Deck 1: What Is Economics

Question 1

Scarcity is a situation in which

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

Answer 1

people cannot satisfy all their wants.

Question 2

Scarcity can be eliminated through

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

Answer 2

None of the above because scarcity cannot be eliminated.

Question 3

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

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

Answer 3

make choices to cope with scarcity.

Question 4

An inducement to take a particular action is called

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

Question 5

The study of economics

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

Question 6

Scarcity is

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

Question 7

All economic questions arise because we

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

Question 8

An incentive

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

Question 9

Economics is best defined as

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

Question 10

Scarcity requires that people must

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

Question 11

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

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

Question 12

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

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

Question 13

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

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

Question 14

All economic questions are about

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

Question 15

The problem of "scarcity" applies

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

Question 16

Economists point out that scarcity confronts

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

Question 17

People must make choices because

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

Question 18

Scarcity exists because

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

Question 19

As an economic concept, scarcity applies to

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

Question 20

Fundamental economic problems basically arise from

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

Question 21

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

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

Question 22

Which of the following questions is a macroeconomic issue?

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

Question 23

In part, microeconomics is concerned with the study of

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

Question 24

Which of the following is a macroeconomic issue?

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

Question 25

In part, microeconomics is concerned with

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

Question 26

Macroeconomics is concerned with

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

Question 27

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

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

Question 28

Which of the following is a macroeconomic decision or concept?

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

Question 29

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

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

Question 30

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

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

Question 31

Macroeconomics differs from microeconomics in that:

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

Question 32

Which of the following is a microeconomic topic?

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

Question 33

Which of the following is a microeconomic topic?

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

Question 34

Which of the following questions is NOT a microeconomic question?

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

Question 35

Economics is the study of

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

Question 36

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 small shoe factory deciding how much leather to purchase for the next quarter's production need
C) a multinational company deciding where to relocate its world headquarter
D) All of the above answers are correct.

Question 37

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

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

Question 38

In broad terms the difference between microeconomics and macroeconomics is that

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

Question 39

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

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

Question 40

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

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

Question 41

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) "what"
B) "how"
C) "when"
D) "how many"

Question 42

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

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

Question 43

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

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

Question 44

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

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

Question 45

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

A) "what"
B) "how"
C) "where"
D) "for whom"

Question 46

Which of the following statements is correct?

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

Question 47

Which of the following is a macroeconomic issue?

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

Question 48

Macroeconomic topics include

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

Question 49

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) "what"
B) "how"
C) "for whom"
D) "where"

Question 50

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

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

Question 51

Microeconomics is the study of ________.

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

Question 52

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) "how"
B) "what"
C) "defense"
D) "for whom"

Question 53

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) "how"
B) "for whom"
C) "scarcity"
D) "what"

Question 54

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) "when"
B) "for whom"
C) "what"
D) "where"

Question 55

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) "how"
B) "scarcity"
C) "what"
D) "for whom"

Question 56

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

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

Question 57

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) "what"
B) "why"
C) "when"
D) "scarcity"

Question 58

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) "what"
B) "for whom"
C) "how"
D) "why"

Question 59

Scarcity is a situation in which ________.

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

Question 60

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) "what"
B) "how"
C) "where"
D) "for whom"

Question 61

Factors of production include

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

Question 62

Which of the following is NOT a factor of production?

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

Question 63

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

Question 64

Which factor of production earns profit?

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

Question 65

Which of the following is correct? Factors of production are

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

Question 66

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

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

Question 67

Which of the following is NOT a factor of production?

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

Question 68

Factors of production include all of the following EXCEPT

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

Question 69

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

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

Question 70

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

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

Question 71

Overtime worked by a JCPenney associate is considered ________ and earns ________.

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

Question 72

The "gifts of nature" are included as part of which factor of production?

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

Question 73

Copper falls into which factor of production category?

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

Question 74

In economics, the term "land" means

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

Question 75

Factors of production are grouped into four categories:

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

Question 76

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

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

Question 77

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

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

Question 78

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) "scarcity"
B) "what"
C) "why"
D) "how"

Question 79

Which of the following is NOT a factor of production?

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

Question 80

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) "for whom"
B) "when"
C) "where"
D) "how"