Chapter 1: Multiple Choice Questions 1) 1) An incentive A) could be either a reward or a penalty. B) could be a reward but could not be a penalty. C) could be a penalty but could not be a reward. D) is the opposite of a trade-off. 2) 2) The most fundamental economic problem is A) scarcity B) health C) security. D) the fact the United States buys more goods from foreigners than we sell to foreigners. 3) 3) Economics is best defined as the study of how people, businesses, governments, and societies A) use their infinite resources. B) choose abundance over scarcity. make choices to cope with scarcity. D) attain wealth 4) 4) Economists point out that scarcity confronts A) both the poor and the rich. B) the rich but not the poor. C) neither the poor nor the rich. D) the poor but not the rich. 5) 5) Scarcity requires that people must A) trade. C) make choices. B) cooperate. D) compete. 6) 6) As an economic concept, scarcity applies to A) money but not time. B) time but not money. C) both money and time. D) neither time nor money. 7) 8) 7) Economics is the study of A) the choices we make because of scarcity. B) affluence in a morally bankrupt world. C) the distribution of surplus goods to those in need. D) ways to reduce wants to eliminate the problem of scarcity. 8) Which of the following is a macroeconomic topic? A) The reasons for the rise in average prices. B) Whether the army should buy more tanks or more rockets. C) The reasons for a rise in the price of orange juice. D) Why plumbers earn more than janitors. 9) Which of the following is a microeconomic topic? A) The reasons why Kathy buys less orange juice. B) The reasons why total employment decreases. C) The reasons for a decline in average prices, D) The effect of the government budget deficit on inflation. 9)