ECO1

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.

a. resources are scarce.

10. 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. surpluses. c. inefficiencies. d. inequalities.

a. scarcity.

Economics deals primarily with the concept of a. scarcity. b. money. c. poverty. d. banking.

a. scarcity.

Which of the following is correct? a. The word economy comes from the Greek word for "rational thinker." b. Economists study the management of scarce resources. c. Because economists believe that people pursue their best interests, they are not interested in how people interact. d. All of the above are correct.

b. Economists study the management of scarce resources.

Economics is the study of a. production methods. b. how society manages its scarce resources. c. how households decide who performs which tasks. d. the interaction of business and government.

b. how society manages its scarce resources.

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that a. trade can make everyone better off. b. people face trade-offs c. rational people think at the margin. d. people respond to incentives.

b. people face trade-offs

The word "economy" comes from the Greek word oikonomos, which means a. "environment." b. "production." c. "one who manages a household." d. "one who makes decisions."

c. "one who manages a household."

Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that a. people respond to incentives. b. rational people think at the margin. c. people face tradeoffs. d. improvements in efficiency sometimes come at the expense of equality.

c. people face tradeoffs.

The adage, "There is no such thing as a free lunch," means a. even people on welfare have to pay for food. b. the cost of living is always increasing. c. people face tradeoffs. d. all costs are included in the price of a product.

c. people face tradeoffs.

Resources are a. scarce for households but plentiful for economies. b. plentiful for households but scarce for economies. c. scarce for households and scarce for economies. d. plentiful for households and plentiful for economies.

c. scarce for households and scarce for economies.

9. Approximately what percentage of the world's economies experience scarcity? a. 25% b. 50% c. 75% d. 100%

d. 100%

11. Which of the following products would be considered scarce? a. golf clubs b. Picasso paintings c. apples d. All of the above are correct.

d. All of the above are correct.

The principle that "people face tradeoffs" applies to a. individuals. b. families. c. societies. d. All of the above are correct.

d. All of the above are correct.

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"? a. Melissa can attend the concert only if she takes her sister with her. b. Greg is hungry and homeless. c. Brian must repair the tire on his bike before he can ride it to class. d. Kendra must decide between going to Colorado or Cancun for spring break.

d. Kendra must decide between going to Colorado or Cancun for spring break.

In considering how to allocate its scarce resources among its various members, a household considers a. each member's abilities. b. each member's efforts. c. each member's desires. d. all of the above

d. all of the above

The word that comes from the Greek word for "one who manages a household" is a. market. b. consumer. c. producer. d. economy.

d. economy

8. 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 services. c. governments restrict production of too many goods and services. d. resources are limited.

d. resources are limited.