering the ________ question. A) "what" B) "how" C) "where" D) "for whom" 6) Entrepreneurs do all of the following EXCEPT A) organize labor, land, and capital. B) come up with new ideas about what, how, when and where to produce. C) bear risk from business decisions. D) own all the other resources. 7) Which of the following is NOT a factor of production? A) the water used to cool a nuclear power plant. B) the effort of farmers raising cattle. C) the wages paid to workers. D) the management skill of a small business owner.
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3/2/12 3:10 PM Economics of Production 11 Page 2 of 47 http://econweb.rutgers.edu/sani/cook/121/121-sample%20test.htm 8) When a university decides to add to the football stadium instead of adding to the baseball stadium, it faces the A) "what" tradeoff. B) "how" tradeoff. C) "for whom" tradeoff. D) macroeconomic question. 9) The term used to emphasize that making choices in the face of scarcity involves a cost is A) substitution cost. B) opportunity cost. C) utility cost. D) accounting cost. 10) The opportunity cost of something you decide to get is A) all possible alternatives that you give up to get it. B) the highest valued alternative you give up to get it. C) the lowest valued alternative you give up to get it. D) the amount of money you pay to get it. 11) During the summer you have made the decision to attend summer school, which precludes you from working at your usual summer job in which you normally earn $6,000 for the summer. Your tuition cost is $3,000, books and supplies cost $300, and room and board cost $1,000. The opportunity cost of attending summer school is A) $10,300. B) $6,000. C) $4,300. D) $3,300. 12) You decide to take a vacation and the trip costs you $2,000. While you are on vacation, you do not report to work where you could have earned $750. The opportunity cost of the vacation is A) $2,000. B) $750. C) $2,750. D) $1,250 13) When the government chooses to use resources to build a dam, these sources are no longer available to build a
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Economics Practice - Economics of Production 11 3/2/12 3:10...

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