Module 1 and 2 Quiz

Which of the following questions is studied in microeconomics? A. Should I go to college or get a job after I graduate? B. What government policies should be adopted to promote full employment? C. How many people are employed in the economy this year? D. Has the overall level of prices in the economy increased or decreased? E. What determines the overall salary levels paid to workers in given years?

A

A student decides that having already spent three hours studying for an exam, she should spend one more hour studying for the same exam. Which of the following is most likely true? A. the marginal benefit of the fourth hour is certainly less than the marginal cost of the fourth hour B. the marginal benefit of the fourth hour is at least as great as the marginal cost of the fourth hour C. Without knowing the student's opportunity cost of studying, we have no way of knowing whether or not her marginal benefits outweigh her marginal costs. D. The marginal cost of the third hour was likely greater than the marginal cost of the fourth hour E. The marginal cost of the third hour was less than the marginal cost of the third hour

B

The concept of opportunity cost would no longer be relevant if A. poverty in an economy no longer existed B. the supply of all resources was unlimited C. resources were allocated efficiently D. real wages were flexible E. all current incomes were invested in technological research

B

Economics is best described as A. the study of how scarce material wants are allocated between unlimited resources B. the study of how scarce labor can be replaced by unlimited capital C. the study of how decision makers choose the best way to satisfy their unlimited material wants with a scarce supply of resources D. the study of how unlimited material wants can best be satisfied by allocating limitless amounts of productive resources E. the study of how capitalism is superior to any other economic system

C

Command Economy

Industries are publicly owned and a central authority makes production and consumption decisions

Identify an economy's four resources that are considered scarce

Land, labor, capital, and entrepreneurship

Scarcity

an adjective that is used to describe a limited amount of resources due to unlimited wants

Macroeconomics

field that studies the big picture economy, such as unemployment rate, inflation rate, GDP, etc.

What does every economic issue involve?

individual choice

Microeconomics

studies how individuals, businesses, and households make decisions and how these decisions interact

Market Economy

the decisions of individual production and consumption are made with little government involvement

Economics

the study of scarcity of choice

Opportunity cost

what you must give up in order to get something