Test 1

A  promote the equal distribution of real assets and wealth.

B  contribute to a more equal distribution of income.

C  achieve full employment and price level stability.

D  reallocate resources from less desired to more desired uses.

A  market failure.

B  the invisible hand.

C  derived demand.

D  consumer sovereignty.

A  public goods.

B  property rights.

C  capital goods.

D  human capital.

A  Full employment.

B  Productive efficiency.

C  Full production.

D  International specialization and trade.

A  the presence of inflationary pressures.

B  the presence of technological change.

C  that resources are imperfectly substitutable among alternative uses.

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

A  resources are scarce.

B  wants are virtually unlimited.

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  The improvement of a society’s technological knowledge.

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

C  The reduction of unemployment.

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

A  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.

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

A  An oil drilling rig

B  A farmer

C  A machine for detecting earthquakes

D  Natural gas

A  Silicon (sand) used to make computer chips

B  A piece of software used by a firm

C  A corporate bond issued by a computer manufacturer

D  A computer programmer

A  objective and is based on facts

B  derived by deduction

C  derived by induction

D  subjective and is based on a value judgment

A  make simplifying assumptions

B  include all available information

C  expect to exactly duplicate the real world

D  must use mathematical equations

A  the economic perspective

B  policy economics

C  microeconomics

D  the scientific method

A  Anomaly

B  Hypothesis

C  Principle

D  Comparison

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

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

C  must be an avid runner

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

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

B  irrational because some neighbors refused his offer

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

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

A  contradicts the economic perspective

B  is an example of irrational behavior

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

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

A  households and businesses make rational decisions

B  wants are scarce relative to resources

C  most decisions do not involve sacrifices or trade-offs

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

A  imperfect information

B  opportunity costs.

C  marginal benefits that exceed marginal costs

D  normative economics

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

B  The distribution of income is the fairest.

C  Everyone receives an equal income.

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

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

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

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

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

A  Ditch diggers and doctors receive the same wage.

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

C  All industries are equally satiated with a particular resource

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

A  This is a positive statement

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

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

D  This is a normative statement.

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

B  Technological progress

C  Discovery of a new supply of resources.

D  An increase in the population and technological progress.

A  It’s fuel is money.

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

C  It’s purpose is to produce material wealth.

D  The central processing unit is the price mechanism.

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

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

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

B  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.

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

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

A  becomes straighter.

B  shifts outward.

C  becomes more curved.

D  starts to bow inward.

A  allocate its resources efficiently.

B  operate at full employment.

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

D  avoid any waste or misallocation of resources.

A  Economic resources are not completely adaptable to alternative uses.

B  Economic resources are sometimes misallocated.

C  Economic resources are perfectly adaptable to alternative uses.

D  Economic resources are finite.

A  The law of increasing opportunity costs

B  The law of increasing returns

C  The law of diminishing costs

D  Ockham’s Razor

A  Politics

B  Investing

C  How people deal with scarcity

D  Getting rich