Chapter 1 Macroeconomics Test Questions

question

In deciding whether to study for an economics quiz or go to a concert, one is confronted by the idea(s) of
answer

scarcity and opportunity costs.
question

The four factors of production are
answer

land, labor, capital, and entrepreneurial ability.
question

A recurring theme in economics is that people
answer

have unlimited economic wants but limited resources.
question

(Consider This) An exception to the advice “go to college, stay in college, and earn a degree” occurs when
answer

the opportunity cost of attending college is extraordinarily high.
question

From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student’s thinking, the marginal
answer

cost of going to the movies is less than the marginal benefit of going to the movies.
question

From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the
answer

marginal benefit of more insurance coverage is greater than the marginal cost.
question

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase.
answer

purposeful behavior.
question

In economics, the pleasure, happiness, or satisfaction received from a product is called
answer

utility.
question

One basic difference between “land” and “capital” resources is that land is
answer

natural, while capital is created by humans.
question

According to economists, economic self-interest
answer

is a reality that underlies economic behavior.
question

The economizing problem for individuals is a consequence of the fact that
answer

economic wants are greater than economic means or incomes.
question

A budget line is a graph that shows the various combinations of two products that a
answer

consumer can buy with a given amount of money income.
question

Money is not considered to be an economic resource because
answer

as such it is not productive.
question

The notion of “purposeful behavior” in the economic perspective suggests that
answer

one person’s choice may differ from another’s if their circumstances and information differ.
question

One basic difference between “labor” and “entrepreneur” is that
answer

labor is hired by a firm, whereas the entrepreneur owns the firm.
question

You should decide to go to a movie
answer

if the marginal benefit of the movie exceeds its marginal cost.
question

When economists say that people act rationally in their self-interest, they mean that individuals
answer

look for and pursue opportunities to increase their utility.
question

The process of observing real-world behavior, developing hypotheses, testing them against facts, then using the results to construct theories is called
answer

the scientific method.
question

The opportunity cost to a consumer who smokes cigarettes consists of the
answer

products that the consumer could have bought instead of cigarettes.
question

The economic principle that the “unemployment rate will tend to increase as the economy moves into a recession” is an example of
answer

a generalization.
question

Money is not an economic resource because
answer

money, as such, does not produce anything.
question

Joe sold gold coins for $1,000 that he bought a year ago for $1,000. 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 $1,000 if he had bought a bank certificate of deposit instead of the coins. The economist’s analysis in this case incorporates the idea of
answer

opportunity costs.
question

Economics is a social science that studies how individuals, institutions, and society may
answer

best use resources to maximize satisfaction of economic wants.
question

The main function of the entrepreneur is to
answer

innovate.
question

The economizing problem faced by society is essentially one of deciding how to make the best use of
answer

limited economic resources to satisfy unlimited economic wants.
question

(Consider This) Consumers might leave a fast-food restaurant without being served because
answer

they conclude that the marginal cost (monetary plus time costs) exceeds the marginal benefit.
question

The opportunity cost of doing or getting something is defined as
answer

the value of the best alternative that is given up in order to do or get something.
question

What is a major opportunity cost of going to college on a full-time basis?
answer

the forgone income that would have been earned working in a full-time job
question

Economists contend that most economic decisions are
answer

purposeful.
question

Economic resources are also called
answer

factors of production.
question

Economics may best be defined as the
answer

social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.
question

The opportunity cost of constructing a new public highway is the
answer

value of other goods and services that are sacrificed in order to construct the new highway.
question

Economic analysis assumes “purposeful behavior,” which means that people will pursue decisions or actions
answer

that will increase their well-being.
question

If someone produced too little of a good, this would suggest that
answer

the good was produced to the point where its marginal benefit exceeded its marginal cost.
question

For economists, the word “utility” means
answer

pleasure or satisfaction.

Get instant access to
all materials

Become a Member