Deck 1: The Role and Method of Economics

Question 1

The central question in economics is how to:

A)regulate the supply of money.
B)make the best use of scarce resources to satisfy our unlimited wants.
C)reduce the wants of individuals, businesses and government.
D)find more resources to satisfy everyone's wants.

Answer 1

B

Question 2

Economics is concerned with:

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.

Answer 2

D

Question 3

Economics is primarily the study of:

A)human greed.
B)how firms compete for profits in the marketplace.
C)how limited resources are allocated to satisfy unlimited wants.
D)unemployed resources.
E)how successful investors make money in the stock market.

Answer 3

C

Question 4

Scarcity means that:

A)human desires are limited.
B)resources are insufficient to satisfy all human desires.
C)choices are unnecessary.
D)all but the very wealthy must face choices.
E)market prices are too low.

Question 5

Scarcity implies that:

A)consumers are too poor to afford the goods and services available.
B)at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce.
C)it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.
D)consumers would be willing to purchase the same quantity of a good at a higher price.

Question 6

Economics is primarily the study of:

A)how choices are made because of scarcity.
B)corporate balance sheets and income statements.
C)how to operate a business.
D)how to make money in the stock market.
E)how to allocate scarce resources to satisfy unlimited needs.

Question 7

Economics is a science that:

A)typically uses controlled experiments to learn about consumer and firm behavior.
B)uses models that cannot be tested empirically due to the complex nature of the economy.
C)explores how choices are made between conflicting wants and desires in a world of scarcity.
D)relies entirely upon normative analysis.
E)primarily focuses on budgetary decisions made by political leaders.

Question 8

Fundamentally, economics is concerned with:

A)how scarce resources are allocated to satisfy limited wants.
B)how limited resources are allocated to satisfy scarce wants.
C)how limited resources are allocated to satisfy unlimited wants.
D)how limited wants can be used to satisfy limited resources.
E)how unlimited wants can be used to satisfy unlimited resources.

Question 9

Scarcity is the result of:

A)government decision making.
B)inappropriate normative judgments.
C)positive economics.
D)wants that exceed the resources necessary to provide them.

Question 10

The fundamental economic problem is:

A)poverty.
B)unemployment.
C)scarcity.
D)government intervention into markets.
E)inflation.

Question 11

The problem of scarcity:

A)exists because resources are limited relative to wants.
B)exists because resources are unlimited relative to wants.
C)is solved by economists using abstract models.
D)can be eliminated through appropriate government intervention into markets.
E)does not exist in communist societies.

Question 12

Scarcity is:

A)only a problem in modern industrialized economies.
B)only a problem in impoverished economies.
C)only a problem in centrally planned economies.
D)a word meaning that there is a shortage of goods at the current market price.
E)a problem that necessitates making choices and tradeoffs.

Question 13

Which of the following statements are true?

A)Scarcity refers to shortages at existing market prices.
B)As a result of scarcity, individuals must make choices and face trade-offs.
C)It is impossible to satisfy unlimited human wants with limited resources.
D)All of the answers are true statements.
E)The only true statements are "As a result of scarcity, individuals must make choices and face trade-offs" and " "It is impossible to satisfy unlimited human wants with limited resources."

Question 14

Scarcity:

A)exists because basic human survival needs cannot be satisfied with available resources.
B)occurs only in centrally planned economies.
C)will likely be eliminated by technological progress.
D)exists only in poor nations.
E)occurs if there are insufficient resources to provide for human wants.

Question 15

Which of the following forces us to choose among alternatives?

A)Value
B)Scarcity
C)Rarity
D)Market mechanism

Question 16

Scarcity exists because of:

A)the allocation of goods by prices.
B)specialization and division of labor.
C)the market mechanism.
D)unlimited wants and limited resources.

Question 17

Economics is most importantly concerned with:

A)how to profit from trading in the stock market.
B)government taxation and spending.
C)studying how we allocate scarce resources to satisfy unlimited wants.
D)how to reduce inflation.
E)how to successfully launch a business.

Question 18

Scarcity means that:

A)there will always be families living below the poverty line.
B)resources are unlimited.
C)human wants are limited.
D)limited resources cannot satisfy all of our unlimited human wants.
E)choices are unnecessary.

Question 19

Economics is the study of how people cope with:

A)fluctuations in stock prices.
B)greed.
C)limited human wants.
D)limited resources.

Question 20

Economic choices or tradeoffs are the result of:

A)basic human greed.
B)scarcity.
C)poverty.
D)private ownership of resources.
E)the fallacy of composition.

Question 21

The most essential economic problem is the existence of:

A)both an increasing population and the depletion of natural resources.
B)both limited economic resources and unlimited desires.
C)both inflation and unemployment.
D)income inequality and economic freedom.

Question 22

Which of the following is not an example of a factor of production?

A)an office building
B)a product's price
C)the land plowed by a farmer in order to grow corn
D)the chief executive officer of a large corporation
E)a worker on an assembly line producing compact disc players

Question 23

Which of the following is true?

A)As long as human wants exceed available resources, scarcity will exist.
B)Scarcity ultimately leads to competition for the available goods and services.
C)Scarcity affects everyone to the same degree.
D)All of the answers are true.
E)As long as human wants exceed available resources, scarcity will exist, and scarcity ultimately leads to competition for the available goods and services.

Question 24

By the study of "scarcity," an economist means how we best utilize our:

A)limited resources in order to promote full employment and price stability.
B)unlimited desires in order to best use our unlimited resources.
C)unlimited resources to best satisfy our unlimited desires.
D)limited resources in order to best satisfy our unlimited desires.
E)unlimited resources in order to best satisfy our limited desires.

Question 25

The real core of the economic problem is to:

A)increase the amount of leisure time available to people.
B)guarantee everyone on the planet a minimum level of food, shelter and clean water.
C)allocate limited resources among competing uses.
D)eliminate scarcity.

Question 26

If scarcity was not a fact,

A)people could have all they wanted of goods and services for free.
B)it would no longer be necessary to make choices.
C)poverty, defined as the lack of a minimum level of consumption would also be eliminated.
D)all of the answers would be true.

Question 27

An example of physical capital is:

A)a $100 bill.
B)a stock certificate.
C)a chainsaw.
D)a cheeseburger.
E)a savings account.

Question 28

Land as a factor of production can include all of the following except:

A)trees.
B)a flock of sheep.
C)a sawmill.
D)a water body.
E)a limestone deposit.

Question 29

In economics, which of the following is considered "land"?

A)A hydroelectric dam.
B)A 500 acre forest.
C)bauxite deposits.
D)underground pools of crude oil.
E)All of the above except a hydroelectric dam are considered land.

Question 30

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

A)an unskilled worker
B)a large coal deposit
C)a fishing boat
D)yellow-fin tuna

Question 31

Human capital is:

A)machinery owned by firms, but not by individuals.
B)machinery owned by individuals, but not by firms.
C)machinery owned by individuals or firms, but not by the government.
D)the skill or knowledge of individuals.

Question 32

Human capital is:

A)the same as labor.
B)a term describing the tools and equipment owned by households.
C)a worker's physical effort when working with machines.
D)the expertise or knowledge possessed by workers.
E)the money in checking, savings, or CD accounts at banks.

Question 33

Which of the following would be categorized as capital resources for a college or university?

A)water, trees, and the acreage a campus rests on
B)white boards, overhead projectors, and the expertise of professors
C)exams, fuel oil (which heats the buildings), and electricity
D)the work effort of registrars, clerical assistants, and teaching assistants

Question 34

Which of the following is not an example of a capital resource?

A)the expertise of a computer programmer
B)a pitch fork
C)a commercial sewing machine
D)100 acres of farmland in central California

Question 35

An example of a capital resource is:

A)stock in a computer software company.
B)the funds in a CD account at a bank.
C)a bond issued by a company selling electric generators.
D)a dump truck.
E)an employee of a moving company.

Question 36

Which of the following would not be considered "capital" in economics?

A)A delivery van used by Federal Express.
B)1000 shares of General Electric stock.
C)$500 in currency.
D)A microprocessor factory
E)both the delivery van the factory are considered capital.

Question 37

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.

Question 38

Which of the following is not an example of a resource?

A)a forest
B)a river
C)a John Deere tractor
D)the chef at the city's best café
E)all of the answers are resources

Question 39

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.

Question 40

Economic resources are also known as:

A)elements.
B)financial capital.
C)factors of production.
D)building blocks.

Question 41

When economists say goods are scarce, they mean that:

A)consumers do not have enough money to purchase the goods.
B)the desire for goods and services exceeds our ability to produce them with limited resources.
C)at the current price, consumers are willing to buy more of a good than suppliers are willing to produce.
D)government programs are needed to lift families out of poverty.

Question 42

The function of an entrepreneur is to:

A)bear the business risks.
B)organize the other factors of production.
C)innovate.
D)do all of the tasks listed.

Question 43

Which of the following will not directly add to improvements in human capital?

A)increases in take home pay
B)a low-level manager is sent back to college to acquire an MBA degree
C)improved job training programs offered to employees
D)an increase in the computer-proficiency requirements of all high school graduates

Question 44

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

A)redwood trees
B)unskilled labor
C)stocks and bonds
D)an oil rig

Question 45

An economy's resources:

A)consist of land, labor, capital, and entrepreneurial skills.
B)are unlimited in a country like the United States.
C)are always efficiently utilized in wealthy nations.
D)consist of land, labor, and entrepreneurial skills but not capital.

Question 46

Entrepreneurship is:

A)human capital.
B)another word for the financial capital that can be used to start a business.
C)the resource that organizes the other factors of production in order to produce goods and/or services.
D)another word for physical capital that is used to produce goods and services.

Question 47

All of the following are tangible goods except:

A)a skateboard.
B)a desk.
C)a train locomotive.
D)fairness.
E)a piano.

Question 48

Which of the following is not a factor of production?

A)capital
B)entrepreneurship
C)legal institutions
D)labor

Question 49

The similarity between all goods and services, whether tangible or intangible, is that they:

A)are not subject to economic analysis.
B)require technical expertise.
C)have no price tags.
D)are made from scarce resources and are subject to economic analysis.

Question 50

All of the following are intangible except:

A)health.
B)love.
C)computer programming expertise.
D)power.
E)All of the answers are intangible goods.

Question 51

Which of the following observations regarding economic goods is incorrect?

A)They are limited in supply.
B)They are desirable.
C)They are low-priced essential goods.
D)They are scarce goods created from scarce resources

Question 52

Economics is a social science that primarily explores how:

A)businesses market products under competitive conditions.
B)stock and bond prices fluctuate when there are changes in demand or supply.
C)the government allocates its budget among competing political interests.
D)goods and services are produced and distributed in a world with limited resources.
E)high employment and low inflation levels can be maintained.

Question 53

Economics is primarily concerned with the study of:

A)problems such as poverty and unemployment.
B)limited desires pursuing unlimited resources.
C)production and distribution of goods in a world of unlimited resources.
D)production and distribution of goods in a world of limited resources.
E)the evolution of firms from small startups to successful corporations.

Question 54

Scarcity, as defined by an economist, means:

A)demand exceeds supply at the current market price.
B)consumers are too poor to purchase the available goods and services.
C)supply exceeds demand at the current market price.
D)the desire for goods exceeds our ability to produce them with limited available resources.

Question 55

Which of the following would be an example of entrepreneurship?

A)The cross training of bank employees
B)A bank teller
C)A check encoding machine
D)The building used as a bank's operations center

Question 56

An example of an intangible good is:

A)an automobile.
B)a new house.
C)a snowplow.
D)friendship.
E)a recliner chair.

Question 57

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

A)money management.
B)entrepreneurship.
C)strategic management.
D)capital management.

Question 58

Which of the following goods would be considered scarce?

A)iPods
B)crude oil
C)tax preparation services
D)all of the answers are correct

Question 59

Economic goods are:

A)only those commodities priced in monetary terms.
B)scarce products that are created from scarce resources.
C)the opposite of normative economic goods.
D)not subject to scarcity.

Question 60

A "scarce" good is a good:

A)for which it is impossible to increase production any further given the available resources and technology.
B)for which there is a shortage at the current market price.
C)that is always in demand at any price.
D)for which available resources are insufficient to satisfy unlimited human desires for it.
E)that cannot be produced using mass production techniques.

Question 61

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

A)This is a true statement because most people don't want to suffer the penalties associated with criminal behavior.
B)This is a true statement because most individuals are good citizens and prefer not to commit crimes.
C)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.
D)This is a false statement because only people with certain genetic predispositions are likely to commit crimes.

Question 62

When economists refer to economic behavior, they mean that:

A)from time to time, everyone behaves irrationally.
B)changes in incentives influence behavior in unpredictable ways.
C)the pursuit of money is the most significant factor influencing decision making.
D)rational people try to anticipate the likely consequences of their actions.

Question 63

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

A)Self-interest is purely monetary in nature.
B)Self-interest can include benevolence.
C)Self-interest is a good predictor of human behavior in most situations.
D)Self-interest is not the same as selfishness.

Question 64

Scarcity:

A)is only a problem in communist countries.
B)is a problem in both communist and socialist countries, but not in market economies.
C)does not exist in wealthy countries.
D)will never be eradicated because humans develop new wants as productive capabilities improve.
E)implies that it is a problem in both communist and socialist countries, but not in market economies or wealthy countries.

Question 65

If a university begins a policy of permanently expelling any student caught cheating in any way, you would expect that:

A)no students would cheat.
B)fewer students would cheat.
C)there would be no difference in the amount of cheating.
D)minor cases of cheating would become a larger fraction of all cases of cheating attempted.
E)both fewer students would cheat and minor cases of cheating would become a larger fraction of all cases of cheating attempted.

Question 66

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
E)all of the answers are correct

Question 67

Raylene works at an accounting firm.She is considered what type of resource?

A)an entrepreneur
B)management
C)capital
D)labor

Question 68

Most of economic analysis assumes that people's actions are:

A)motivated by submerged emotional needs.
B)driven by magnetic forces generated by planetary movements.
C)motivated primarily by concern for the well-being of others.
D)motivated by self-interest.
E)motivated purely by money.

Question 69

When economists assume that people act rationally, it means they:

A)make decisions based on complete and accurate information.
B)make decisions that will not be regretted later on.
C)make decisions based on what they believe is best for themselves using available information.
D)make decisions based solely on what is best for society.
E)commit no errors in judgment.

Question 70

Which of the following would reflect self-interested behavior?

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.

Question 71

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

A)respond selfishly.
B)respond in predictable ways to changing circumstances.
C)it leads to inconsistent and unpredictable behavior.
D)all of the above.

Question 72

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

A)Scarcity and rarity
B)Opportunities and pay-offs
C)Values and information
D)Legal consequences

Question 73

Additions to human capital can be made through:

A)increases in pension benefits
B)monthly deposits into a savings account.
C)improved education and on-the-job training.
D)the purchase of tools and equipment by workers.

Question 74

Economists believe that individuals act as if they are motivated:

A)primarily by the opinions of their peers.
B)primarily by human feelings.
C)primarily by self-interest.
D)only by concern for the larger community.
E)by none of the above.

Question 75

Which of the following is not an example of a factor of production?

A)land
B)labor
C)capital
D)entrepreneurship
E)None of the answers is correct

Question 76

Which of the following is not a factor of production?

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

Question 77

Scarcity applies to:

A)only the poor.
B)everyone but the very wealthy.
C)the value of our time.
D)both the rich and poor.
E)the value of our time and to both the rich and poor.

Question 78

Which of the following is false?

A)Even intangible goods can be subjected to economic analysis.
B)Wealthy individuals who decide to donate money to charity do not face the constraints of scarcity.
C)Increases in production would not enable us to eliminate scarcity.
D)If we had unlimited resources, we would not have to choose among our desires.
E)Scarcity implies that "there is no such thing as a free lunch."

Question 79

A person behaving rationally will attempt to:

A)always avoid illegal actions.
B)explain or rationalize a decision.
C)refrain from normative analysis.
D)consider the future consequences of her/his behavior.
E)refrain from positive economic analysis.

Question 80

Scarcity exists for those with

A)lower incomes.
B)average incomes.
C)higher incomes.
D)all of the answers are correct.
E)lower incomes and average incomes only