Deck 1: Introduction: What Is Economics

Question 1

Economics is best defined as the study of

A) financial decision-making.
B) how consumers make purchasing decisions.
C) choices made by people faced with scarcity.
D) inflation, unemployment, and economic growth.

Answer 1

choices made by people faced with scarcity.

Question 2

________ is a situation in which resources are limited in quantity and can be used in different ways.

A) Choice
B) Scarcity
C) Economics
D) Supply and demand

Answer 2

Scarcity

Question 3

An economic model is

A) a small but completely working economy.
B) a simplified representation of an economic environment.
C) any graph.
D) all of the above

Answer 3

a simplified representation of an economic environment.

Question 4

An arrangement that allows buyers and sellers to exchange things is called

A) a contract.
B) a market.
C) money.
D) efficient.

Question 5

Which of the following is an example of scarcity?

A) If you choose to play video games, you will not have as much time for exercise.
B) If a city uses an acre of land to build a park, there will be less land for houses.
C) If I decide to buy a new car, I may not have enough money to go away on vacation this year.
D) All of the above are examples of scarcity.

Question 6

The factors of production include

A) natural resources.
B) labor.
C) entrepreneurship.
D) all of the above

Question 7

In a modern market economy,most of the answers to the questions of what to produce,how to produce it,and who should get the production are made by

A) governments.
B) individuals.
C) firms.
D) both B and C

Question 8

Which of the following is NOT a market?

A) a group of children trading Pokemon cards
B) a cattle auction
C) your college bookstore
D) All of the above are markets.

Question 9

Which of the following is NOT a market?

A) an online electronic auction
B) a group of paving contractors bidding for a road construction contract
C) ticket scalpers selling tickets outside a sold-out sports event
D) All of the above are markets.

Question 10

Economics is the study of

A) how to invest in the stock market.
B) how society uses limited resources.
C) the role of money in markets.
D) how government officials decide which goods and services are produced.

Question 11

Which of the following is NOT a key economic question?

A) What products to produce?
B) Who produces the products?
C) How to produce the products?
D) Who gets the produced products?

Question 12

Scarcity can best be defined as a situation in which

A) there are no buyers willing to purchase what sellers have produced.
B) there are not enough goods to satisfy all of the buyers demands.
C) resources are limited in quantity and can be used in different ways.
D) there is more than enough money to satisfy consumers wants.

Question 13

Because resources are limited,

A) only the very wealthy can get everything they want.
B) firms will be forced out of business.
C) the availability of goods will be limited but the availability of services will not.
D) people must make choices.

Question 14

Printing presses,forklifts,and assembly plants are examples of which factor of production?

A) physical capital
B) human capital
C) entrepreneurship
D) labor

Question 15

When Bob,a recent college grad,took an internship at an accounting firm,he is accumulating which factor of production?

A) physical capital
B) human capital
C) entrepreneurship
D) natural resources

Question 16

Resources are all of the following EXCEPT

A) unlimited and in abundance.
B) the things we use to produce goods and services.
C) limited in quantity and can be used in different ways.
D) scarce and therefore requiring choices to be made.

Question 17

Which of the following is NOT a factor of production?

A) money
B) human capital
C) physical capital
D) labor

Question 18

The effort used to coordinate the factors of production and produce goods and services is called

A) entrepreneurship.
B) capital accumulation.
C) land ownership.
D) land.

Question 19

In which of the following markets is a person's time and effort exchanged for money?

A) consumer market
B) capital market
C) labor market
D) goods market

Question 20

Markets perform all of the following functions EXCEPT

A) determining the prices of goods and services.
B) helping firms decide what to produce.
C) helping firms decide how to produce.
D) determining why a firm chooses to produce a certain product.

Question 21

Deciding if a company will produce automobiles by manual labor or with the use of robots answers the economic question of

A) Who consumes the products produced?
B) What will be produced?
C) Where will the products produced be consumed?
D) How will we produce the products?

Question 22

Economists employ economic models

A) because reality is complex.
B) to make the field more scientific.
C) to make reality more complex.
D) because economic theory is too easy without them.

Question 23

Scarcity is a situation in which resources are limited in quantity and can be used in different ways.

Question 24

Which of the following is NOT an economic decision in a modern economy?

A) Who consumes the products produced?
B) What will be produced?
C) Where will the products produced be consumed?
D) How will we produce the products?

Question 25

Money is an example of a scarce factor of production.

Question 26

Markets do not determine the quantity of goods sold,only the price.

Question 27

________ is a simplified representation of an economic environment.

A) An economic model
B) Microeconomics
C) Scarcity
D) Normative analysis

Question 28

Normative economic analysis

A) is the focus of most modern economic reasoning.
B) answers the question "What ought to be?"
C) predicts the consequences of alternative actions.
D) All of the above are correct.

Question 29

Positive economics

A) is the focus of most modern economic reasoning.
B) concerns the forces that affect economic activity.
C) predicts the consequences of alternative actions.
D) All of the above are correct.

Question 30

Which of the following is an example of a normative question?

A) How will an increase in the price of gasoline affect taxi drivers?
B) What fraction of an income-tax cut will be spent on consumer goods?
C) Should the government provide free prescription drugs to senior citizens?
D) How will an increase in the minimum wage affect teenaged workers?

Question 31

Which of the following is a question answered with positive economic analysis?

A) If a college had more money, should it offer free parking for students?
B) If a college can afford it, should it provide more financial aid assistance?
C) If a college increased tuition, by how much will class sizes decline?
D) As a result of a recession, should the college cut tuition to stimulate enrollments?

Question 32

Talking about alternatives is the first step in a process that helps us make better choices about how we use our resources.

Question 33

Which of the following is a question that needs to be answered with normative economic reasoning?

A) If a college offers free parking for students, will more students drive to campus?
B) If a college provided more financial aid assistance, would more students benefit?
C) If a college increases tuition, would class size decline?
D) Should a college reduce tuition to stimulate enrollment?

Question 34

When economists construct economic models,

A) all but the essential features of the environment are eliminated.
B) all the essential features of the environment are eliminated.
C) only mathematical equations are used.
D) every detail found in reality must be included.

Question 35

Which of the following is NOT an example of a question answered by positive analysis?

A) How will an increase in the price of gasoline affect taxi drivers?
B) What fraction of an income-tax cut will be spent on consumer goods?
C) How will an increase in interest rates affect investment in factories?
D) Should the government increase the minimum wage?

Question 36

Positive economics questions "What ought to be?" while normative economics predicts the consequences of alternative actions,answering the questions "What is?" or "What will be?"

Question 37

Most modern economic analysis is positive in nature,but many issues also involve questions with normative economics.

Question 38

Deciding how products of a society are distributed among the citizens in an economy answers the economic question of

A) Who consumes the products produced?
B) What will be produced?
C) Where will the products produced be consumed?
D) How will we produce the products?

Question 39

Deciding if a college uses more PhDs than graduate assistants to teach introductory classes answers the economic question of

A) Who consumes the products produced?
B) What will be produced?
C) Where will the products produced be consumed?
D) How will we produce the products?

Question 40

Which of the following is NOT a question answered with normative economic reasoning?

A) If a college had more money, should it offer free parking for students?
B) As a result of a recent recession, should a college offer more financial aid assistance?
C) If a college increased tuition, what is the estimated decline in enrollments?
D) Given the additional funding that a college received, should it cut tuition to stimulate enrollments?

Question 41

Is money a scarce factor of production? Explain.

Question 42

Economists will never reach the same conclusions in their positive analyses.

Question 43

According to the authors in this chapter,which of the following impedes entrepreneurship from thriving in Sub-Saharan Africa?

A) institutions
B) diseases
C) government policy
D) inflation

Question 44

According to the Texas Transportation Institute,U.S.consumers waste ________ gallons of gasoline and diesel fuel each year because of traffic congestion.

A) 11 million
B) 93 million
C) 2.3 billion
D) 12 trillion

Question 45

It takes longer to set up a business in Canada than in Mozambique.

Question 46

The worldwide recession in 2007 started from

A) easy access to credit in the United States.
B) booming housing prices that ultimately dropped.
C) a large number of home purchasers who were unable to afford the homes.
D) All of the above are correct.

Question 47

Economists have found that as a nation's economy grows,

A) the poorest families are left behind.
B) the poorest families have a decline in income.
C) the poorest families share in the prosperity.
D) the poorest families are unaffected.

Question 48

Economics tells us what to choose given the trade-offs.

Question 49

If each extra driver on the road makes every other driver's commute last one minute longer and there are 600 drivers on the road,then one extra driver costs society

A) 1 hour extra in commuting time.
B) 10 hours extra in commuting time.
C) 100 hours extra in commuting time.
D) 10 extra minutes in commuting time.

Question 50

According to the text,the solution economists propose to the problem of traffic congestion is to

A) impose a tax for the use of a road during peak times.
B) make cars smaller.
C) make gasoline cheaper.
D) make the roads wider.

Question 51

According to the text,economists identify that the reason why traffic congestions exists and wastes large amounts of resources in the economy is because

A) the drivers are NOT mindful of the additional time they impose on other drivers if they enter a highway.
B) the cars are too big.
C) the drivers are mindful of the additional time they impose on other drivers if they enter a highway.
D) the roads are too small.

Question 52

Economic analysis includes commuting time as part of the cost of traffic congestion.

Question 53

The recent experience of sub-Saharan Africa has taught economists that institutions such as the legal system and the regulatory environment play a key role in economic growth.

Question 54

In the final two decades of the 20th century,sub-Saharan African economies grew rapidly.

Question 55

One efficient solution to congestion is to

A) impose a congestion tax on drivers who use the road during the rush hour.
B) prevent cars from using the roads during the rush hour.
C) give subsidies to drivers who use the road during the rush hour.
D) lower gasoline taxes.

Question 56

Which of the following did NOT directly cause the worldwide recession in 2007-2008?

A) the decision by the government to bail out banks in 2008
B) easy access to credit in the United States
C) a large number of home purchasers who were unable to afford the homes
D) booming housing prices that ultimately dropped

Question 57

Economists will always reach the same conclusion in their positive analyses.

Question 58

Would an economist consider clean air a scarce resource? Explain.

Question 59

Normative economics questions "What ought to be?" while positive economics predicts the consequences of alternative actions,answering the questions "What is?" or "What will be?"

Question 60

Richard runs a pizza delivery restaurant.List the three basic types of decisions economics studies and give an example from Richard's restaurant.

Question 61

A small change in a relevant variable is

A) an average change.
B) a ceteris paribus change.
C) an efficient change.
D) a marginal change.

Question 62

A variable is

A) something that always has the same value.
B) something that can take on different values.
C) something that cannot be measured.
D) something that varies over time.

Question 63

A student has a D grade average in her accounting course and a B grade average in her economics course.She decides to study an extra hour for her accounting exam and one less hour for her economics exam,hoping to improve her accounting grade while not hurting her economics grade.This is an example of

A) thinking at the margin.
B) using assumptions to simplify.
C) ceteris paribus.
D) caveat emptor.

Question 64

Which of the following is NOT an example of a marginal question?

A) How many more years of education must I undertake if I want to get a Ph.D. in economics?
B) How many more dollars will I earn in my lifetime if I get my Master's degree?
C) How many students borrow money in order to attend college?
D) How many more points will I expect to have if I study an hour longer?

Question 65

The economic view of traffic congestion considers that

A) drivers ignore the costs they impose on other drivers by slowing other drivers' commute time.
B) driving is a right.
C) most drivers are not good defensive drivers.
D) the amount of driving should be reduced.

Question 66

Adam Smith is

A) considered the founder of economics.
B) responsible for a branch of economics bearing his name.
C) responsible for refining the model of supply and demand.
D) the author of this text.

Question 67

The four elements of the economic way of thinking include all of the following EXCEPT

A) economists use assumptions to make things simpler and focus attention on what really matters.
B) economic analysis often involves variables and how they affect one another.
C) economic analysis assumes that people act irrationally and that they are not motivated by self-interest.
D) economists often consider how a small change in one variable affects another variable.

Question 68

Ceteris paribus is the Latin expression meaning

A) other variables are held fixed.
B) let buyer beware.
C) think at the margin.
D) for every action there is an equal and opposite reaction.

Question 69

The Latin phrase ceteris paribus means that when a relationship between two variables is being studied,

A) both are treated as unpredictable.
B) neither of those two variables is allowed to change.
C) all other variables are held fixed.
D) we recognize that some factors are unknown.

Question 70

Which of the following is an example of a marginal question?

A) How much will my chances of finding a job improve if I raise my GPA from a C to a C+ grade average?
B) What is the average cost of a college education?
C) How many students borrow money in order to attend college?
D) What is the average income of a college graduate?

Question 71

An example of people acting in their own self-interest would include

A) individuals joining a car pool to go to work when tolls are imposed on congested highways.
B) an adult, returning to college to pursue a degree to qualify for a promotion at work.
C) a teenager earns an A grade average in school in order to use her parents' car.
D) All of the above are examples of people acting in their own self-interest.

Question 72

When economists assume that people are rational and respond to incentives,they mean

A) people act with kindness.
B) people are altruistic.
C) people act in their own self-interest.
D) none of the above

Question 73

What is an economic view of traffic congestion?

Question 74

According to the book,the general consensus is that our policymakers do not know what they are doing and are managing our economy ineffectively.

Question 75

What assumption was used by the authors of the book when analyzing the traffic congestion problem in London?

A) They assumed that all cars are of the same make and model.
B) They assumed that traffic congestion is the same during daytime and during nighttime.
C) They assumed that every car has the same effect on the travel time of other cars.
D) They assumed that travel via public transportation is less costly that travel by car.

Question 76

Who is associated with the following summary of the economic way of thinking: "The theory of economics does not furnish a body of settled conclusions immediately acceptable to policy.It is a method rather than a doctrine,an apparatus of the mind,a technique of thinking which helps its processor draw correct conclusions."

A) John Maynard Keynes
B) Alfred Marshall
C) Adam Smith
D) President Harry Truman

Question 77

When you need to know how to get from San Francisco to New York,which of the following details regarding reality are deemed not important and are usually assumed to not be included in your map?

A) the temperature while you travel
B) the number of lanes on the freeway
C) the number of cars on the freeway
D) All of the above are deemed unimportant and are assumed as not included in your map.

Question 78

Which of the following is a variable?

A) your GPA
B) your hourly wage
C) the price of gasoline
D) All of the above are correct.

Question 79

To think at the margin means to consider

A) how nothing remains constant over time.
B) how a small change in one variable affects another variable.
C) how people behave in their own self-interest.
D) how people will decide what to purchase.

Question 80

Economists use assumptions to

A) make things simpler.
B) focus on what really matters.
C) simplify decision-making.
D) all of the above