Test 1

A  achieve full employment and price level stability.

B  contribute to a more equal distribution of income.

C  promote the equal distribution of real assets and wealth.

D  reallocate resources from less desired to more desired uses.

A  consumer sovereignty.

B  the invisible hand.

C  derived demand.

D  market failure.

A  public goods.

B  property rights.

C  capital goods.

D  human capital.

A  Full production.

B  Productive efficiency.

C  International specialization and trade.

D  Full employment.

A  that more output could be produced with the available resources.

B  that resources are imperfectly substitutable among alternative uses.

C  the presence of inflationary pressures.

D  the presence of technological change.

A  resources are scarce.

B  resources are not generally equally efficient in producing every good.

C  the originator of the idea drew it this way and modern economists follow this convention.

D  wants are virtually unlimited.

A  An increase in the quantity of a society’s labor force.

B  The improvement of a society’s technological knowledge.

C  An upgrading of the quality of a nation’s human resources.

D  The reduction of unemployment.

A  an economy’s capacity to produce increases in proportion to its population size.

B  an economy will automatically obtain full employment of its resources.

C  the production of more of any one good will in time require smaller and smaller sacrifices of other goods.

D  if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.

A  Natural gas

B  A machine for detecting earthquakes

C  A farmer

D  An oil drilling rig

A  Silicon (sand) used to make computer chips

B  A corporate bond issued by a computer manufacturer

C  A piece of software used by a firm

D  A computer programmer

A  derived by deduction

B  objective and is based on facts

C  derived by induction

D  subjective and is based on a value judgment

A  expect to exactly duplicate the real world

B  make simplifying assumptions

C  must use mathematical equations

D  include all available information

A  the economic perspective

B  microeconomics

C  policy economics

D  the scientific method

A  Comparison

B  Anomaly

C  Hypothesis

D  Principle

A  decided that the marginal cost of running one more mile would outweigh the benefit of the additional mile

B  must be an avid runner

C  decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile

D  was not very tired, so the marginal cost of the extra mile was very low

A  irrational because some neighbors refused his offer

B  rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else’s wants.

C  greedy because he is asking for a high wage that some of his neighbors can’t afford to pay

D  selfish because he is asking for a wage that is higher than others might charge

A  implies that electronic media sources are displacing print sources for many consumers

B  implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.

C  is an example of irrational behavior

D  contradicts the economic perspective

A  the decision to engage in one activity means forgoing some other activity

B  most decisions do not involve sacrifices or trade-offs

C  households and businesses make rational decisions

D  wants are scarce relative to resources

A  imperfect information

B  normative economics

C  marginal benefits that exceed marginal costs

D  opportunity costs.

A  The distribution of income is the fairest.

B  Everyone receives an income that is equal to the value of their productive contribution to society.

C  Everyone receives an income that is as high as possible.

D  Everyone receives an equal income.

A  The firm uses the most labor intensive method of production.

B  Firms use “least cost” method of producing goods and services.

C  The production of goods and services uses the most “capital intensive” techniques.

D  The firm is able to charge the highest price possible for the product.

A  All industries are willing to pay the same price for all resources

B  Ditch diggers and doctors receive the same wage.

C  All industries receive an equal amount of a particular resource.

D  All industries are equally satiated with a particular resource

A  This is a normative statement.

B  This is a positive statement

C  The relationship between consumer spending and the unemployment rate is negative.

D  The line on a graph representing the relationship between these two variables would have a negative slope.

A  An increase in the population and technological progress.

B  Discovery of a new supply of resources.

C  Technological progress

D  An increase in the population, technological progress, and discovery of a new supply of resources.

A  It’s purpose is to produce material wealth.

B  The central processing unit is the price mechanism.

C  The accelerator/decelerator is the level of total spending. 

D  It’s fuel is money.

A  biases

B  calculations

C  models

D  formulas

A  allocate and utilize society’s scarce resources as efficiently as they can.

B  Respond quickly and accurately to the dollar votes of the consumer, allocate and utilize society’s scarce resources as efficiently as they can, and continually increase their productivity through technological progress and better uses of society’s scarce resources.

C  continually increase their productivity through technological progress and better uses of society’s scarce resources.

D  respond quickly and accurately to the dollar votes of the consumer.

A  the fact that the consumer is ruled by the corporation and must play by its set of rules.

B  the fact that corporations impose their own wills on the consumer in determining what will be produced.

C  the fact that the consumer is king in a market economy, and this dictator will harshly punish any firm that does not quickly respond to his dollar votes.

D  the fact that the government is ruled by the consumer, which in turn is ruled by the corporation.

A  becomes more curved.

B  becomes straighter.

C  starts to bow inward.

D  shifts outward.

A  operate at full employment.

B  allocate its resources efficiently.

C  avoid any waste or misallocation of resources.

D  Operate at full employment, allocate its resources efficiently and avoid any waste or misallocation of resources.

A  Economic resources are sometimes misallocated.

B  Economic resources are not completely adaptable to alternative uses.

C  Economic resources are finite.

D  Economic resources are perfectly adaptable to alternative uses.

A  The law of increasing returns

B  The law of diminishing costs

C  Ockham’s Razor

D  The law of increasing opportunity costs

A  How people deal with scarcity

B  Investing

C  Getting rich

D  Politics