Deck 1: The Central Idea

Question 1

Who faces the problem of scarcity?

A)Only the rich
B)Only the poor
C)Only people living next to wealthy people
D)Everyone
E)Only people running a business

Answer 1

D

Question 2

From an economic perspective, people make decisions because of

A)social custom.
B)genetics.
C)scarcity.
D)their own habit.
E)religion.

Answer 2

C

Question 3

The existence of scarcity implies that

A)economic interaction is limited.
B)people are not able to use all the available resources.
C)people must make a choice.
D)people will always be poor.
E)rich people are better off than poor people.

Answer 3

C

Question 4

A resource is not scarce if

A)there is more of it than people want.
B)it can be found in any store.
C)people have enough money to pay for it.
D)it has a low opportunity cost.
E)its supply exceeds its demand.

Question 5

People make decisions when doing something involves

A)no benefits.
B)only benefits.
C)giving up nothing else.
D)an opportunity cost.
E)different types of resources.

Question 6

A market is

A)a place where firms meet to set prices.
B)an arrangement by which economic exchanges take place.
C)an organization controlled by a government.
D)a place where goods are produced.
E)anywhere people come close to each other.

Question 7

If a resource is always available when needed, then it

A)will be more expensive than other resources.
B)is not scarce.
C)has a high opportunity cost.
D)it must be valuable.
E)is scarce.

Question 8

Economics deals with how

A)individuals make decisions to use scarce resources in order to satisfy their unlimited wants.
B)to run a business successfully.
C)individuals become rich.
D)society can eliminate scarcity.
E)society creates more resources in order to raise its standard of living.

Question 9

Buyers and sellers interact in a

A)government.
B)face-to-face forum.
C)family.
D)market.
E)classroom.

Question 10

Economics is the study of how individuals become wealthy.

Question 11

Economics is the study of how people deal with

A)unlimited resources.
B)too much money.
C)scarcity.
D)limited human wants.
E)a lack of choices.

Question 12

Scarcity is a problem

A)only for poor countries.
B)only for economies under complete government control.
C)faced by all economies.
D)that can be eliminated as the economy grows.
E)not faced by free market economies.

Question 13

Scarcity applies to everyone regardless of income.

Question 14

Which of the following statements about economic interaction is not true?

A)It is a fact of economic life.
B)It requires a market.
C)It can occur within a family.
D)It makes our lives better.
E)It requires people to make sacrifices by giving up what they may have otherwise.

Question 15

Economics is a study of

A)choices and interactions among people when resources are scarce.
B)how to eliminate scarcity.
C)how to make choices and interact in order to avoid scarcity.
D)how to avoid scarcity by making choices.
E)how to make money in stock markets.

Question 16

The economic problem is

A)a lack of money.
B)a lack of jobs.
C)poverty.
D)scarcity.
E)a rising standard of living.

Question 17

Economic interactions occur only in the presence of government.

Question 18

Choices are made in order to avoid scarcity.

Question 19

A budget constraint

A)does not occur if there is scarcity.
B)is faced only by poor people.
C)is a way to overcome scarcity.
D)forces people to make choices.
E)prohibits consumers from spending.

Question 20

The concept of scarcity refers to

A)a situation in which an item is very expensive.
B)a situation in which an item is available only in very small quantities.
C)a situation in which a resource is nonrenewable.
D)a situation in which people face a shortage in a particular market.
E)a situation in which the available resources are not enough to satisfy the wants of the people.

Question 21

Stephanie has only one hour to study for an exam in math or to complete an assignment in economics. For Stephanie, the opportunity cost of spending the hour completing the economics assignment is

A)a lower grade in the math exam.
B)a higher grade in the math exam.
C)a lower grade in both the math exam and the economics assignment.
D)a higher grade in both the math exam and the economics assignment.
E)none because history and economics are unrelated.

Question 22

Exhibit 1-2
According to Exhibit 1-2, if Sam did all the cooking as well as waited on tables, how many customers would he be able to serve per day?

A)4
B)Between 2 and 20
C)0
D)20
E)5

Question 23

An example of opportunity cost is the

A)income that a person does not earn because she has retired and decided not to work at all.
B)pleasure that an economics student derives from studying economics.
C)Chinese food that you gave up when you chose to eat Italian food.
D)tuition you pay to attend college.
E)price paid for a concert ticket when you go to that concert.

Question 24

Exhibit 1-1

Refer to Exhibit 1-1. Suppose that Adam has three hours to study for an exam in economics and another exam in sociology on the same day. The amount of time he spends studying economics and its relation to his grade in the two classes are shown in the table. The opportunity cost of increasing the time spent on studying economics from two hour to three hours is

A)55 points on the sociology grade.
B)40 points on the sociology grade.
C)15 points on the sociology grade.
D)10 points on the sociology grade.
E)zero.

Question 25

The opportunity cost of an activity is the total value of all activities that a person cannot do.

Question 26

Gains from trade occur when there are differences in opportunity cost.

Question 27

The opportunity cost for a student to attend college is zero if the student receives a scholarship.

Question 28

Which of the following statements is false?

A)There is an opportunity cost associated with any choice made.
B)If there is a budget constraint, there will be scarcity.
C)A person without a budget constraint does not face opportunity costs.
D)Opportunity costs occur because of scarce resources.
E)Because of scarcity, choices have to be made.

Question 29

When the economy is in recession, jobs are generally harder to find and more people go to college. We can conclude that the opportunity cost of

A)going to college decreases when the economy is in recession.
B)going to college increases when the economy is in recession.
C)working increases when the economy is in recession.
D)working is zero when the economy is in recession.
E)going to college is always higher than the opportunity cost of working.

Question 30

According to the textbook, the main reason for Mark Zuckerberg to leave college and to start a new company, Facebook, is that

A)he had failed many courses in college.
B)the opportunity cost is higher for him to stay in college than to run Facebook.
C)the opportunity cost is lower for him to stay in college than to run Facebook.
D)the opportunity cost is zero for him to stay in college.
E)the opportunity cost is zero for him to run Facebook.

Question 31

Aaron's budget is such that he can afford either a large-screen high-definition TV or a trip to Disney for his whole family, both of which cost the same. Which of the following statements about Aaron's opportunity cost is correct?

A)The opportunity cost of the Disney trip is the money Aaron pays for the trip.
B)The opportunity cost of the Disney trip is the same as the opportunity cost of the TV because Aaron can afford only one or the other.
C)There is nothing to say about the opportunity cost because we don't know how much the TV or the Disney trip costs.
D)The opportunity cost of the Disney trip is the loss from not being able to buy the TV.
E)The opportunity cost of either the TV or the Disney trip is the total cost of the TV and the Disney trip.

Question 32

The opportunity cost of attending college

A)is zero because the return is always positive.
B)includes the skills earned from attending college.
C)is the living expenses, which are the same whether the students attend college or not.
D)includes the lost incomes that would have been earned if the student had not attended college.
E)includes the scholarships for attending college.

Question 33

Gains from voluntary trade arise because

A)it reallocates goods between individuals.
B)it occurs in a household.
C)it reallocates goods between individuals in a way they both prefer.
D)it occurs in a market.
E)of the power involved.

Question 34

A voluntary exchange of existing consumer goods is beneficial because it

A)makes those engaging in the exchange better off.
B)changes the total quantity of goods produced.
C)reallocates existing goods.
D)reduces scarcity.
E)requires choice.

Question 35

A college student faces no opportunity cost if her parents pay her college tuition and her living expenses.

Question 36

Trade benefits people only when they together produce more goods or services.

Question 37

Maria has two options to spend her school break in the summer: get a summer job that pays $3,000 or travel in Mexico. The opportunity cost of the summer job is that Maria

A)can earn more than $3,000.
B)can also travel in Mexico.
C)has to give up traveling in Mexico.
D)can save the money for traveling in Mexico.
E)has to work and travel at the same time.

Question 38

The opportunity cost of a choice is the

A)benefit associated with making that choice.
B)value of the next best activity not chosen.
C)fair market price of whatever is chosen.
D)dollar amount paid to purchase what is chosen.
E)consequence associated with failure.

Question 39

In economics, choices are made based on

A)benefits but not costs.
B)opportunity costs.
C)producers.
D)emotion.
E)what is not available to the person making the choice.

Question 40

Of the following individuals, who bears the highest opportunity cost of going to college?

A)A pro-football player earning $2 million a year
B)A high school graduate without a job
C)A high school dropout earning the minimum wage in a fast-food restaurant
D)A teenager who attends college and also works on campus
E)A retiree

Question 41

When people specialize in the activity in which they have a comparative advantage,

A)there cannot be a division of labor, though production will increase.
B)there will likely be a division of labor as well as an increase in output.
C)there will be a gain from trade, but production will not be increased.
D)there will likely be a division of labor, and output will stay the same.
E)there will likely be a division of labor, and output will decline.

Question 42

The division of labor enables

A)people not to work at all.
B)the elimination of scarcity.
C)opportunity costs.
D)self-sufficiency.
E)specialization.

Question 43

Exhibit 1-2
According to Exhibit 1-2, if Anne spent all her time cooking, how many meals would she be able to prepare per day?

A)20
B)2
C)4
D)40
E)5

Question 44

Exhibit 1-3
Refer to Exhibit 1-3. Suppose John and Jack can produce the above combinations of candy bars and ice cream bars in one hour. John and Jack can maximize their total production if

A)both produce candy bars.
B)both produce ice cream bars.
C)John produces both candy bars and ice cream bars, while Jack produces nothing.
D)Jack produces both candy bars and ice cream bars, while John produces nothing.
E)each of them produces what he has a comparative advantage in producing.

Question 45

Exhibit 1-2
____ must exist in order for gains from trade to be realized.

A)Governments
B)Markets
C)An increase in production
D)Economic interaction
E)Firms

Question 46

If an individual is able to produce a good with a lower opportunity cost than someone else, then that individual has

A)avoided opportunity costs.
B)an interaction advantage.
C)the advantage of producing all goods.
D)removed scarcity.
E)a comparative advantage.

Question 47

Production can be increased whenever people

A)engage in activities with a high opportunity cost.
B)specialize in whichever field they have a comparative advantage in.
C)specialize in whatever interests them.
D)do not allocate goods through trade.
E)make decisions according to societal needs.

Question 48

Exhibit 1-2
According to Exhibit 1-2, if Anne and Sam each worked separately, how many meals per day would be served by each of them?

A)40
B)4
C)2
D)20
E)5

Question 49

Trade always results in a gain for one or both participants in the trade

Question 50

Trade enables people to specialize in activities in which they have a comparative advantage.

Question 51

The goods that individual producers specialize in are determined solely by the amounts of time and resources they need to produce those goods.

Question 52

In general, what is economics the study of?

Question 53

Exhibit 1-2
According to Exhibit 1-2, if Anne and Sam joined forces, the number of meals served would increase by a. 8.
B) 20.
C) 12.
D) 4.
E) 5.

Question 54

Exhibit 1-2
According to Exhibit 1-2, if Anne and Sam join forces, with Anne doing all the cooking and Sam doing all the serving, the number of customers served per day would be a. 40.
B) 4.
C) 20.
D) 8.
E) 5.

Question 55

International trade exists only when a country can gain a trade advantage over another country.

Question 56

As a result of economic interaction,

A)the number of available choices is reduced.
B)scarcity is increased.
C)opportunity costs increase.
D)people are able to specialize.
E)scarcity is eliminated.

Question 57

A division of labor occurs when some workers do all tasks while others do nothing.

Question 58

A country trades with other countries because

A)it can gain in production and consumption.
B)it wants to improve foreign relations.
C)its government can earn taxes on imported goods.
D)it has an excess production capacity.
E)its residents always prefer imported goods to domestic goods.

Question 59

It is impossible for two people to increase their total production if one has a comparative advantage in the production of one particular good.

Question 60

Which of the following statements is true?

A)There are no gains from trade between people in different countries because, with international trade, it's the countries that trade, and not its people, that realize the gains.
B)Trade between people in different countries cannot occur.
C)Trade between people in different countries can occur, but it will not result in an increase in consumer satisfaction.
D)Trade between people in different countries can occur, but it will not lead them to better utilize their comparative advantage.
E)Trade between people in different countries can occur, and the gains that occur are the same as the gains from trade within a country.

Question 61

The table below depicts the choices George and Sarah face when deciding whether to cook, wait on tables, or both.

Question 62

Why is it reasonable to assume that when trade is voluntary, those involved in the trade will gain?

Question 63

Exhibit 1-4
Refer to Exhibit 1-4. The opportunity cost of producing the first TV set is

A)15 units of computers.
B)5 units of computers.
C)43 units of computers.
D)42 units of computers.
E)1 unit of computers.

Question 64

Exhibit 1-4
Refer to Exhibit 1-4. The opportunity cost of producing the sixth TV set is

A)15 units of computers.
B)5 units of computers.
C)43 units of computers.
D)42 units of computers.
E)1 unit of computers.

Question 65

Choices are necessary only for individuals but not for the economy as a whole.

Question 66

If available resources are being used efficiently,

A)a society can increase the production of one good or service only by decreasing the production of some other good or service.
B)society need no longer worry about tradeoffs.
C)a society can increase the production of one good or service only by increasing the production of some other good or service.
D)resources are no longer limited.
E)scarcity is no longer a problem.

Question 67

Which of the following does a production possibilities curve best illustrate?

A)The concept of achieving an impossible goal
B)The concept of unlimited possibilities
C)The concept of an opportunity cost
D)The elimination of scarcity
E)The concept of economic interaction

Question 68

A movement along the production possibilities curve shows how an economy increases its output with more resources.

Question 69

Exhibit 1-4
The typical production possibilities schedule shows that the opportunity cost for producing more of one good requires giving up an increasing amount of production of another good.

Question 70

What is the relationship among economic interaction, specialization, comparative advantage, and gains from trade?

Question 71

Resources include all of the following except

A)Money
B)Workers
C)Land
D)Machinery
E)Factories

Question 72

If an economy produces only smartphones and toys, then producing more and more smartphones will most likely require

A)giving up a decreasing amount of the production of toys.
B)giving up an increasing amount of the production of toys.
C)gaining an increasing amount of the production of toys.
D)gaining a decreasing amount of the production of toys.
E)no change in toy production.

Question 73

Suppose that an economy produces only two goods: computers and movies. If the economy at all times utilizes all its resources, and it decides to use more of its available resources to produce computers,

A)the production of movies will drop.
B)the production of both movies and computers will drop.
C)the production of movies will rise.
D)the production of movies will not change but the production of computers will increase.
E)then will be no change in the production of either computers or movies.

Question 74

What is the meaning of comparative advantage?

Question 75

After purchasing a can of soda from a convenience store, David complained that the store had charged too much for the soda. Comment.

Question 76

Explain how trade between two different countries is similar to trade occurring between two individuals within a country.

Question 77

If an economy produces only movies and computers, then the opportunity cost of producing more movies is

A)the value of forgone computer production.
B)the value of more computer production.
C)the value of movie production minus the value of computer production
D)the total value of movie and computer production.
E)zero because computers and movies are unrelated.

Question 78

Choices are made whenever

A)money is limited.
B)there are too many alternatives.
C)resources are limited relative to human wants.
D)the society has abundant resources.
E)different people in an economy want different things.

Question 79

What is division of labor, and why is this a reason for economic interaction?

Question 80

Josie has two classes: Biology and math. She finds out that the grades for both classes has improved without spending more time studying. Using the production possibilities curve, Josie's situation can be represented by

A)moving from a point on the production possibilities curve to a point inside the curve.
B)a movement along the curve from the axis for biology to the axis for math.
C)a movement along the curve from the axis for math to the axis for biology.
D)an inward shift of the curve.
E)an outward shift of the curve.