ECO2013

Economic choice is the result of

scarcity.

Which of the following sayings best reflects the concept of opportunity cost? a "You can't teach an old dog new tricks." b "Time is money." c "I have a baker's dozen" d "There's no business-like show business."

b

Which one of the following states a key economic idea?

Incentives matter: human choice is influenced in predictable ways by changes in personal costs and benefits.

Absolute advantage is the ability of an individual, a firm, or a country to a produce more of a good or service than competitors using the same amount of resources. b reach a higher production possibilities frontier by lowering opportunity costs. c consume more goods or services than others at lower costs. d produce a good or service at a lower opportunity cost than other producers.

a

Which of the following terms best relates to a fair distribution of economic benefits? a Productive efficiency b Allocative efficiency c Voluntary exchange d Equity

d (everyone gets the exact same)

What do economists mean when they say a good is scarce?

The amount of the good that people would like exceeds the supply freely available from nature.

According to Adam Smith, which of the following is the instrument the invisible hand uses to direct economic activity? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Price b Government regulation c Financial markets d Cost

a

If an economy is operating at a point inside the production possibilities curve, Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a its resources are not being used efficiently. b the curve will begin to shift inward. c the curve will begin to shift outward. d This is a trick question because an economy cannot produce at a point inside the curve.

a

The basic difference between macroeconomics and microeconomics is that a macroeconomics is concerned with the forest (aggregate markets), while microeconomics is concerned with the individual trees (subcomponents). b macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. c microeconomics is concerned with the forest (aggregate markets), while macroeconomics is concerned with the trees (subcomponents). d opportunity cost is applicable to macroeconomics, and scarcity relates to microeconomics.

a

If a firm or a nation desires to maximize its output, each productive assignment should be carried out by those persons who a have the highest opportunity cost. b have a comparative advantage in the productive activity. c can complete the productive activity most rapidly. d least enjoy performing the productive activity.

b

In the following graph, which combination is unattainable with the current resources available in this economy? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Combination F b Combination C c Combination G

c (points outside the line)

If the production possibilities frontier is linear, then Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a it is easy to efficiently produce output. b opportunity costs are increasing as more of one good is produced. c opportunity costs are decreasing as more of one good is produced. d opportunity costs are constant as more of one good is produced.

d

If the production possibilities frontier is linear, then a it is easy to efficiently produce output. b opportunity costs are increasing as more of one good is produced. c opportunity costs are decreasing as more of one good is produced. d opportunity costs are constant as more of one good is produced.

d

Positive economics differs from normative economics in that a positive economics deals with how people react to changes in benefits, and normative economics deals with how people react to changes in costs. b positive economic statements are testable, and normative statements are not. c positive economic statements tell us what we should be doing, and normative economics tells us what we should have done. d positive economic statements focus on the application of the theory, and normative economic statements are theoretical.

a

Which one of the following is a positive economic statement? a An increase in the minimum wage will reduce employment. b The minimum wage should be increased. c Social justice will be served by increasing the minimum wage. d Thoughtful people oppose an increase in the minimum wage.

a

With voluntary exchange, a both the buyer and seller will be made better off. b the buyer will be made better off, while the seller will be made worse off. c the seller will be made better off, while the buyer will be made worse off. d both the buyer and the seller will be made worse off.

a

People make decisions at the margin. Thus, when deciding whether to purchase a second car, they would compare a the total benefits expected from two cars with the costs of the two cars. b the additional benefits expected from a second car with the total cost of the two cars. c the dollar cost of the two cars with the potential income that the two cars will generate. d the additional benefits of the second car with the additional costs of the second car.

d

What is the role of the entrepreneur? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a to bring together the factors of production: labor, capital, and natural resources b to take risks c to operate a business that produces a good or service d All of these.

d

What types of economies require that we answer the questions of what, how, and for whom to produce goods and services? a Market economies b Centrally planned economies c Mixed economies d All of the above

d

Which of the following is not one of the basic economic questions that all economies must answer? a What will be produced? b Who will get the goods and services? c How will the goods and services be produced? d Which government agency will set the prices of the goods and services?

d

Which of the following will most likely occur under a system of clearly defined and enforced private property rights? a Resource owners will fail to conserve vital resources, even if they expect their supply to be highly limited in the future. b Resource owners will ignore the wishes of others, including others who would like to use the resource that is privately owned. c Resource owners will fail to consider the wishes of potential future buyers when they decide how to employ privately owned resources. d Resource owners will gain by discovering and employing their resources in ways that are highly valued by others.

d

The expression, "There's no such thing as a free lunch," implies that

opportunity costs are incurred when resources are used to produce goods and services.