Test

A person should consume more of something when its marginal a.) benefit exceeds its marginal cost b.) cost exceeds its marginal benefit c.) cost equals its marginal benefit d.) benefit is still positive

a

According to economists, economic self-interest a.) is a reality that underlies economic behavior b.) has the same meaning as selfishness c.) is more characteristic of men than of women d.) is usually self-defeating

a

Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and others refuse. Economists would describe Alex's behavior as a.) rational self-interest, because he attempting to increase his own income by identifying and satisfying someone else's wants b.) greedy, because he is asking for a high wage c.) selfish, because he is asking for a wage that is higher than others might charge d.) irrational, because some neighbors refused his offer

a

Economics involves marginal analysis because a.) most decisions involve changes from the present situation b.) marginal benefits always exceed marginal costs c.) marginal costs always exceed marginal benefits d.) much economic behavior is irrational

a

In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of a.) scarcity and opportunity costs b.) money and real capital c.) complementary economic goals d.) full production

a

Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money, because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of a.) opportunity costs b.) marginal benefits that exceed marginal costs c.) imperfect information d.) normative economics

a

Marginal costs exist because a.) the decision to engage in one activity means forgoing some other activity b.) wants are scarce relative to resources c.) households and businesses make rational decisions d.) most decisions do not involve sacrifices or tradeoffs

a

When economists say that people act rationally in their self interest, they mean that individuals a.) look for and pursue opportunities to increase their utility b.) generally disregard the interests of others c.) are mainly creatures of habit d.) are usually impulsive and unpredictable

a

Which of the following most closely relates to the idea of opportunity costs? a.) tradeoffs b.) economic growth c.) technological change d.) capitalism

a

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because a.) people are greedy b.) productive resources are limited c.) human beings are inherently insecure d.) people are irrational

b

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. This is a reflection of a.) resource scarcity and the necessity of choice b.) purposeful behavior c.) marginal costs that exceed marginal benefits d.) the tradeoff problem that exists between competing goals

b

Economics may best be defined as the a.) interaction between macro and micro considerations b.) social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity c.) empirical testing of value judgments through the use of logic d.) use of policy to refute facts and hypotheses

b

If someone produced too much of a good, this would suggest that a.) rational choice cannot be applied to many economic decisions b.) the good was produced to the point where its marginal cost exceeded its marginal benefit c.) certain goods and services such as education and health care are inherently desirable and should be produced regardless of costs and benefits d.) the good was produced to the point where its marginal benefit exceeded its marginal cost

b

Purposeful behavior means that a.) people are selfish in their decision-making b.) people weigh costs and benefits to make decisions c.) people are immune from emotions affecting their decisions d.) decision-makers do not make mistakes when weighing costs and benefits

b

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates a.) distorted priorities b.) opportunity costs c.) increasing opportunity costs d.) productive efficiency

b

The assertion that "There is no free lunch" means that a.) there are always tradeoffs between economic goals b.) all production involves the use of scarce resources and thus the sacrifice of alternative goods c.) marginal analysis is not used in economic reasoning d.) choices need not be made if behavior is rational

b

The economic perspective entails a.) irrational behavior by individuals and institutions b.) a comparison of marginal benefits and marginal costs in decision making c.) short-term but not long-term thinking d.) rejection of the scientific method

b

You should decide to go to a movie a.) if the marginal cost of the movie exceeds its marginal benefit b.) if the marginal benefit of the movie exceeds its marginal cost c.) if your income will allow you to buy a ticket d.) because movies are enjoyable

b

For economists, the word "utility" means a.) versatility and flexibility b.) rationality c.) pleasure or satisfaction d.) purposefulness

c

Purposeful behavior suggests that a.) everyone will make identical choices b.) resource availability exceeds economic wants c.) individuals may make different choices because of different desired outcomes d.) an individual's economic goals cannot involve tradeoffs

c

The study of economics is primarily concerned with a.) keeping private businesses from losing money b.) demonstrating that capitalistic economies are superior to socialistic economies c.) choices that are made in seeking the best use of resources d.) determining the most equitable distribution of society's output

c

Which one of the following expressions best states the idea of opportunity cost? a.) "A penny saved is a penny earned." b.) "He who hesitates is lost." c.) "There is no such thing as a free lunch." d.) "All that glitters is not gold."

c

Economists contend that most economic decisions are a.) random b.) chaotic c.) spontaneous d.) purposeful

d

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact a.) is an example of irrational behavior b.) implies that reading should be taught through phonics rather than the whole language method c.) contradicts the economic perspective d.) implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost

d

In economics, the pleasure, happiness, or satisfaction received from a product is called a.) marginal cost b.) rational outcome c.) status fulfillment d.) utility

d