Economics

1) All economic questions arise from the fact that

• A) inflation is inevitable.

• B) both wants and resources are unlimited

• C) unemployment is inevitable.

• D) resources are scarce.

2) The opportunity cost of any action is

• A) all the possible alternatives forgone.

• B) the best alternative forgone.

• C) the time required but not the monetary cost.

• D) the monetary cost but not the time required.

3) In the production of goods and services, trade-offs exist because

• A) not all production is efficient.

• B) society has only a limited amount of productive resources.

• C) buyers and sellers must often negotiate prices.

• D) human wants and needs are limited at a particular point in time.

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

• A) ʺwhatʺ

• B) ʺhowʺ

• C) ʺwhereʺ

• D) ʺfor whomʺ

5) 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) ʺwhereʺ

• D) ʺfor whomʺ

6) 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) ʺwhatʺ

• B) ʺhowʺ

• C) ʺwhereʺ

• D) ʺfor whomʺ

7) 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

8) When an action is chosen, the value of the best alternative NOT chosen is the

• A) implicit cost.

• B) explicit cost.

• C) accounting cost.

• D) opportunity cost.

9) Macroeconomics differs from microeconomics in that macroeconomics

• A) includes second round effects while microeconomics does not.

• B) analyzes marginal as well as average benefits and costs.

• C) studies the national economy while microeconomics analyzes the decisions of individual people and firms.

• D) emphasizes relative prices instead of price indices.

10) A point inside a production possibility frontier

• A) could indicate that some resources are unemployed.

• B) is unattainable.

• C) is better than points on the production possibility frontier.

• D) implies that too much capital and not enough labor are being used.