Econ Unit 1 Test

Incentives matter

• only when people are greedy and selfish.
• only in a free market system.
• only in the private sector.
• to all human beings regardless of environment.

Which of the following is true?

• Changes in personal costs and benefits will exert a predictable influence on the choices of people.
• If one individual gains from an economic activity, then someone else must lose.
• If a good is provided free to an individual by government, its production will not consume valuable scarce resources.
• If the intentions behind a policy are good, you can be assured that the outcome will be desirable.

If market equilibrium is achieved then which of the following is true?

• Supply has met Demand of a good or service
• Supply exceeds demand of a good or service
• Demand exceeds supply of a good or service
• The government has instituted a price floor causing a surplus
• The government has instituted a price ceiling causing a shortage.

The basic task of economics is to

• explain the tax and expenditure policies of governments.
• predict the future movements of the stock market.
• explain the forces that underlie human decision making.
• report on key economic indicators, such as GDP and unemployment.

Maria wishes to buy gasoline and have her car washed. She finds that if she buys 9 gallons of gasoline at $2.50 per gallon, the car wash costs $2, but if she buys 10 gallons of gasoline, the car wash is free. For Maria, the marginal cost of the tenth gallon of gasoline is

• zero.
• 50 cents
• $2.00
• $2.50

Which of the following popular expressions best reflects the idea of marginalism?

• "Anything worth doing is worth doing to the best of one’s ability.”
• “What are you going to do for me next?”
• ​“There is no such thing as a free lunch.”
• “The best things in life are free.”

The expression, "There's no such thing as a free lunch," implies that

• everyone has to pay for his own lunch.
• the person consuming a good must always pay for it.
• opportunity costs are incurred when resources are used to produce goods and services.
• no one has time for a good lunch anymore.

Which of the following actions has an opportunity cost?

• Taking a morning run
• Buying a smartphone
• Enjoying a beautiful rainbow
• All of the above

Which of the following statements is correct?

• The human desire for goods and services is limited while the resources required for their production are unlimited.
• The human desire for goods and services is virtually unlimited while the resources required for their production are limited.
• Both the human desire for goods and services and the resources required for their production are virtually unlimited.
• Both the human desire for goods and services and the resources required for their production are limited.

What do economists mean when they state that a good is scarce?

• There is a shortage or insufficient supply of the good at the existing price.
• There is a surplus of a good at a specific price.
• It is impossible to expand the availability of the good beyond the current amount.
• The amount of the good that people would like exceeds the supply freely available from nature.