Deck 1: Getting Started

Question 1

Economics is best defined as the social science that studies

A)the way to eliminate choices in our decisions.
B)the choices that societies,and the people and institutions that make up societies,make in dealing with the issue of scarcity.
C)how choices made in the social interest must conflict with choices made in the self-interest.
D)how a person can get everything he or she wants.
E)the reason money exists.

Answer 1

B

Question 2

Economics is the social science that studies

A)how people make choices to cope with scarcity.
B)the real reasons people buy goods and services.
C)the psychology of individuals and businesses.
D)how choices made in the social interest could eliminate scarcity.
E)whether a nation has enough natural resources.

Answer 2

A

Question 3

Scarcity means that

A)what we can produce with our resources is greater than our material wants.
B)choices made in self-interest cannot be the same as those made in the social interest.
C)wants are greater than what we can produce with our resources.
D)governments must make up for shortages in resources.
E)resources are unlimited.

Answer 3

C

Question 4

Which of the following is a microeconomic topic?

A)The government leaves interest rates unchanged as the economy improves.
B)Unemployment soars as taxes increase.
C)Germany's government increases taxes to avoid a budget deficit.
D)JetStar analyses the benefits of adding one more flight to Sydney.
E)Chinese economic growth slows.

Question 5

Which of the following is a microeconomic issue?

A)The Australian government cuts taxes to combat a recession.
B)The unemployment rate soars in Spain.
C)The price of petrol increases in the United States this year.
D)The Brazilian economy experiences rapid economic growth.
E)Inflation skyrockets in Russia.

Question 6

Scarcity forces people to

A)be unwilling to help others.
B)consume as much as they can as quickly as they can.
C)choose among available alternatives.
D)live at a low standard of living.
E)cheat and steal.

Question 7

What is the reason that all economic issues and problems occur?

A)All nations use some form of money to buy and sell goods and services.
B)People seek only their own self-interest.
C)Powerful governments are able to control production and consumption.
D)Human wants exceed the resources available to satisfy them.
E)Humans are always wasteful and inefficient in production and consumption.

Question 8

The primary focus of microeconomics is

A)our government's monetary policy.
B)the levels of employment and inflation.
C)to study how we managed to eliminate scarcity.
D)to examine the behaviour and operation of the individual units or sectors that make up the economy.
E)to examine the operation of the entire (aggregatE)economy.

Question 9

Scarcity

A)leads to higher prices.
B)used to exist everywhere but has been eliminated in advanced economies.
C)is the inability to satisfy all our wants.
D)is not something that affects very rich people.
E)applies only to people living in poverty.

Question 10

Which of the following is a microeconomic topic?
I)Banana prices increase after a cyclone hits Queensland.
Ii)Xavier starts a new business designing web pages.
Iii)Abby decides to practise an extra hour of soccer instead of studying.

A)ii and iii
B)ii only
C)i,ii and iii
D)i and ii
E)i only

Question 11

Which of the following is a microeconomic topic?
I)K-Mart's decision to close stores that are not making a profit.
Ii)Bunning's choice to hire more full-time employees because its sales increased.
Iii)Virgin Airlines changes its fares.

A)i only
B)ii only
C)i and iii
D)ii and iii
E)i,ii,and iii

Question 12

Microeconomics includes the study of the

A)choices made by individuals and businesses.
B)recessions and inflation in the global economy.
C)reasons why the government changes interest rates.
D)aggregate effects on the national economy.
E)nationwide unemployment rate.

Question 13

Which of the following best defines economics?

A)Economics is concerned with prices and quantities of goods and services,both at the individual level and at the industry level.
B)Economics helps you earn as much money as possible.
C)Economics studies how to choose the best alternative when coping with scarcity.
D)Economics analyses all aspects of human behaviour in general.
E)Economics teaches how to limit our wants.

Question 14

Which of the following statements best describes the study of economics? Economics studies how

A)we make choices in the face of scarcity.
B)to organise production so that scarcity does not occur.
C)firms make profits.
D)businesses reach decisions.
E)to create incentives so that scarcity does not exist.

Question 15

Scarcity exists because

A)some individuals have low incomes.
B)people take too much leisure time.
C)human wants exceed the resources available to satisfy them.
D)the costs of production are high.
E)some people make bad economic decisions.

Question 16

Scarcity means we must

A)work more.
B)make choices.
C)earn more.
D)consume less.
E)produce less.

Question 17

Because human wants are insatiable and unlimited while available resources are limited,people are said to face the problem of

A)why to produce.
B)scarcity.
C)macroeconomics.
D)social interest versus self-interest.
E)microeconomics.

Question 18

The study of economics is best described as a study of

A)the factors that influence the stock and bond markets.
B)how people earn a living.
C)coping with scarcity,and choices made as a result of scarcity in a society.
D)capitalism.
E)the choices made in producing goods and services.

Question 19

Which of the following is a microeconomic issue?

A)The quantity of wheat grown in South Australia increases this year.
B)Growth in the Australian economy slowed.
C)The inflation rate fell this year.
D)Increased federal government expenditures have lowered the unemployment rate.
E)The Australian government cuts taxes to combat a recession.

Question 20

Scarcity requires that we

A)learn to limit our wants.
B)have the most rapid economic growth possible.
C)have unlimited resources.
D)produce efficiently.
E)make choices about what goods and services to produce.

Question 21

When Qantas decides to stop flying to Singapore from Adelaide,it directly answers the ________ question.

A)why
B)when
C)what
D)how
E)for whom

Question 22

The question of 'What goods and services get produced? ' most closely relates to which of the following issues?

A)Taxing high-income workers to give payments to poor households.
B)Building a missile defence system,or putting a computer in every primary school classroom.
C)Obtaining specialised training to increase one's income.
D)The distribution of goods and services in the economy.
E)Producing goods and services in the least costly manner.

Question 23

The question of 'how are goods and services produced? ' most closely addresses which of the following issues?

A)Should Ford build SUVs or luxury cars?
B)Why are Christmas trees popular only in December?
C)Should Ford use expensive industrial robots or inexpensive Mexican employees to produce SUVs?
D)Is income distributed fairly in Australia?
E)Should contractors build residential housing or shopping malls?

Question 24

Which of the following is a topic studied in macroeconomics?

A)The impact of labour unions on wages.
B)The pricing decisions in the computer hardware industry.
C)The effect on economic growth if the government raises taxes.
D)The impact of higher prices for petrol on the number of SUVs people buy.
E)How the wheat industry determines how much wheat to grow.

Question 25

When a home builder decides to computerise all of his production schedule,it directly answers the ________ question.

A)for whom
B)how
C)what
D)why
E)where

Question 26

Which of the following is the best example of a 'what? ' question?

A)What should doctors be paid?
B)Should higher-income or lower-income people buy SUVs?
C)Should we make faster microprocessors or pest-resistant corn?
D)Should cars be produced using workers or robots?
E)Should migrant workers or domestic workers be used to pick grapes?

Question 27

When unskilled teens earn less than university graduates,society answers the ________ question.

A)for whom
B)how
C)social interest versus self-interest
D)what
E)why

Question 28

Which of the following is a macroeconomic topic?

A)Why did production and jobs expand slowly in 2011?
B)The federal government's decision to increase the sales tax in Australia.
C)The effect of drought in South Australia on the price and quantity of wheat.
D)The federal government's decision to spend more on environmental protection.
E)General Motors decides what prices to set for its new models.

Question 29

When an AFL player earns more than a police officer,society answers the ________ question.

A)what
B)for whom
C)why
D)social interest versus self-interest
E)how

Question 30

Which economic question depends on the incomes that people earn and the prices they pay for goods and services?

A)Why?
B)Where?
C)What?
D)How?
E)For whom?

Question 31

Macroeconomics is the study of

A)the government.
B)how ceteris paribus affects causation.
C)national or global economies.
D)the actions of individual consumers.
E)the actions of individual businesses.

Question 32

Which of the following is a macroeconomic topic?
I)China increases interest rates to slow its economic growth.
Ii)Parliament lowers tax rates to try to lower the unemployment rate.
Iii)Nissan decides to produce more electric Leaf models and fewer Altima sedans.

A)i and iii
B)i,ii and iii
C)iii only
D)ii and iii
E)i and ii

Question 33

When Fresh Express Salads decides to mechanically pick all of its lettuce,it directly answers the ________ question.

A)where
B)how
C)for whom
D)what
E)when

Question 34

When you make the decision to spend your time attending class,which economic question are you answering?

A)Why?
B)For whom?
C)Is this in the social interest?
D)What?
E)How?

Question 35

When the federal government decides to pay senators more than it pays soldiers,it answers the ________ question.

A)why
B)what
C)where
D)for whom
E)how

Question 36

When Toyota decides to increase production of hybrid cars,it directly answers the ________ question.

A)what
B)why
C)for whom
D)where
E)how

Question 37

Which of the following is a macroeconomic issue?

A)The number of jobs and production in Zimbabwe increase.
B)The Australian Football League signs a new television contract.
C)Power stations are required to install more anti-pollution devices.
D)The South Australian wheat harvest is smaller than normal.
E)The price of a ticket to Dreamworld on the Gold Coast is increased.

Question 38

Of the three major economic questions,which of the following is the best example of a 'how? ' question?

A)Should we spend more on health care?
B)Should we eat more oatmeal?
C)Should we produce goose down jackets?
D)Should we build log homes or build factories from bricks?
E)Should we collect tolls on freeways using human toll collectors or mechanised toll booth machines?

Question 39

When an electricity distribution company decides to use manpower to bury its lines,it directly answers the ________ question.

A)for whom
B)when
C)why
D)what
E)how

Question 40

Which of the following BEST describes macroeconomics?

A)It is not a social science because its predictions cannot be tested.
B)It examines how the choices that individuals make affect governments.
C)It analyses the aggregate effects on the national economy of the choices made by individuals,firms and governments.
D)It studies the choices that individuals and businesses make when coping with scarcity.
E)Proving causation is never a problem for macroeconomics.

Question 41

Whether a company produces fishing rods mostly by hand or using high-tech machinery is a question of

A)'how will the goods be produced?'
B)'where will the goods be produced?'
C)'why will the goods be produced?'
D)'for whom will goods be produced?'
E)'when will the goods be produced?'

Question 42

The question 'should economics majors or sociology majors earn more after they graduate? ' is an example of a ________ question.

A)why
B)what
C)how
D)for whom
E)where

Question 43

The question 'should we produce houses using bricks or wood? ' is an example of a ________ question.

A)for whom
B)why
C)how
D)what
E)where

Question 44

The characteristic from which all economic problems arise is

A)providing a minimal standard of living for every person.
B)hunger.
C)the nature of political decisions.
D)how to make a profit.
E)scarcity.

Question 45

The question 'should we produce LCD televisions or computer monitors? is an example of a ________ question.

A)what
B)how
C)why
D)for whom
E)where

Question 46

To economists,scarcity means that

A)there can never be answers to the what,how or for whom questions.
B)unlimited wants cannot be satisfied by limited resources.
C)a person looking for work is not able to find work.
D)limited wants cannot be satisfied by unlimited resources.
E)the number of people without jobs rises when economic times are bad.

Question 47

People must make choices because

A)most people enjoy shopping.
B)making choices is in the social interest.
C)the question 'what goods and services are produced?' is not adequately answered.
D)there are many goods available.
E)of scarcity.

Question 48

Australia has a universal health care system called Medicare,so that everyone,regardless of their ability to pay,has some access to health care.Based on this observation,Australia has decided that 'everyone,regardless of their ability to pay' is the answer to what microeconomic question?

A)For whom will health care be produced?
B)What type of health care will be produced and in what quantity?
C)Why will we offer health care?
D)Must we offer health care?
E)How will health care be produced?

Question 49

Which of the following is a microeconomic issue?

A)Why has economic growth been rapid in China?
B)Why has unemployment risen nationwide?
C)Why is the average income lower in Africa than in Latin America?
D)Why did overall production increase in Australia last year?
E)What is the impact on the quantity of Pepsi purchased if consumers' tastes change in favour of non-carbonated drinks?

Question 50

If a decision is made and it is the best choice for society,the decision is said to be

A)consistent with scarcity.
B)a want-maximising choice.
C)a valid economic choice.
D)made in the social interest.
E)made in self-interest.

Question 51

Which of the following statements is true regarding scarcity?

A)An economy experiences scarcity only when the incomes of its citizens decline.
B)Scarcity affects poorer countries only.
C)Scarcity could be overcome if people would make all choices in the social interest.
D)All citizens in a wealthy economy experience scarcity.
E)Poor people experience scarcity more often than do rich people.

Question 52

All economic questions and problems arise from

A)the fact that society has more than it needs.
B)turmoil in the stock market.
C)the difference between self-interest and social interest.
D)a society's wants exceeding what its scarce resources can produce.
E)the unequal distribution of income.

Question 53

When Ferrari decides to produce 1,200 '360 Modenas' each year,Ferrari is answering the ________ question.

A)how
B)why
C)for whom
D)what
E)scarcity

Question 54

Choices that are best for the society as a whole are choices in pursuit of

A)self-interest.
B)answering the 'for whom?' question.
C)answering the 'how?' question.
D)incentives.
E)the social interest.

Question 55

Self-interest

A)has nothing to do with determining what goods are produced.
B)occurs only when wants exceed available resources.
C)cannot be used to determine how goods are produced.
D)reflects choices that are best for society as a whole.
E)reflects choices that are best for the individual who makes them.

Question 56

Rational choice

A)is made by comparing different incentives.
B)is always efficient.
C)is what you must give up to get what you want.
D)is a choice that uses the available resources to best achieve the objective of the person making the choice.
E)provides the answer to only the 'how?' question.

Question 57

Scarcity results from the fact that

A)choices made in self-interest are not always in the social interest.
B)people's wants exceed the resources available to satisfy them.
C)we cannot answer the major economic questions.
D)the population keeps growing.
E)not all goals are desirable.

Question 58

Microeconomics includes the study of

A)the overall amount of production within the economy.
B)how countries decide to fund their budget deficits.
C)the effect on the national economy of the choices that individuals make.
D)how a nation promotes economic growth.
E)the choices that individuals and businesses make.

Question 59

When a landscaping company decides to use drafting software and computers instead of hiring designers to draw design plans by hand,it is answering the ________ question.

A)for whom
B)what
C)why
D)how
E)opportunity cost

Question 60

Choices that are best for the individuals who make them are choices in pursuit of

A)efficiency.
B)equity.
C)the social interest.
D)self-interest.
E)incentives.

Question 61

Matthew has eaten two hamburgers and is considering a third.The marginal benefit in his decision is the pleasure from consuming

A)the third hamburger minus the pleasure from consuming zero hamburgers.
B)just the third hamburger.
C)just the second hamburger.
D)the two previous hamburgers.
E)all three hamburgers.

Question 62

Ali decides to attend the one-hour review session for microeconomics instead of working at his job.His job pays him $10 per hour.Ali's opportunity cost of attending the review session is

A)the value of the session minus the $10 he could have earned at his job.
B)the $10 he could have earned at his job.
C)nothing,because the review session does not cost anything.
D)equal to the benefit he gets from the review session.
E)the one-hour review session.

Question 63

The benefit from a good or service that you purchase is measured by

A)how strong the incentives were that led to buying the good or service.
B)the dollar amount you can get by selling the good or service.
C)what you are willing to give up to obtain the good or service.
D)the dollar amount paid for the good or service.
E)None of the above answers is correct because there is no way to measure the benefit you receive from purchasing a good or service.

Question 64

Your lecturer changes the penalty for cheating on exams from getting a 0 on the exam to getting an F in the course.Your lecturer has

A)increased the marginal cost of cheating.
B)recognised that students don't respond to incentives.
C)decreased the marginal benefit of cheating.
D)recognised that students don't make rational choices.
E)made all the students act in the social interest.

Question 65

In economics,cost is measured as ________,and benefit is measured as ________.

A)what you must give up to get something;what you are willing to give up to get it
B)what you are willing to give up to get it;what you must give up to get something
C)what you are willing to pay on the margin;what the government pays you when you are unemployed or retired
D)the amount of money that you pay on the margin;the amount of money that you receive on the margin
E)the amount of money that you pay for something;the amount of money that someone else is willing to pay you

Question 66

An opportunity cost is

A)the dollar amount that is paid.
B)anything the decision maker believes costs to be.
C)whatever is paid out and cannot be reduced or reversed.
D)another term for all the sunk costs.
E)the benefits of the highest-valued alternative forgone.

Question 67

The cost of a one-unit increase in an activity is called the

A)margin.
B)rational cost.
C)opportunity benefit.
D)marginal cost.
E)marginal benefit.

Question 68

The marginal cost of an activity ________ as you do more of it.

A)decreases
B)changes only if the marginal benefit of the activity does not change
C)changes only if the marginal benefit of the activity changes
D)doesn't change
E)increases

Question 69

The value of the best thing that a person must give up when making a decision is known as the ________ cost.

A)benefit's
B)direct
C)sunk
D)opportunity
E)explicit

Question 70

Economists measure opportunity cost

A)as the sum of all forgone opportunities.
B)as equal to the sum of all the sunk costs.
C)as the best thing given up.
D)as the same as marginal benefit.
E)only when it is on the margin.

Question 71

If Jessie studies economics for two hours instead of going to the movies with her friends,then

A)Jessie is not responding to any incentives.
B)Jessie is definitely making a rational choice.
C)Jessie is ignoring a sunk cost.
D)the benefit of studying is the missed movie.
E)the opportunity cost of studying is the missed movie.

Question 72

Suppose you take a trip during the mid-semester break.To determine the benefit of taking the trip,you

A)must measure what the trip is worth to you and then subtract the cost of the trip.
B)calculate the opportunity cost of the trip.
C)measure what you are willing to give up to take the trip.
D)calculate the value of the next best alternative forgone.
E)determine the sunk cost of taking the trip.

Question 73

You have chosen to take a trip during the mid-semester break.If you had not gone,you would either have worked at a temporary job or studied for exams.The opportunity cost of your trip is

A)We cannot determine what the opportunity cost is without knowing which alternative,working or studying,you would have preferred.
B)the wages you would have earned from working and the lower grade earned by not studying.
C)the wages you would have earned from working.
D)the value of the trip.
E)the lower grade earned by not studying.

Question 74

The benefit of a one-unit increase in an activity

A)decreases as you do more of it.
B)is always greater than the opportunity cost of that activity.
C)is measured by what you must give up.
D)is called marginal cost.
E)is called rational-choice benefit.

Question 75

Suppose that,instead of taking this test,you could either have worked and earned income or partied and had a pleasurable time.Your opportunity cost of taking the test is the

A)forgone work.
B)forgone working or partying,depending on which was your next best choice.
C)forgone working and partying.
D)forgone party.
E)test because you are taking it.

Question 76

A rational choice is one that

A)is made in the social interest rather than the self-interest.
B)always turns out for the best for the decision maker.
C)creates no costs for the decision maker.
D)uses the available resources to most effectively satisfy the wants of the person making the choice.
E)must be made with perfect information.

Question 77

The opportunity cost of a one-unit increase in an activity

A)decreases as you do more of it.
B)is measured by what the person is willing to give up to get one more unit of the activity.
C)is greater than the marginal benefit.
D)is called rational cost.
E)is called marginal cost.

Question 78

What is NOT true about rational choice?

A)It might turn out not to have been the best choice after the event.
B)It can result in different decisions for different individuals.
C)It is a choice that uses the available resources to best achieve the objective of the person making the choice.
D)It is the same for all individuals.
E)It involves comparing costs and benefits.

Question 79

Mothers Against Drunk Drivers (MADD)campaigned to increase the legal penalties of drunk driving.This successful campaign ________ of drunk driving.

A)had no effect on the marginal cost or marginal benefit but did affect the total benefit
B)increased the marginal benefit
C)decreased the marginal cost
D)decreased the marginal benefit
E)increased the marginal cost

Question 80

The opportunity cost of a decision is measured in terms of

A)the price of a new opportunity that arises.
B)sunk cost.
C)the price of the alternative we choose.
D)the next best thing given up.
E)time.