Economics - MCQ L1 Intro

Econ MCQ - L1 Intro1) All economic questions are about A) how to make money. B) what to produce. C) how to cope with scarcity. D) how to satisfy all our wants. Answer: 2) When an economist talks of scarcity, the economist is referring to the A) ability of society to employ all of its resources. B) ability of society to consume all that it produces. C) inability of society to satisfy all human wants because of limited resources. D) ability of society to continually make technological breakthroughs and increase production. Answer: 3) An inducement to take a particular action is called A) the marginal benefit. B) the marginal cost. C) opportunity cost. D) an incentive. Answer: 4) Economics is best defined as A) how people make money and profits in the stock market. B) making choices from an unlimited supply of goods and services. C) making choices with unlimited wants but facing a scarcity of resources. D) controlling a budget for a household. Answer: 5) Studying the determination of prices in individual markets is primarily a concern of A) positive economics. B) negative economics. C) macroeconomics. D) microeconomics. Answer: 6) Which of the following questions is NOT a microeconomic question? A) Can the Federal Reserve keep income growing by cutting interest rates? B) How would a tax on e-commerce affect eBay? C) What is Britney's opportunity cost of having another baby? D) Does the United States have a comparative advantage in information technology services? Answer: 7) In broad terms the difference between microeconomics and macroeconomics is that A) they use different sets of tools and ideas. B) microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy. C) macroeconomics studies the effects of government regulation and taxes on the price of individual goods and services whereas microeconomics does not. D) microeconomics studies the effects of government taxes on the national unemployment rate. Answer: 8) Macroeconomic topics includeA) total, nationwide employment. B) studying what factors influence the price and quantity of automobiles. C) studying the determination of wages and production costs in the software industry. D) the impact of government regulation of markets. Answer: 9) Keeping in mind economists' definition of factors of production, which of the following is NOT a factor of production? A) money B) low-skilled labor C) coal D) an engineer Answer: 10) The income earned by the people who sell the services of the factor of production ________ is called ________. A) capital; rent B) entrepreneurship; wages C) land; profit D) entrepreneurship; profit Answer: 11) Which of the following best defines capital as a factor of production? A) The gifts of nature that businesses use to produce goods and services. B) The knowledge and skills that people obtain from education and use in production of goods and services. C) Financial assets used by businesses. D) Instruments, machines, and buildings used in production. Answer: 12) Human capital is A) all capital owned by individuals, but not by corporations or governments. B) all capital owned by individuals or corporations, but not by governments. C) machinery that meets or exceeds federal safety standards for use by humans. D) the skill and knowledge of workers. Answer: 13) Which of the following is NOT an investment in human capital? A) a business student takes a seminar in using a laptop computer B) a student purchases a laptop computer C) a computer science student learns how to repair a laptop computer D) a computer science student takes a course on programming a laptop computer Answer: 14) Entrepreneurs do all of the following EXCEPT A) organize labor, land, and capital. B) come up with new ideas about what and how to produce. C) bear risk from business decisions. D) own all the other resources used in the production process. Answer: 15) In economics we learn that A) tradeoffs allow us to have more of everything we value. B) tradeoffs allow us to avoid the problem of opportunity cost. C) opportunity costs are all of the possible alternatives given up when we make a choice. D) None of the above answers is correct. Answer: 16) The loss of the highest-valued alternative defines the concept of A) marginal benefit. B) scarcity. C) entrepreneurship. D) opportunity cost. Answer: 17) Opportunity cost means the A) accounting cost minus the marginal cost. B) highest-valued alternative forgone. C) accounting cost minus the marginal benefit. D) monetary costs of an activity. Answer: 18) The night before a midterm exam, you decide to go to the movies instead of studying for the exam. You score 60 percent on your exam. If you had studied the night before, you'd have scored 70 percent. What was the opportunity cost of your evening at the movies? A) 10 percent off your grade B) 60 percent C) 70 percent D) zero Answer: 19) You decide to take a vacation and the trip costs you $2,000. While you are on vacation, you do not go to work where you could have earned $750. In terms of dollars, the opportunity cost of the vacation is A) $2,000. B) $750. C) $2,750. D) $1,250 Answer: 20) Jill, an economics student, has already spent 5 hours cleaning her room. In deciding whether or not to continue cleaning for another hour, she applies the economic principle of A) scarcity. B) ceteris paribus. C) choosing at the margin. D) productivity. Answer: 21) In economics, positive statements are about A) the way things ought to be. B) the way things are. C) macroeconomics, not microeconomics. D) microeconomics, not macroeconomics. Answer: 22) Which of the following are true regarding "positive" statements? I. They describe what "ought to be." II. They describe what is believed about how the world appears. III. They can be tested as to their truthfulness. A) I and II B) II and III C) I and III D) I, II and III Answer: 23) Which of the following is a positive statement? A) The United States should fight inflation even if it raises unemployment. B) What to do with Social Security is the most important economic issue today.C) A 5 percent increase in income leads to a 3 percent increase in the consumption of orange juice. D) Because they decrease productivity, labor unions should be eliminated. Answer: 24) Panasonic sends its HDTV salespeople to training sessions. This is an example of A) a macroeconomic decision. B) scarcity. C) a firm investing in workers' human capital D) entrepreneurship. Answer: 25) "As part of the financial crisis bailout plan in 2009, the Federal Reserve bought stakes in banks. This policy will result in an increase in the inflation rate." This is an example of A) a positive statement. B) a normative statement. C) a microeconomic statement. D) an economic model.Answer: 26) "OPEC should supply more oil so that the world's economies can grow more rapidly." This is an example of A) a normative statement. B) a positive statement. C) a decision at the margin. D) OPEC overcoming scarcity Answer: Question Answer 1 C 2 C 3 D 4 C 5 D 6 A 7 B 8 A 9 A 10 D 11 D 12 D 13 B 14 D 15 D 16 D 17 B 18 A 19 C 20 C 21 B 22 B 23 C 24 C 25 A 26 A