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Economics is most importantly concerned with:

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studying how we allocate scarce resources to satisfy unlimited wants.

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Economic choices or tradeoffs are the result of:

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scarcity.

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Economics is concerned with:

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A. the choices people must make because resources are scarce. B. human decision makers and the factors that influence their choices. C. the allocation of limited resources to satisfy virtually unlimited desires. D. all of the answers are correct.

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Economic resources are also known as:

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factors of production

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Which of the following is not an example of a resource? a forest, a river, a John Deere tractor, the chef at the city's best café

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all are resources

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Human capital is:

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the expertise or knowledge possessed by workers.

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Which of the following is true? A. Poverty could be eliminated but scarcity could not. B. Scarcity could be eliminated but poverty could not. C. Both scarcity and poverty could be eliminated. D. Neither scarcity nor poverty could be eliminated.

answer

Poverty could be eliminated but scarcity could not.

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Which of the following is true of resources? A. Their availability is unlimited. B. They are the inputs used to produce goods and services. C. Increasing the amount of resources available could eliminate scarcity. D. They are inputs used to produce goods and services and increasing the amount of resources available could eliminate scarcity.

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They are the inputs used to produce goods and services.

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An example of a capital resource is:

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A dump truck

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Entrepreneurship is:

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the resource that organizes the other factors of production in order to produce goods and/or services.

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Which of the following is an example of an individual motivated be self-interest? A. a student volunteering at a soup kitchen B. an attorney providing free legal service to low income families C. a young person volunteering for the Peace Corps D. a man buying a new Camaro

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all of the answers

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Economists believe that individuals act as if they are motivated by self-interest and:

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respond in predictable ways to changing circumstances.

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From an economists' perspective, which of the following observations is not true?

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Self-interest is purely monetary in nature.

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When economists refer to economic behavior, they mean that:

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rational people try to anticipate the likely consequences of their actions.

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What according to an economist, forms the basis of rational human behavior under current and anticipated future circumstances?

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Values and information

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"As a rational person, you would expect individuals to always avoid actions that are illegal." T or F

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This is a false statement because it is expected that individuals will consider the consequences of their actions and that some will choose to commit illegal acts anyway.

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When economists speak of markets, they primarily mean:

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mechanisms that coordinate actions of buyers and sellers.

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Which of the following serve as the language of the market system?

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Market prices

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Which of the following is an example of market failure? A. Overuse of highways that leads to traffic congestion B. Reduced levels of vaccinations which increase illness and disease C. Substantial foreclosures caused by sub-prime lending

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all of the above

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Market failure occurs when:

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the economy fails to allocate resources efficiently on its own.

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A hypothesis is:

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a testable proposition.

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A theory can best be defined as:

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a deliberate simplification of factual relationships that attempts to explain and predict how those relationships work.

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The importance of the ceteris paribus assumption is that it:

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allows one to analyze the relationship between two variables apart from the influence of other variables.

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Economics is different from a "hard" science like physics because:

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economists cannot easily control all the variables that might influence human behavior.

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Macroeconomic topics do not usually include:

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the profit maximizing decisions of an individual manufacturer.

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Which of the following lies primarily within the realm of microeconomics?

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a study of supply and demand conditions in the market for orange juice

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Which of the following best illustrates the fallacy of composition?

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If Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods.

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Which of the following is a statement of positive economics?

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The income tax reduces after-tax incomes of the rich

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Suppose there are two members of the U.S. Congress who were once economics professors. Why is it important to be able to distinguish their positive from their normative statements about economic policy?

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Their positive statements help us understand the economy's response to a particular policy, while their normative statements reflect their value judgments.

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Which of the following is not an example of the use of the problem solving perspective provided by economics?

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The Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember.

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The problem of scarcity:

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exists because resources are limited relative to wants.

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The real core of most economic problem is to:

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allocate limited resources among competing uses.

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Human capital is:

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the skill or knowledge of individuals.

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Which of the following is an example of a capital resource?

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an oil rig

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The function of an entrepreneur is to:

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bear the business risks. organize the other factors of production. innovate.

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Every time an individual decides to try out new equipment, or finds better ways to manage money, he or she is exhibiting traits of:

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entrepreneurship.

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Economic goods are:

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scarce products that are created from scarce resources.

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An economy's resources:

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consist of land, labor, capital, and entrepreneurial skills.

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Which of the following would reflect self-interested behavior?

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A. A worker pursuing a higher paying job and better working conditions. B. A consumer seeking a higher level of satisfaction with her current income. C. Donating a cell phone to a woman's shelter. D. Mother Theresa using her Nobel Prize money to care for the poor. E. All of the answers would reflect self-interested behavior.

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Negative incentives:

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decrease benefits or increase costs.

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A market economy depends on market mechanisms to:

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determine the most efficient way of using resources.

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In a market economy, the amount of a good that is produced is primarily decided by the interaction of:

answer

buyers and sellers.

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Which of the following is not a resource exchanged in the factor markets? A. land B. capital C. labor D. entrepreneurship

answer

land, capital, labor, entrepreneurship ALL OF THE ABOVE

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A good economic theory:

answer

relies on simplifying assumptions in order to explain economic behavior.

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Which of the following is correct?

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A theory may result from a tested and confirmed hypothesis.

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The term "ceteris paribus" means that:

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all variables except those specified are constant.

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An economic hypothesis is tested:

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by comparing the hypothesis's predictions to real-world data.

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Which of the following is most likely a topic of discussion in a microeconomics course?

answer

an increase in the price of lumber used to construct houses

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The branch of economics that focuses on outcomes in highly aggregated markets, such as the markets for labor or consumer products, is called:

answer

macroeconomics.

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Which of the following is most likely an example of correlation but not an example of causation?

answer

Usually, if I eat a chili dog and drink a beer before a game, my teams wins.

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The fallacy of composition is:

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he erroneous view that what is true for the individual will also be true for the group.

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Your mother tells you, "Watching ten hours of TV per day will make you stupid." This is a positive statement because:

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it is a proposition that can be tested.

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"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime. Less crime will reduce the number of police officers cities will hire." This quotation:

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contains positive statements only.

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Bill says: "The imposition of a tax on tequila will increase its price." Bob says: "Taxes should be imposed on tequila because college students drink too much."

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Bill's statement is positive, and Bob's statement is normative.

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Which of the following represents a normative statement?

answer

The study of economics is more important than the study of history.

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