Micro- Ch. 1 & 2

Which of the following is a labor resource? a) A computer programmer. b) A computer. c)Silicon (sand) used to make computer chips. d) A piece of software used by a firm.

a) A computer programmer.

Which of the following would not be considered a capital resource by economists? a) A van used by a mother to transport the family around b) An office computer used by an accountant c) A crane used by a building contractor d) A camera used by a professional photographer

a) A van used by a mother to transport the family around

Money is not considered to be an economic resource because: a) As such it is not productive b) Money is not a free gift of nature c) Money is made by man d) Idle money balances do not earn interest income

a) As such it is not productive

When studying human behavior, economists assume rational self-interest. This means that: a) People make decisions based on some desired outcome b) People are quite selfish, and are not concerned about others c) People always make the right decisions d) People have all the information they need to make a decision

a) People make decisions based on some desired outcome

Which of the following is not a main function of the entrepreneur? a) To make routine pricing decisions. b) To innovate. c) To assume the risk of economic losses. d) To make strategic business decisions.

a) To make routine pricing decisions.

Economic systems differ according to which two main characteristics? a) Who owns the factors of production and the methods used to coordinate economic activity. b) The technology used in production and the quantity and quality of natural resources. c) How goods are produced and who gets them. d) The political system in place and the degree of scarcity facing the economy.

a) Who owns the factors of production and the methods used to coordinate economic activity.

Economists would classify all of the following as "land," except: a) Two thousand acres of virgin forest b) A hydroelectric dam c) Crude oil reserves d) Iron ore deposits

b) A hydroelectric dam

As a consequence of the problem of scarcity: a) There is never enough of anything b) Individuals have to make choices from among alternatives c) Only some people can "have it all" d) Things which are plentiful have relatively high prices

b) Individuals have to make choices from among alternatives

Property rights are important because they: a) ensure an equal distribution of income. b) encourage cooperation by improving the chances of mutually agreeable transactions. c) guarantee that any exchange will make all parties better off than prior to the exchange. d) allow the government to control how resources are allocated.

b) encourage cooperation by improving the chances of mutually agreeable transactions.

An economic system: a) requires a grouping of private markets linked to one another. b) is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem. c) requires some sort of centralized authority (such as government) to coordinate economic activity. d) is a plan or scheme that allows a firm to make money at some other firm's expense.

b) is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.

The four factors of production are: a) land, labor, capital, and money. b) land, labor, capital, and entrepreneurial ability. c) labor, capital, technology, and entrepreneurial ability. d) labor, capital, entrepreneurial ability, and money.

b) land, labor, capital, and entrepreneurial ability.

Economics is a social science that studies how individuals, institutions, and society may: a) Expand the amount of resources available to them b) Attain a minimum level of production c) Best use resources to maximize satisfaction of economic wants d) Reduce the amount of goods and services they need

c) Best use resources to maximize satisfaction of economic wants

Which of the following is not a typical characteristic of a market system? a) Private property. b) Freedom of enterprise. c) Government ownership of most property resources. d) Competition in product and resource markets.

c) Government ownership of most property resources.

The opportunity cost of doing or getting something is best and fully defined as: a) The difference between the marginal cost and benefit of doing something b) The materials used in doing or getting something c) The value of the best alternative that is given up in order to do or get something d) The money spent in doing or getting something

c) The value of the best alternative that is given up in order to do or get something

The process of producing and accumulating capital goods is called: a) money capital. b) depreciation. c) investment. d) consumption.

c) investment

Copyrights and trademarks are examples of: a) capital goods. b) human capital. c) property rights. d) public goods.

c) property rights.

The basic truth that underlies the study of economics is the fact that we all face: a) Death b) Taxes c) Risk d) Scarcity

d) Scarcity

Which of the following is one of the Five Fundamental Questions? a) Which products will be in scarce supply and which in excess supply? b) Who should appoint the head of the central bank? c) How much should society save? d) What goods and services will be produced?

d) What goods and services will be produced?

Specialization—the division of labor—enhances productivity and efficiency by: a) allowing workers to take advantage of existing differences in their abilities and skills. b) avoiding the time loss involved in shifting from one production task to another. c) allowing workers to develop skills by working on one, or a limited number, of tasks. d) all of the means identified in the other answers.

d) all of the means identified in the other answers.

Economic resources are also called: a) free gifts of nature. b) consumption goods. c) units of money capital. d) factors of production.

d) factors of production.