Econ Exam #1 Chapter 1

8) ________ is the study of an economy as a whole.

Macroeconomics

4) In economics, scarcity refers to the situation of ________.

having more wants than the amount of available resources

16) The best alternative use of a resource is referred to as its ________.

opportunity cost

12) Which of the following best describes equilibrium?

A situation where no economic agent would beneft by changing his or her behavior

19) ________ is a calculation that adds up the costs and benefts using a common unit of measurement, like dollar values.

Cost-benefit analysis

2) Which of the following best describes scarce resources?

Resources for which the quantity that people want exceeds the quantity that is freely available

9) Which of the following is a topic studied by macroeconomists? A) Aggregate demand in an economy B) Price determination by a frm C) The consumption choice of a single household D) The production decision of a frm

a

11) Which of the following correctly defnes the term "equilibrium"? A) It refers to a situation in which data are used to arrive at conclusions. B) It refers to a situation in which all economic agents are simultaneously optimizing. C) It refers to a situation in which an optimizing decision is made by an individual economic agent. D) It refers to a situation in which government intervention eficiently allocates scarce resources

b

3) Which of the following is NOT a scarce resource? A) Gold B) Pollution C) Petroleum D) iPhones

b

5) Which of the following statements is true? A) Gold is not a scarce resource. B) Both life-saving drugs and ice cream are examples of scarce goods. C) If a scarce resource is given away for free, everyone will be able to consume it. D) Scarcity means that there is an imbalance between unlimited resources and limited wants.

b

7) Which of the following is an example of a positive economic statement? A) The government should ideally work as a welfare state. B) An increase in income causes an increase in savings. C) Economics is the most useful social science. D) Eliminating poverty is more important than reducing infation

b

1) Which of the following statements is true? A) All economic agents are necessarily individuals. B) A worker who shirks work is not an economic agent. C) A government is an example of an economic agent. D) A street gang is not an economic agent.

c

10) Which of the following is a topic studied by macroeconomists? A) The savings of a single household B) The productivity of an agricultural farm C) The total output of an economy D) Price determination in a market

c

18) John has to choose between two jobs: one that ofers him $50 per hour and one that ofers him $35 per hour. The opportunity cost of choosing the job that ofers him $50 per hour is ________. A) $1.5 per hour B) $15 per hour C) $35 per hour D) $85 per hour

c

6) Which of the following is an example of a positive economic statement? A) The pricing policies followed in single-producer markets should be strictly supervised. B) Unemployment is more harmful than infation. C) Higher interest rates will encourage more savings. D) Pollution is one of the most serious economic problems.

c

14) Which of the following is NOT a key principle of economics? A) Optimization B) Equilibrium C) Empiricism D) Substitution

d

15) Which of the following statements is true of optimization? A) Optimization analysis only relates to the fnancial budget of an economic agent. B) Individuals who optimize do not consider costs when choosing the most feasible alternative. C) Economic agents can optimize only when they are able to perfectly estimate all future costs and benefts. D) Economic agents who optimize attempt to choose the best feasible option, given the information that they have.

d

17) A student has two options: she can either surf the web or work part-time. Working parttime pays her $20 per hour. What is the student's opportunity cost of surfng the web for 5 hours? A) $4 B) $20 C) $50 D) $100

d

13) Empiricism is analysis that uses ________ to test theories.

data

20) The net beneft of a particular alternative equals ________.

the benefits received from the alternative minus the costs incurred when choosing the alternative