Quiz 1

Which of the following is true about labor as a factor of production?

A) Labor refers to human effort.

What is the correct definition of a Positive Economic Statement?

C) A positive economic statement is one that can proved true or proven false by testing it with reference to facts. It need not be true but simply able to subjected to testing to determine if in fact it is true.

Which of the following is NOT true about natural resources?

C) All natural resources are renewable or have a supply that man can never exhaust.

Which of the following lists the four major categories of economic resources used in the production of consumer goods?

C) Land, labor, capital and entrepreneurial skill.

Which of the following is NOT true about Microeconomics and Macroeconomics?

C) Microeconomics studies the performance of the economy as a whole.

In which type market do firms buy labor, capital and natural resources?

C) Resource Market

Which of the following provides a correct example of Normative Economics?

C) The government should provide a minimum total welfare payment to poor people that is at least 80% of the local minimum wage salary.

Which of the following correctly reflects the function of a resource market?

B) Firms buy labor, capital and natural resources in Resource Markets.

Which is the correct definition of Macroeconomics?

A) Macroeconomics looks at the entire economy, not at the multitude of individual markets for the numerous individual goods and services. It looks at high level economic measures such as the level of employment, price levels and Gross Domestic Product.

Which of the following is NOT true about positive economic statements?

A) Positive economic statements are ones that are true.

As used in economics, to what does the term "marginal" refer?

A) The word "marginal" refers to the incremental or additional change that results from buying one more unit of something or doing one more specified action.

Which of the following is NOT true about a normative economic statement?

A) This is an accurate example of a normative economic statement: Raising the price of labor will cause a decrease in the amount of labor used by firms.

Which of the following is true about scarcity?

B) Scarcity refers to the long term situation whereby the amount desired exceeds the amount freely available. Therefore, any item that can command any price in an open market is technically scarce.

Which of the following is TRUE about Product Markets?

A) Consumers buy final goods and services in Product Markets. While firms are the buyers in resource markets, consumers (households) are the buyers in product markets.

Which of the following is correct about the term "capital" as defined by economists?

B) Economists define capital as physical assets (factories, machinery, etc.) used to produce other physical assets or consumer goods.

Which of the productive resources involves the surface of the earth and the valuable resources located just on the surface and below the surface?

B) Land (Natural Resources)

Which of the following provides the correct definition of Microeconomics?

B) Microeconomics studies the phenomenon of individual choice and how markets coordinate those choices. Microeconomics focuses on how prices and quantities sold are determined in defined markets for individual goods.

As used by economists, which of the following is the correct definition of capital?

D) Physical assets (factories, machinery, tools etc.) used to produce other physical assets or consumer goods.