1. Economics is the study of
a. how society make choices when there is scarcity.
b. the government's role in society.
c. how a market system functions.
d. how to increase production.
____ 2. Resources are
a. things that can be used to buy goods and services including money, checks and credit
b. things that can be used to satisfy people’s needs such as food, clothing and houses.
c. things that can be used to make goods and services including land, labor and capital.
d. All of the above.
____ 3. Which of the following questions is not answered by the decisions that every society must make?
a. What determines consumer preferences?
b. What goods will be produced?
c. Who will produce the goods?
d. Who will consume the goods?
____ 4. The overriding reason as to why households and societies face many decisions is that
a. resources are scarce.
b. goods and services are not scarce.
c. incomes fluctuate with business cycles.
d. people, by nature, tend to disagree.
____ 5. The phenomenon of scarcity stems from the fact that
a. most economies’ production methods are not very good.
b. in most economies, wealthy people consume disproportionate quantities of goods and
c. governments restricts production of too many goods and services.
d. resources are limited.
____ 6. Approximately what percentage of the world's economies experience scarcity?
____ 7. What you give up to obtain an item is called your
a. opportunity cost.
b. explicit cost.
c. true cost.
d. direct cost.
____ 8. Mallory decides to spend three hours working overtime rather than watching a video with her friends. She
earns $8 an hour. Her opportunity cost of working is
a. the $24 she earns working.
b. the $24 minus the enjoyment she would have received from watching the video.
c. the enjoyment she would have received had she watched the video.
d. nothing, since she would have received less than $24 of enjoyment from the video.
____ 9. Which of the following statements does not apply to a market economy?
Firms decide whom to hire and what to produce.
Prices offer signals about the relative scarcity of a good and help the buyers and sellers to respond to it.
Households decide which firms to work for and what to buy with their incomes.
Government policies are the primary forces that guide the decisions of firms and households.
____ 10. In a market economy, who makes the decisions that guide most economic activity?
firms and households
____ 11. The economy of the former Soviet Union is best described as a
____ 12. Which of the following statement should not be included in microeconomics?
Old Navy (the clothing stores) decided to close some stores in May.
Green Tag Inc. decided to hire 450 workers.
Mark found a new job in Atlanta.
Two people in love are getting married.
____ 13. Macroeconomics is the study of
individual decision makers.
markets for large products.
____ 14. Microeconomics is best described as the study of
how households and firms make decisions and how they interact in specific markets.
the flows of dollars between households and firms.
markets for land, labor, and capital.
____ 15. In economics, which of the following is included in land?
A fish swimming in an ocean.
A fish sold to a woman who will cook the fish for dinner.
A fish dish served in a restaurant.
All of the above.
____ 16. In economics, which of the following is considered as capital?
Ocean and forests.
The parking lot of a shopping mall.
None of the above.
____ 17. Which of the following countries’ economy are considered as transition economy?
All of the above.
____ 18. Which of these statements is a normative statement?
Gasoline prices ought to be lower than they are now.
The federal government should raise taxes on wealthy people.
The social security system is a good system and it deserves to be preserved as it is.
All of the above are normative statements.
____ 19. A normative statement describes how the world
was in the past.
is in the present.
will be in the future.
ought to be.
All of the above.
____ 20. “Prices rise when the quantity of money rises rapidly” is an example of a
negative economic statement.
positive economic statement.
normative economic statement.
statement that contradicts one of the basic principles of economics.
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