Test 1

A  reallocate resources from less desired to more desired uses.

B  contribute to a more equal distribution of income.

C  promote the equal distribution of real assets and wealth.

D  achieve full employment and price level stability.

A  market failure.

B  derived demand.

C  consumer sovereignty.

D  the invisible hand.

A  public goods.

B  human capital.

C  capital goods.

D  property rights.

A  Productive efficiency.

B  Full employment.

C  International specialization and trade.

D  Full production.

A  that resources are imperfectly substitutable among alternative uses.

B  the presence of inflationary pressures.

C  the presence of technological change.

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

A  wants are virtually unlimited.

B  resources are scarce.

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

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

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

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

C  The reduction of unemployment.

D  The improvement of a society’s technological knowledge.

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

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

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

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  A machine for detecting earthquakes

B  A farmer

C  An oil drilling rig

D  Natural gas

A  A piece of software used by a firm

B  A corporate bond issued by a computer manufacturer

C  Silicon (sand) used to make computer chips

D  A computer programmer

A  objective and is based on facts

B  subjective and is based on a value judgment

C  derived by induction

D  derived by deduction

A  expect to exactly duplicate the real world

B  include all available information

C  must use mathematical equations

D  make simplifying assumptions

A  the scientific method

B  the economic perspective

C  policy economics

D  microeconomics

A  Anomaly

B  Comparison

C  Hypothesis

D  Principle

A  must be an avid runner

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

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

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

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

D  irrational because some neighbors refused his offer

A  is an example of irrational behavior

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

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

D  contradicts the economic perspective

A  most decisions do not involve sacrifices or trade-offs

B  households and businesses make rational decisions

C  wants are scarce relative to resources

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

A  imperfect information

B  marginal benefits that exceed marginal costs

C  opportunity costs.

D  normative economics

A  The distribution of income is the fairest.

B  Everyone receives an equal income.

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

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

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

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

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

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

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 are equally satiated with a particular resource

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

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

B  This is a positive statement

C  This is a normative statement.

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

A  Technological progress

B  An increase in the population and technological progress.

C  Discovery of a new supply of resources.

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

A  The central processing unit is the price mechanism.

B  It’s fuel is money.

C  It’s purpose is to produce material wealth.

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

A  models

B  formulas

C  calculations

D  biases

A  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.

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

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

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

A  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.

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

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

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

A  becomes straighter.

B  starts to bow inward.

C  shifts outward.

D  becomes more curved.

A  avoid any waste or misallocation of resources.

B  allocate its resources efficiently.

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

D  operate at full employment.

A  Economic resources are sometimes misallocated.

B  Economic resources are perfectly adaptable to alternative uses.

C  Economic resources are not completely adaptable to alternative uses.

D  Economic resources are finite.

A  Ockham’s Razor

B  The law of increasing opportunity costs

C  The law of diminishing costs

D  The law of increasing returns

A  Politics

B  How people deal with scarcity

C  Getting rich

D  Investing