Microeconomics - Module 1 Quiz Review

Which of the following statements best describes allocation? In a decision-making process, an allocation is the value or cost of the next best alternative. Allocation occurs when a country discovers mineral deposits. Allocation is the outcome that occurs from choosing one alternative over another. Allocation is the result of all resources being equally scarce.

Allocation is the outcome that occurs from choosing one alternative over another.

What statement best describes an economic model? An economic model helps to simplify reality. An economic model is based on political decisions. An economic model determines economic outcomes. An economic model only relates to issues of microeconomic concern.

An economic model helps to simplify reality.

Which of the following statements is true about causation? Causation implies correlation. Causation can only be demonstrated by scientists. Causation can be demonstrated using a model. Causation does not exist in the real world.

Causation can be demonstrated using a model.

Which of the following statements about economic models is most accurate? Quantifiability is a necessary condition for a variable to be included in a model. Economic models help inform economic policies. Political forces can influence economic outcomes. Complex models can explain just as much, or just as little, as simple models.

Complex models can explain just as much, or just as little, as simple models.

Which of the following is true? All resources have similar levels of productivity. Labor is always a more productive resource than capital. Different resources have different levels of productivity. Land is the only scarce resource.

Different resources have different levels of productivity.

Which of the following questions is considered most directly relevant to the question of how to produce? How can a nation reduce income taxes? How many bushels of wheat does a nation need to import? How many barrels of oil does a nation aim to export? How can a nation decrease the cost of production technology?

How can a nation decrease the cost of production technology?

Which of the following is true about human choices from an economist's viewpoint? Humans make choices to satisfy their own wants and needs. Humans make choices to satisfy their employers. Humans make choices to increase the amount of resources available. Humans make choices to reduce their dependence on trade.

Humans make choices to satisfy their own wants and needs.

Which of the following is true about human action? It is only relevant in determining political outcomes. It determines what kind of natural resources a country has. It influences how resources are allocated in a society. It is the reason that scarcity exists.

It influences how resources are allocated in a society.

Which of the following best applies to the concept of an economic theory? It is a statement about association, based on opinion. It is a statement about association, based on fact. It cannot be tested. It states the nature of a causal relationship.

It states the nature of a causal relationship.

Which of the following is true about property rights? Property rights are best guaranteed by authoritarian governments. Property rights allow for consumers to purchase the goods they want. Property rights create an environment for markets to flourish. Production is impossible without property rights.

Property rights create an environment for markets to flourish.

Which of the following statements best describes how resources are allocated in a market economy? The government decides how resources are allocated. Resource allocation is determined by international trade. Resource allocation is determined through the workings of the choices of individual economic agents. Firms decide how resources are allocated.

Resource allocation is determined through the workings of the choices of individual economic agents.

Which of the following statements reflects an accurate comparison of economic theory and economic models? Theory is created according to a model. Theory guides how models are developed. Theory is based on economic policy and models are based on economic behavior. Theory and models replicate reality perfectly.

Theory guides how models are developed.

Which of the following questions is considered most directly relevant to the question of for whom to produce? What kinds of jobs should a nation try to create? What is a nation's comparative advantage in production? What kinds of consumer goods are most preferred by a nation's citizens? Who owns the most businesses?

What kinds of consumer goods are most preferred by a nation's citizens?

Which of the following is usually not scarce? air coffee shops computers lumber

air

Economic liberty...

allows for individuals to participate in trade on a voluntary basis.

Command economies are guided by a..

central authority

Producers in a market economy mainly answer the...

how to produce question.

Adam Smith's invisible hand...

implies that a central authority is not needed for markets to exist.

Which of the following constitutes human action that is relevant to the field of economics? pollination in a rose garden, assuming the roses will be sold weather purchasing a bouquet of roses the amount of rainfall

purchasing a bouquet of roses

Preferences are _______ and __________

ranked and subjective

Which of the following should NOT be classified as a capital resource? a ship owned by a cruise line savings to start a business a windmill a drill bit for a mining company

savings to start a business

Asset owners...

should shoulder the cost of the inefficient use of their assets.

Which principle of subsidiarity do most people agree with?

the decentralization of authority

According to economic theory, human action is rewarded relative to the __________ it creates. satisfaction creativity value attention

value

The three basic economic questions are:

what? how? for whom?