Test 1

A  achieve full employment and price level stability.

B  reallocate resources from less desired to more desired uses.

C  contribute to a more equal distribution of income.

D  promote the equal distribution of real assets and wealth.

A  market failure.

B  consumer sovereignty.

C  derived demand.

D  the invisible hand.

A  property rights.

B  public goods.

C  human capital.

D  capital goods.

A  Full employment.

B  Full production.

C  International specialization and trade.

D  Productive efficiency.

A  the presence of inflationary pressures.

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

C  that resources are imperfectly substitutable among alternative uses.

D  the presence of technological change.

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

B  wants are virtually unlimited.

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

D  resources are scarce.

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  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  an economy will automatically obtain full employment of its resources.

A  A farmer

B  A machine for detecting earthquakes

C  Natural gas

D  An oil drilling rig

A  Silicon (sand) used to make computer chips

B  A computer programmer

C  A corporate bond issued by a computer manufacturer

D  A piece of software used by a firm

A  derived by deduction

B  objective and is based on facts

C  subjective and is based on a value judgment

D  derived by induction

A  include all available information

B  make simplifying assumptions

C  must use mathematical equations

D  expect to exactly duplicate the real world

A  policy economics

B  the economic perspective

C  the scientific method

D  microeconomics

A  Principle

B  Anomaly

C  Comparison

D  Hypothesis

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

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

A  irrational because some neighbors refused his offer

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

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

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

A  contradicts the economic perspective

B  is an example of irrational behavior

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

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

A  wants are scarce relative to resources

B  households and businesses make rational decisions

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

D  most decisions do not involve sacrifices or trade-offs

A  marginal benefits that exceed marginal costs

B  imperfect information

C  opportunity costs.

D  normative economics

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

B  Everyone receives an equal income.

C  The distribution of income is the fairest.

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

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

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

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 receive an equal amount of a particular resource.

D  All industries are equally satiated with a particular resource

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

B  This is a normative statement.

C  This is a positive statement

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

A  Discovery of a new supply of resources.

B  An increase in the population and technological progress.

C  Technological progress

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  calculations

B  models

C  formulas

D  biases

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

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

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

D  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.

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

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 ruled by the corporation and must play by its set of rules.

D  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.

A  becomes straighter.

B  starts to bow inward.

C  shifts outward.

D  becomes more curved.

A  operate at full employment.

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

C  allocate its resources efficiently.

D  avoid any waste or misallocation of resources.

A  Economic resources are finite.

B  Economic resources are sometimes misallocated.

C  Economic resources are not completely adaptable to alternative uses.

D  Economic resources are perfectly adaptable to alternative uses.

A  The law of diminishing costs

B  The law of increasing returns

C  Ockham’s Razor

D  The law of increasing opportunity costs

A  Politics

B  Investing

C  How people deal with scarcity

D  Getting rich