Deck 1: What Is Economics

Question 1

Scarcity is

A) eliminated by choices.
B) a situation that exists during economic recessions but not during economic booms.
C) our inability to satisfy all our wants.
D) an economic problem only for poor people.

Answer 1

C

Question 2

Scarcity requires that people must

A) compete.
B) trade.
C) cooperate.
D) make choices.

Answer 2

D

Question 3

As an economic concept, scarcity applies to

A) money but not time.
B) time but not money.
C) both money and time.
D) neither time nor money.

Answer 3

C

Question 4

All economic questions are about

A) what to produce.
B) how to cope with scarcity.
C) how to satisfy all our wants.
D) how to make money.

Question 5

Economics is best defined as the science of choice and how people cope with

A) differences in needs.
B) differences in wants.
C) scarcity.
D) different economic systems.

Question 6

Scarcity exists because

A) of the inefficient choices we make.
B) poor people need more food and other goods.
C) society and people are greedy and wasteful.
D) our wants exceed the resources available to satisfy them.

Question 7

In every economic system, choices must be made because resources are and our wants are .

A) unlimited; unlimited
B) unlimited; limited
C) limited; limited
D) limited; unlimited

Question 8

Scarcity is a situation in which

A) most people can get only bare necessities.
B) people cannot satisfy all their wants.
C) people can satisfy all their wants.
D) some people can get all they want and some cannot.

Question 9

All economic questions arise because we

A) want more than we can get.
B) want more than we need.
C) have limited wants that need to be satisfied.
D) have an abundance of resources.

Question 10

An incentive

A) is the opposite of a tradeoff.
B) could be a penalty but could not be a reward.
C) could be either a reward or a penalty.
D) could be a reward but could not be a penalty.

Question 11

People must make choices because

A) there are many goods available.
B) of scarcity.
C) most people enjoy shopping.
D) None of the above answers is correct.

Question 12

Fundamental economic problems basically arise from

A) the unequal distribution of income.
B) the fact that society has more than it needs.
C) turmoil in the stock market.
D) our wants exceeding our scarce resources.

Question 13

When an economist talks of scarcity, the economist is referring to the

A) ability of society to continually make technological breakthroughs and increase production.
B) inability of society to satisfy all human wants because of limited resources.
C) ability of society to consume all that it produces.
D) ability of society to employ all of its resources.

Question 14

Scarcity can be eliminated through

A) exploration that helps us find new resources.
B) wise use of our resources.
C) the use of market mechanisms.
D) None of the above because scarcity cannot be eliminated.

Question 15

The study of economics

A) deals mainly with microeconomics.
B) focuses mainly on individual consumers.
C) recognizes that scarcity does not affect rich nations.
D) arises from the fact that our wants exceed available resources.

Question 16

Economics is best defined as the study of how people, businesses, governments, and societies

A) use their infinite resources.
B) attain wealth.
C) choose abundance over scarcity.
D) make choices to cope with scarcity.

Question 17

The problem of ʺscarcityʺ applies

A) only in underdeveloped countries because there are few productive resources in these countries.
B) to all economic systems, regardless of their level of development.
C) only in economic systems that are just beginning to develop because specialized resources are scarce.
D) only in industrially developed countries because resources are scarce in these countries.

Question 18

An inducement to take a particular action is called

A) the marginal benefit.
B) the marginal cost.
C) an incentive.
D) opportunity cost.

Question 19

Economists point out that scarcity confronts

A) the rich but not the poor.
B) the poor but not the rich.
C) neither the poor nor the rich.
D) both the poor and the rich.

Question 20

Economics is best defined as

A) controlling a budget for a household.
B) making choices from an unlimited supply of goods and services.
C) how people make money and profits in the stock market.
D) making choices with unlimited wants but facing a scarcity of resources.

Question 21

Which of the following is a microeconomic topic?

A) The reasons why total employment decreases.
B) The reasons why Kathy buys less orange juice.
C) The reasons for a decline in average prices.
D) The effect of the government budget deficit on inflation.

Question 22

In part, microeconomics is concerned with

A) factors that explain changes in the unemployment rate over time.
B) the Federal Reserveʹs policy decisions.
C) changes in the economyʹs total output of goods and services over long periods of time.
D) how a business firm decides upon the amount it produces and the price it sets.

Question 23

Studying the determination of prices in individual markets is primarily a concern of

A) negative economics.
B) positive economics.
C) microeconomics.
D) macroeconomics.

Question 24

In part, microeconomics is concerned with the study of

A) national output of goods and services.
B) the effect government regulation has on the price of a product.
C) unemployment and economic growth.
D) the Federal Reserveʹs policies.

Question 25

Which of the following is a macroeconomic decision or concept?

A) how many television sets to produce
B) the unemployment rate for the entire economy
C) the price of oil
D) the unemployment rate for each firm

Question 26

Which of the following is a microeconomic topic?

A) How rent ceilings impact the supply of apartments.
B) Comparing inflation rates across countries.
C) How a trade agreement between the United States and Mexico affects both nationsʹ unemployment rates.
D) How a tax rate increase will impact total production.

Question 27

Which of the following questions is a macroeconomic issue?

A) What is the future growth prospect for an economy?
B) How many workers should the owner of a business hire?
C) What effect would a cure for Mad Cow Disease have on the market for beef?
D) How many more pounds of cookies will a consumer purchase if the price of cookies decreases?

Question 28

The analysis of the behavior of individual decision-making units is the definition of

A) normative economics.
B) positive economics.
C) microeconomics.
D) macroeconomics.

Question 29

In broad terms the difference between microeconomics and macroeconomics is that

A) macroeconomics studies the effects of government regulation and taxes on the price of individual goods and services whereas microeconomics does not.
B) microeconomics studies the effects of government taxes on the national unemployment rate.
C) they use different sets of tools and ideas.
D) microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy.

Question 30

Which of the following is an example of a microeconomic decision?

A) an individual deciding how to allocate the time he or she has for work and leisure
B) a multinational company deciding where to relocate its world headquarter
C) a small shoe factory deciding how much leather to purchase for the next quarterʹs production need
D) All of the above answers are correct.

Question 31

Which of the following questions is a topic that would be studied by microeconomics?

A) How will a lower price of digital cameras affect the quantity of cameras sold?
B) What is the current unemployment rate in the United States?
C) Why did production and the number of jobs shrink in 2009?
D) Will the current budget deficit affect the well-being of the next generation?

Question 32

Macroeconomics is concerned with

A) government decision making concerning farm price supports.
B) economy-wide variables.
C) individual consumers.
D) the effects on Ford Motor of a strike by the United Auto Workers.

Question 33

Which of the following questions is NOT a microeconomic question?

A) How would a tax on e-commerce affect eBay?
B) Does the United States have a comparative advantage in information technology services?
C) What is Britneyʹs opportunity cost of having another baby?
D) Can the Federal Reserve keep income growing by cutting interest rates?

Question 34

An example of a question that might be explored in microeconomics is to determine

A) savings by the household sector.
B) why the U.S. economy has grown more rapidly than the Japanese economy.
C) the number of workers employed by Intel.
D) the total employment within the U.S. economy.

Question 35

The branch of economics that deals with the analysis of the whole economy is called

A) metroanalysis.
B) microeconomics.
C) macroeconomics.
D) marginal analysis.

Question 36

The study of the decisions of individual units in the economy is known as

A) macroeconomics.
B) ceteris paribus study.
C) microeconomics.
D) the study of incentives.

Question 37

The study of the choices made by individuals is part of the definition of

A) positive economics.
B) macroeconomics.
C) normative economics.
D) microeconomics.

Question 38

Macroeconomics differs from microeconomics in that:

A) macroeconomics studies the behavior of government while microeconomics looks at private corporations.
B) macroeconomics studies the decisions of individuals.
C) macroeconomics focuses on the national economy and the global economy.
D) microeconomics looks at the economy as a whole.

Question 39

Which of the following is a macroeconomic issue?

A) How federal government budget deficits affect interest rates.
B) What determines the amount a firm will produce.
C) The cause of a decline in the price of peanut butter.
D) How a rise in the price of sugar affects the market for sodas.

Question 40

Economics is the study of

A) the distribution of surplus goods to those in need.
B) the choices we make because of scarcity.
C) ways to reduce wants to eliminate the problem of scarcity.
D) affluence in a morally bankrupt world.

Question 41

If Taco Bell decides to produce more tacos and fewer burritos, Taco Bell is answering the
Part of one of the two big economic questions.

A) ʺwhenʺ
B) ʺwhatʺ
C) ʺscarcityʺ
D) ʺwhyʺ

Question 42

Macroeconomic topics include

A) studying what factors influence the price and quantity of automobiles.
B) studying the determination of wages and production costs in the software industry.
C) total, nationwide employment.
D) the impact of government regulation of markets.

Question 43

When China builds a dam using few machines and a great deal of labor, it is answering the
Part of one of the two big economic questions.

A) ʺwhatʺ
B) ʺhowʺ
C) ʺfor whomʺ
D) ʺwhereʺ

Question 44

U.S. producers decide to produce more compact cars and fewer SUVs as the price of gasoline rises. Producers are answering the part of one of the two big economic questions.

A) ʺhowʺ
B) ʺhow manyʺ
C) ʺwhatʺ
D) ʺwhenʺ

Question 45

Which of the following is a macroeconomic issue?

A) The purchasing decisions that an individual consumer makes.
B) The effect of an increase in the tax on cigarettes on cigarette sales.
C) The hiring decisions that a business makes.
D) The effect of increasing the money supply on inflation.

Question 46

The fact that wants cannot be fully satisfied with available resources reflects the definition of

A) the big tradeoff.
B) for whom to produce.
C) scarcity.
D) the what tradeoff.

Question 47

When a country decides to produce fewer bombers and more public housing projects, it is answering the part of one of the two big economic questions.

A) ʺhowʺ
B) ʺfor whomʺ
C) ʺdefenseʺ
D) ʺwhatʺ

Question 48

When a California farmer decides to harvest lettuce using machines instead of by migrant workers, the farmer is answering the part of one of the two big economic questions.

A) ʺfor whomʺ
B) ʺhowʺ
C) ʺscarcityʺ
D) ʺwhatʺ

Question 49

When a farmer decides to raise hogs instead of cattle, the farmer is answering the part of one of the two big economic questions.

A) ʺfor whomʺ
B) ʺhowʺ
C) ʺwhatʺ
D) ʺwhyʺ

Question 50

Microeconomics is the study of .

A) the national economy
B) all aspects of scarcity
C) the global economy
D) the choices that individuals and businesses make

Question 51

In the U.S. economy, which of the following statements is true?

A) Production is divided evenly between goods and services.
B) More services are produced than goods.
C) More goods are produced than services.
D) The economy is too complex to determine the proportion of production that is devoted to producing services.

Question 52

Scarcity is a situation in which .

A) some people are poor and others are rich
B) something is being wasted
C) long lines form at gas stations
D) we are unable to satisfy all our wants

Question 53

Studying the effects choices have on the individual markets within the economy is part of

A) microeconomics.
B) macroeconomics.
C) incentives.
D) scarcity.

Question 54

Which of the following statements is correct?

A) The percentage of people producing goods in the United States has steadily increased over the last 60 years.
B) The United States produces more services than goods.
C) The United States produces an equal amount of goods and services.
D) The United States produces more goods than services.

Question 55

Economics can be defined as the social science that explains the .

A) choices made by politicians
B) choices made by households
C) choices that we make as we cope with scarcity
D) choices we make when we trade in markets

Question 56

When firms in an economy start producing more computers and fewer televisions, they are answering the part of one of the two big economic questions.

A) ʺwhereʺ
B) ʺwhatʺ
C) ʺwhenʺ
D) ʺfor whomʺ

Question 57

When a firm decides to produce more electric cars and fewer gas guzzlers, it is most directly answering the part of one of the two big economic questions.

A) ʺhowʺ
B) ʺfor whomʺ
C) ʺwhatʺ
D) ʺscarcityʺ

Question 58

When a textile company keeps track of its inventory using a computer and its competitor uses a pad of paper and a pencil, they are both answering the part of one of the two big economic questions.

A) ʺfor whomʺ
B) ʺhowʺ
C) ʺwhereʺ
D) ʺwhatʺ

Question 59

When an economy produces more houses and fewer typewriters, it is answering the part of one of the two big economic questions.

A) ʺwhereʺ
B) ʺhowʺ
C) ʺwhatʺ
D) ʺfor whomʺ

Question 60

The largest part of what the United States produces today is such as .

A) services; textbooks and computers
B) goods; food and electronic equipment
C) services; trade and health care
D) goods; education and entertainment

Question 61

Which of the following is NOT a factor of production?

A) 100 shares of Microsoft stock
B) mineral resources
C) an apartment building
D) a university professor

Question 62

Keeping in mind economistsʹ definition of factors of production, which of the following is NOT a factor of production?

A) coal
B) an engineer
C) low-skilled labor
D) money

Question 63

Factors of production are grouped into four categories:

A) labor, capital, money, entrepreneurship
B) land, labor, capital, entrepreneurship
C) land, labor, capital, money
D) land, capital, money, entrepreneurship

Question 64

Which factor of production earns profit?

A) human capital
B) entrepreneurship
C) money
D) land

Question 65

Which of the following are considered factors of production used to produce goods and services?
I) Land
II) Labor
III) Capital
IV) Entrepreneurship

A) I and II only
B) I, II and III only
C) I and III only
D) I, II, III and IV

Question 66

Overtime worked by a JCPenney associate is considered and earns .

A) human capital; interest.
B) labor; profit.
C) labor; wages.
D) entrepreneurship; profit.

Question 67

The fact that people with higher incomes get to consume more goods and services addresses the
Part of one of the two big economic questions.

A) ʺhowʺ
B) ʺwhereʺ
C) ʺfor whomʺ
D) ʺwhenʺ

Question 68

The income earned by the people who sell the services of the factor of production is called .

A) capital; rent
B) land; profit
C) entrepreneurship; wages
D) entrepreneurship; profit

Question 69

Factors of production include all of the following EXCEPT .

A) machines made in past years.
B) a wheat field that is not irrigated
C) entrepreneurship
D) money

Question 70

Copper falls into which factor of production category?

A) capital
B) entrepreneurship
C) labor
D) land

Question 71

An art museum decides to offer tours by having visitors listen to cassette tapes rather than have tour guides. The museum is answering the part of one of the two big economic questions.

A) ʺwhatʺ
B) ʺscarcityʺ
C) ʺhowʺ
D) ʺwhyʺ

Question 72

A natural resource, such as fishing territories, is considered an example of

A) only capital.
B) both land and labor.
C) land only.
D) land, labor, capital and entrepreneurship.

Question 73

Factors of production include

A) land, labor, capital and entrepreneurship.
B) only capital, land, and labor.
C) labor and capital not land, which is fixed).
D) the economic system.

Question 74

Which of the following is correct? Factors of production are

A) only land and labor.
B) the inputs used to produce goods and services.
C) land, labor, the price system, and capital.
D) the fundamental source of abundance.

Question 75

Which of the following is NOT a factor of production?

A) vans used by a bakery company for deliveries
B) wilderness areas that have yet to be developed
C) a person developing a production schedule for a new product
D) 175 shares of Microsoft stock

Question 76

Which of the following is NOT a factor of production?

A) the effort of farmers raising cattle.
B) the management skill of a small business owner.
C) the water used to cool a nuclear power plant.
D) the wages paid to workers.

Question 77

In economics, the term ʺlandʺ means

A) land, mineral resources, and natureʹs other bounties.
B) only land that is used in agricultural production.
C) land that is devoted to economic pursuits.
D) land used for agricultural and urban purposes.

Question 78

The ʺgifts of natureʺ are included as part of which factor of production?

A) capital
B) land
C) entrepreneurship
D) labor

Question 79

Which factor of production earns most income in the United States?

A) money
B) entrepreneurship
C) capital
D) labor

Question 80

Which of the following best defines capital as a factor of production?

A) The knowledge and skills that people obtain from education and use in production of goods and services.
B) The gifts of nature that businesses use to produce goods and services.
C) Instruments, machines, and buildings used in production.
D) Financial assets used by businesses.