1. Economics can best be defined as the study of how a. Society decides to use...

 

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1. Economics can best be defined as the study of how a. Society decides to use its scarce resources in an attempt to satisfy unlimited wants b. The government should deal with the problems of unemployment and inflation c. To make money in the stock market d. The government should eliminate the problem of scarce resources 2. What you give up to obtain an item is called your 3. a. True cost b. explicit cost c. opportunity cost d. direct cost Murad decides to spend 3 hours working overtime rather than watching a video with his friends. He earns $14 an hour. His opportunity cost of working is a. The $42 he earns working b. The $42 minus the enjoyment he would have received from watching the video c. The enjoyment he would have received had he watched the video d. Nothing, since he would have received less than $42 of enjoyment from the video 4. People make decisions at the margin by a. Following tradition 7. b. Experience c. Calculating dollar costs d. Comparing costs and benefits 5. A rational or optimizing decision maker takes an action only if the a. Marginal benefit is less than the marginal cost. b. Marginal benefit is greater than the marginal cost c. Average benefit is greater than the average cost d. None of the above 6. Economists understand that people respond to a. Laws b. incentives c. threats more than rewards d. positives, but not negatives Economic inefficiency a. Destroys equity (fairness) b. Wastes economic resources c. Maximizes the size of the economic pie d. Causes a least-cost production technique to be chosen 8. The term used to describe a situation in which markets fail to allocate resources efficiently is called a. Economic meltdown b. Market failure c. Corporate bankruptcy d. disequilibrium 9. Economists believe that scarcity forces everyone to a. Satisfy all their wants b. Abandon consumer sovereignty c. Lie about their wants d. Make choices e. Create unlimited resources 1. Economics can best be defined as the study of how a. Society decides to use its scarce resources in an attempt to satisfy unlimited wants b. The government should deal with the problems of unemployment and inflation c. To make money in the stock market d. The government should eliminate the problem of scarce resources 2. What you give up to obtain an item is called your 3. a. True cost b. explicit cost c. opportunity cost d. direct cost Murad decides to spend 3 hours working overtime rather than watching a video with his friends. He earns $14 an hour. His opportunity cost of working is a. The $42 he earns working b. The $42 minus the enjoyment he would have received from watching the video c. The enjoyment he would have received had he watched the video d. Nothing, since he would have received less than $42 of enjoyment from the video 4. People make decisions at the margin by a. Following tradition 7. b. Experience c. Calculating dollar costs d. Comparing costs and benefits 5. A rational or optimizing decision maker takes an action only if the a. Marginal benefit is less than the marginal cost. b. Marginal benefit is greater than the marginal cost c. Average benefit is greater than the average cost d. None of the above 6. Economists understand that people respond to a. Laws b. incentives c. threats more than rewards d. positives, but not negatives Economic inefficiency a. Destroys equity (fairness) b. Wastes economic resources c. Maximizes the size of the economic pie d. Causes a least-cost production technique to be chosen 8. The term used to describe a situation in which markets fail to allocate resources efficiently is called a. Economic meltdown b. Market failure c. Corporate bankruptcy d. disequilibrium 9. Economists believe that scarcity forces everyone to a. Satisfy all their wants b. Abandon consumer sovereignty c. Lie about their wants d. Make choices e. Create unlimited resources

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