BJU Economics Chapter 1

According to the text, economics is

• the principles describing how people, businesses, and governments ought to make financial choices.

• the science of how and why people, businesses, and governments make the choices they do.

• the description of systems man creates in order to produce, buy, and sell goods and services.

• the study of theories that guide nations' financial and monetary laws and systems.

Which of the following examples falls into the sphere of economics?

• the rise and fall of the stock market

• a mother's trip to the supermarket

• a university class on business management

• all the above

Which two basic economic principles create the need for choices?

• scarcity and contentment

• utility and opportunity

• unlimited wants and limited resources

• subjective value and utility

After twelve years of faithful service, your family's car finally collapses beyond hope of repair and must be taken to the junkyard. Which economic term does this vehicle now best illustrate?

• a free good

• a nuisance good

• an economic good

• a scarce good

The economic cost of a good or service is

• the price charged for it.

• the cumulative cost of making and marketing it.

• the regret a consumer feels after choosing it.

• the value people place on it.

A family must quickly leave its home due to a fire. On her way out the door, the mother grabs the family photo albums but leaves several expensive paintings behind. What economic concept do her actions best illustrate?

• intrinsic value

• utility

• unlimited wants

• subjective value

According to the Austrian economist Carl Menger, what determines the value of an object?

• the labor of the producer

• the quality of the raw materials

• the utility for the user

• the public good accomplished

Your family decides to take a trip to Europe this summer instead of next because airline rates are currently low. What economic concept do the lower airline rates illustrate in your decision-making process?

• opportunity cost

• opportunity benefit

• hidden cost

• intrinsic value

What principle does Henry Hazlitt remind readers of in his story about the broken window?

• scarcity

• stewardship

• hidden costs

• the cost of labor

What approach to economic study focuses on value judgments?

• microeconomics

• positive economics

• macroeconomics

• normative economics