Ch 1 Multiple Choice

Scarcity a)is due to unlimited wants and limited resources b)is not a problem for the wealthy c)is only a problem when a country has too large a population d)all of the above

a)

The study of economics arises due to a)Money b)scarcity c)greed d)resources

b

Which of the following is a normative statement? a.the price of gasoline is too high b.the current high price of gasoline is the result of strong worldwide demand c.when the price of gasoline rises, the quantity of gas purchased falls d.when the price of gasoline rises, transportation costs rise

a

What does the adjective "marginal" mean in economics? a.the edge of a market b.additional or extra c.illegal d.secondary

b

Which of the following is a positive economic statement? a.everyone should live at the same standard of living b.if the price of gasoline rises, a smaller quantity will be bought c.the government should close income tax loopholes d.US firms should not be allowed to practice outsourcing

b

People making optimal decision a.according to their whims and emotions at the moment b.in consistently irrational ways c.at the margin d.randomly

c

The distribution of income primarily determines which of the fundamental economic questions? a.what goods and services are the be produced b.how goods and services are to be produced c.who will receive the goods and services produced d.how to plan the economy

c

The govt makes all economic decisions in a: a.market economy b.mixed economy c.centrally planned economy d.free economy

c

Who ultimately decides what goods and services will be produced in a market economy? a.producing firms b.the ruling political party consumers d.worker

c

Economics is the study of a)how to make money in the stock market b)how to make money in the market economy c)the choices people make to attain their goals, given their scarce resources d)supply and demand

c)

What is an economic model? a.a description of an economic issue that includes all possible related information b.a description of an economic issue based on official govt information c.a detailed version of some aspect of economic life used to analyze an economic issue d.a simplified version of some aspect of economic life used to analyze an economic issue

d

Economists assume that a)humans behave randomly b)humans are greedy and selfish c)humans prefer to live in a society that values fairness above all else d)humans are rational and respond to incentives

d)