Microeconomics First exam chapter 1

Economists would most likely disagree with which of the following statements? A. People respond to incentives B. Making a choice involves an opportunity cost. C. Markets move towards equilibrium D. Resources and inputs used in production are unlimited

D. Resources and inputs used in production are unlimited

Most individuals choose careers in which they specialize in producing only one type of good or service, yet as consumers they have access to a wide variety of goods and service, yet as consumers they have access to a wide variety of goods and services. What principle allows for this? A. trade b. equity c. scarcity d. opportunity cost

Trade

An opportunity cost arises: A. only when a monetary cost is incurred b. only when a time cost is incurred c. only when the wrong decision is made d. whenever any choice is made

Whenever any choice is made

9. the purpose of an economic system is to: a. eliminate scarcity b. protect the environment c. allocate scarce resource d. create an equal distribution of wealth

allocate scarce resources

Economists generally agree that people are most likely to change their behavior when they: A. are asked to do so voluntarily b. are given incentives to do so. c. live in a world without scarcity d. live in a world without opportunity costs

are given incentives to do so

Exchanges taking place in a market system A. are voluntary b. are inefficient c. will benefit one party at the expense of another d. are monitored by the government to ensure that scarce resources are being used wisely.

are voluntary

The condition of scarcity means that: a. when the government produces something, there is no opportunity cost. b. choices must be made in the allocation of productive resources. c. you will not incur an opportunity cost if you have make the right choice. d. only a command economy can make efficient use of resources.

choices must be made in the allocation of of productive resources

An economic system is in_______when individual would be better off by making a different choice A. chaos b. decline c. jeopardy d. equilibrium

equilibrium

Macroeconomics is the branch of economics studying: A. how prices are determined B. why trade-offs exist c. how decisions are made at the margin d. fluctuations in the overall level of business activity

fluctuations in the overall level of business activity

The focal point of economic inquiry is: a. the stock market b. the value of the dollar c. individual choice d. business ethics

individual choice

5. In his bool The Wealth of Nations, Adam Smith used the example of pin-making to illustrate the advantages of: A. equity b. specialization c. marginal analysis d. interaction of choices

specialization