Chapter 1: Exploring Economics

Which is TRUE about specialization and exchange between two individuals? (a.) They generally benefit the poorer individual as well as the richer individual. (.b) They generally benefit the richer individual at the expense of the poorer individual. (c.) They generally benefit the poorer individual at the expense of the richer individual. (d.)They generally benefit neither the poorer individual nor the richer individual.

(a.) They generally benefit the poorer individual as well as the richer individual.

The opportunity costs of attending college do NOT include: (a.) the expenditures for food. (b.) the costs of textbooks or eBooks. (c.) the forgone wages that could have been earned working. (d.) required student activity fees.

(a.) the expenditures for food.

Which of the following is NOT an example of market failure? (a.) Water is polluted by a paper company located by a river. (b.) Air is polluted by a manufacturing firm. (c.) Competition leads firms to provide products at the lowest possible price. (d.) Consumers must buy water from one local water utility.

(c.) Competition leads firms to provide products at the lowest possible price.

In the study of economics, the goals of efficiency and equity are often: (a.) given equal emphasis. (b.) objectively definable. (c.) conflicting with one another. (d.) compatible.

(c.) conflicting with one another.

Supply and demand analysis is used: (a.) only in microeconomics. (b.) only in macroeconomics. (c.) in both microeconomics and macroeconomics. (a.) in neither microeconomics nor macroeconomics.

(c.) in both microeconomics and macroeconomics.

Scarcity: (a.) is synonymous with poverty. (b.) is eliminated with greater technology. (c.) is faced by all individuals and societies. (d.) can be eliminated with adequate resources.

(c.) is faced by all individuals and societies.

A theory composed of a number of assumptions and facts boiled down to their basic relevant elements is called a: (a.) practice. (b.) conclusion. (c.) model. (d.) metaphor.

(c.) model.

When the government chooses to use resources to build tourist centers, the chosen resources are no longer available to build highways. This BEST illustrates the concept of: (a.) macroeconomics. (b.) scarcity. (c.) opportunity cost. (d.) efficiency.

(c.) opportunity cost.

Rational behavior requires "thinking at the margin." Which of the following is an example of this type of thinking? (a.) deciding whether a second burger is worth the extra $2 (b.) deciding whether your overtime pay is worth working on Saturday (your day off) (c.) deciding whether to pay a fine for polluting the local harbor or installing antipollution machinery (d.) All of these are examples of "thinking at the margin."

(d.) All of these are examples of "thinking at the margin."

Because of scarcity: (a.) resources are limitless. (b.) wants are limited. (c.) choices are unlimited. (d.) we face tradeoffs in nearly every choice we make.

(d.) we face tradeoffs in nearly every choice we make.