Test 1

A  promote the equal distribution of real assets and wealth.

B  contribute to a more equal distribution of income.

C  reallocate resources from less desired to more desired uses.

D  achieve full employment and price level stability.

A  market failure.

B  derived demand.

C  consumer sovereignty.

D  the invisible hand.

A  capital goods.

B  property rights.

C  public goods.

D  human capital.

A  Productive efficiency.

B  Full production.

C  Full employment.

D  International specialization and trade.

A  that resources are imperfectly substitutable among alternative uses.

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

C  the presence of technological change.

D  the presence of inflationary pressures.

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

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

C  resources are scarce.

D  wants are virtually unlimited.

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

B  The improvement of a society’s technological knowledge.

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

D  The reduction of unemployment.

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

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

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

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 computer programmer

C  Silicon (sand) used to make computer chips

D  A corporate bond issued by a computer manufacturer

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  expect to exactly duplicate the real world

B  include all available information

C  must use mathematical equations

D  make simplifying assumptions

A  microeconomics

B  the scientific method

C  policy economics

D  the economic perspective

A  Principle

B  Anomaly

C  Hypothesis

D  Comparison

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  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  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  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  is an example of irrational behavior

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

B  households and businesses make rational decisions

C  most decisions do not involve sacrifices or trade-offs

D  wants are scarce relative to resources

A  normative economics

B  imperfect information

C  opportunity costs.

D  marginal benefits that exceed marginal costs

A  The distribution of income is the fairest.

B  Everyone receives an equal income.

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

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

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

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

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

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

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

B  This is a normative statement.

C  This is a positive statement

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

A  Technological progress

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

C  An increase in the population and technological progress.

D  Discovery of a new supply of resources.

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

B  It’s purpose is to produce material wealth.

C  The central processing unit is the price mechanism.

D  It’s fuel is money.

A  models

B  biases

C  formulas

D  calculations

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.

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, 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 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 straighter.

B  shifts outward.

C  becomes more curved.

D  starts to bow inward.

A  avoid any waste or misallocation of resources.

B  operate at full employment.

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

D  allocate its resources efficiently.

A  Economic resources are sometimes misallocated.

B  Economic resources are perfectly adaptable to alternative uses.

C  Economic resources are finite.

D  Economic resources are not completely adaptable to alternative uses.

A  Ockham’s Razor

B  The law of increasing returns

C  The law of diminishing costs

D  The law of increasing opportunity costs

A  Getting rich

B  Politics

C  How people deal with scarcity

D  Investing