Economics Section Quiz

Wages increase what happens to quantity

it decreases

Producer expects the price will be lower later what happens to quantity

it increases

What must be true for something to be an economic good?

An economic good, tangible or intangible, is any good or service that we value or desire. This definition includes the reduction of things we don't want—bads—as a good.

Why does scarcity affect everyone?

Because no one can have all the goods and services that he or she desires, we all face scarcity as a fact of life.

How and why does scarcity affect each of us differently?

Because our desires and the extent of the resources we have available to meet those desires vary, scarcity affects each of us differently.

Price increases for a substitute in production what happens to quantity

It decreases

Producers expect that prices will be higher later what happens to quantity

It decreases

Input price (fuel) falls what happens to quantity

It increases

Number of sellers increases what happens to quantity

It increases

Price decreases for a substitute product what happens to quantity

It increases

Productivity rises what happens to quantity

It increases

3. When we look at a particular segment of the economy, such as a given industry, we are studying a. macroeconomics. b. microeconomics. c. normative economics. d. positive economics.

b

Which of the following is true of resources? a. Their availability is unlimited. b. They are the inputs used to produce goods and services. c. Increasing the amount of resources available could eliminate scarcity. d. Both b and c.

b

2. When economists assume that people act rationally, it means they a. always make decisions based on complete and accurate information. b. make decisions that will not be regretted later. c. do the best they can based on their values and information under current and future circumstances. d. make decisions based solely on what is best for society. e. commit no errors in judgment.

c

If a good is scarce, a. it only needs to be limited. b. it is not possible to produce any more of the good. c. our unlimited wants exceed our limited resources. d. our limited wants exceed our unlimited resources.

c

The importance of the ceteris paribus assumption is that it a. allows one to separate normative economic issues from positive economic ones. b. allows one to generalize from the whole to the individual. c. allows one to analyze the relationship between two variables apart from the influence of other variables. d. allows one to hold all variables constant so the economy can be carefully observed in a suspended state.

c

The statement "the government should increase spending for the space program" is a. objective and testable. b. a positive statement. c. subjective, prescriptive, and normative. d. a fact and very important for the defense of our country.

c

1. Which of the following is a positive statement? a. New tax laws are needed to help the poor. b. Teenage unemployment should be reduced. c. We should increase Social Security payments to the elderly. d. An increase in tax rates will reduce unemployment. e. It is only fair that firms protected from competition by government-granted monopolies pay higher corporate taxes.

d

3. Rational self-interest can include a. the welfare of our family. b. our friends. c. the poor people of the world. d. all of the above.

d

4. Rational self-interest means a. people never make mistakes. b. that our concerns for others does not involve costs. c. we are materialistic and selfish. d. people make decisions with some desired outcome in mind.

d

4. Which of the following is most likely a topic of discussion in macroeconomics? a. an increase in the price of a pizza b. a decrease in the production of stereos by a consumer electronics company c. an increase in the wage rate paid to automobile workers d. a decrease in the unemployment rate e. the entry of new firms into the software industry

d

Economics is concerned with a. the choices people must make because resources are scarce. b. human decision makers and the factors that influence their choices. c. the allocation of limited resources to satisfy unlimited wants. d. all of the above.

d

Economists use theories to a. abstract from the complexities of the world. b. understand economic behavior. c. explain and help predict human behavior. d. do all of the above. e. do none of the above.

d

If scarcity were not a fact, a. people could have all the goods and services they wanted for free. b. it would no longer be necessary to make choices. c. poverty, defined as the lack of a minimum level of consumption, would also be eliminated. d. all of the above would be true.

d

Normative statements a. attempt to describe what happens and why it happens. b. are objective and testable. c. attempt to describe the way the world works. d. are subjective and attempt to prescribe what should be done.

d

Positive statements a. are testable. b. are attempts to describe what happens and why it happens. c. do not have to be a true statement. d. All of the above are true.

d

The fallacy of composition a. is a problem associated with aggregation. b. assumes that if something is true for an individual, then it is necessarily true for a group of individuals. c. is illustrated in the following statement: If I stand up at a football game, I will be able to see better; therefore, if we all stood up, we would all see better. d. all of the above are true.

d

Which of the following statements is (are) true? a. Economists disagree but most often over normative issues. b. Economists do agree over a wide range of issues. c. Disagreement is also common in other disciplines. d. All of the above statements are true.

d

Which of the following would reflect self-interested behavior to an economist? a. worker pursuing a higher-paying job and better working conditions b. consumer seeking a higher level of satisfaction with her current income c. Mother Teresa using her Nobel Prize money to care for the poor d. all of the above

d