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| 1 | |
Economics is primarily the study of: |
| | A) | how scarcity can be eliminated. |
| | B) | how firms manipulate prices. |
| | C) | how government influences resource allocation decisions. |
| | D) | the problem of scarce resources relative to human wants. |
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| 2 | |
Suppose you have a $20 iTunes gift card with which you can buy (download) songs or videos. Songs cost $1.00 each and videos cost $2.00 each. The opportunity cost of one video: |
| | A) | increases as more videos are purchased. |
| | B) | is $1.00. |
| | C) | is constant and equal to ½ song. |
| | D) | is constant and equal to 2 songs. |
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| 3 | |
You should decide to study an extra hour tonight: |
| | A) | if the marginal cost of studying an extra hour exceeds its marginal benefit. |
| | B) | if the marginal benefit of studying an extra hour exceeds its marginal cost. |
| | C) | if you got a lower than expected grade on your last exam. |
| | D) | because studying harder will improve your test scores. |
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| 4 | |
Answer the next question on the basis of the data given in the following production possibilities table:
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The data in the table indicate that increasing production of capital goods requires: |
| | A) | increasing sacrifices of consumer goods. |
| | B) | decreasing sacrifices of consumer goods. |
| | C) | constant sacrifices of consumer goods. |
| | D) | no sacrifices of consumer goods. |
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| 5 | |
Consider the problem Marsha faces of how to allocate her weekly allowance between books and videos. An increase in Marsha's allowance will: |
| | A) | shift her budget line to the right. |
| | B) | shift her budget line to the left. |
| | C) | rotate her budget line, allowing her to buy more books but not more videos. |
| | D) | rotate her budget line, allowing her to buy more videos but not more books. |
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| 6 | |
The negative slope of the production possibilities curve illustrates that: |
| | A) | some resources are always unemployed. |
| | B) | when resources are fully employed, an economy can produce more of one thing only by producing less of something else. |
| | C) | opportunity costs are constant. |
| | D) | businesses can sell more goods when their prices are low. |
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| 7 | |
A microeconomist would most likely study: |
| | A) | how consumers respond to a change in gasoline prices. |
| | B) | the effects of an income tax reduction on the size of the national budget deficit. |
| | C) | the effects of aggregate consumer debt on overall consumption spending. |
| | D) | the relationship between the size of the money supply and the rate of inflation. |
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| 8 | |
Refer to the following production possibilities diagram:
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Production of which of the points in the diagram is currently unattainable given the economy's resources? |
| | A) | Point A |
| | B) | Point B |
| | C) | Point C |
| | D) | Point D |
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| 9 | |
The fundamental problem of economics implies that: |
| | A) | governments must be relied upon to supply essential goods and services. |
| | B) | inflation and unemployment are unavoidable. |
| | C) | growing populations will deplete natural resources. |
| | D) | individuals and communities must make choices among competing alternatives. |
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| 10 | |
Margaret decides to stay home and study for her exam rather than going out to a movie with her friends. Her dilemma is an example of: |
| | A) | the economic perspective. |
| | B) | marginal analysis. |
| | C) | opportunity cost. |
| | D) | allocative efficiency. |
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