ECON 101 Achieve Practice Questions(100% Guaranteed)
Economics is the
(A) study of the distribution of unlimited resources to satisfy limited wants.
(B) study of political organization.
(C) exclusive study of financial markets and instruments.
(D) study of the consumption, production, and distribution of goods and services. correct
answers (D) study of the consumption, production, and distribution of goods and services.
Why:
* Many economists have many different definitions for economics. At its core, economics is the
study of the consumption, production, and distribution of goods and services.
* Some economists define economics as the study of the distribution of limited resources
(scarcity) to satisfy unlimited wants.
An economy is
(A) the political organization of a nation.
(B) the geographical boundaries of a nation.
(C) the system society uses to coordinate productive activities.
(D) the group of individuals who lead a society. correct answers (C) the system society uses to
coordinate productive activities.
Why:
* An economy is the system by which society coordinates productive activities. It can be a
market economy where buyers and sellers trade to determine what is produced. An economy can
also be a command economy where a central authority decides what is produced.
Daniel has decided to open his own bakery using locally sourced ingredients and supplies. He
provides income and jobs to local suppliers. He also provides his community with a place to buy
delicious baked goods. This is an example of
(A) the invisible hand.
(B) a command economy.
(C) market failure.
(D) a recession. correct answers (A) the invisible hand.
Why:
* Notice, though, that Daniel and his suppliers do not set out to help society. They are motivated
by profit. Despite acting "selfishly" by trying to earn profit, they each are taking actions that
ultimately benefit society.
* The invisible hand is a term coined by Adam Smith that describes how people acting in their
own interest often make choices that benefit society as well.
,There are limited resources to satisfy all of society's wants.
(A) business cycle
(B) trade-off
(C) margins
(D) scarcity
(E) entrepreneurship
(F) recession
Comparing the benefits and costs of engaging in an activity
(A) scarcity
(B) trade-off
(C) recession
(D) margins
(E) financial capital
(F) resources correct answers (D) and (B)
Why:
* Economics is the study of how people use their limited resources to satisfy their unlimited
wants. In other words, it is the study of how people and society satisfy wants under conditions of
scarcity.
* Because of scarcity, people have to decide between alternatives, and may have to give up one
good in order to have another. Such decisions involve weighing the benefits of an activity against
its costs. This is called a trade-off.
Which is NOT an example of a resource?
(A) land
(B) firms
(C) labor
(D) human capital
(E) machinery correct answers (B) firms
Why:
A resource is anything used in the production of a product or service. The most common
examples of resources are land, labor, capital, and human capital. Firms are not examples of
resources in the economic sense. Firms typically turn resources into goods and services that are
sold in a market.
The $15 Kelly's Big Burger gift card that your friend gave you for your birthday expires today.
You can either use the gift card to buy yourself dinner at Kelly's Big Burger, or you can stay
home and eat a delicious home-cooked meal. What is the opportunity cost of eating the home-
cooked meal?
, (A) There is no opportunity cost since you did not pay for the gift card.
(B) The value of a $!5 meal at Kelly's Big Burger.
(C) The time it takes to eat your home-cooked meal, and the value of a $15 meal at Kelly's Big
Burger.
(D) the value of the ingredients that go into the home-cooked meal, and the value of a $15 meal
at Kelly's Big Burger.
(E) The value of the ingredients that go into the home-cooked meal. correct answers (D) the
value of the ingredients that go into the home-cooked meal, and the value of a $15 meal at
Kelly's Big Burger.
Why:
The opportunity cost of a decision is the value of the next best alternative. In this case, your next
best alternative is to get a $15 dinner at Kelly's Big Burger, and since you didn't use the
ingredient to make dinner, you can use the ingredients later. So, the opportunity cost includes the
value of the ingredients that went into the home-cooked meal, and the value of a $15 dinner at
Kelly's Big Burger. You can think of opportunity cost a the complete cost of doing something.
Which demonstrates a scenario with no opportunity cost?
(A) It's Friday night and you stay up late talking and hanging out with your friends.
(B) The chemistry club is giving out free pizza for lunch to all who come to their table to get it.
(C) Naomi, age 8, is at a bookstore and chooses to buy a book about a young wizard instead of
buying a math textbook.
(D) Chez Moi and Chez Nous, two premiere French restaurants with three Michelin stars, both
offer you a full time sous chef job at the same salary. You are ecstatic because you know it is a
win-win scenario and choose to work for Chez Nous.
(E) All of these scenarios have an opportunity cost. correct answers (E) All of these scenarios
have an opportunity cost.
Why:
All scenarios have an opportunity cost; that is part of individual choice. An opportunity cost is
what you have to give up to get what you want. While an opportunity cost can involve finances,
it doesn't necessarily have to be monetary, but could be one of many other costs, such as time or
resources.
For which of the following decisions is marginal analysis least beneficial?
(A) deciding which college to attend
(B) deciding between watching another episode of your favorite TV series and going to bed
(C) deciding whether to do more sit-ups at the gym
(D) deciding how fast to go on the freeway
(E) deciding whether to take a lunch break or knock on another door as a door-to-door
salesperson correct answers (A) deciding which college to attend
Why:
Economics is the
(A) study of the distribution of unlimited resources to satisfy limited wants.
(B) study of political organization.
(C) exclusive study of financial markets and instruments.
(D) study of the consumption, production, and distribution of goods and services. correct
answers (D) study of the consumption, production, and distribution of goods and services.
Why:
* Many economists have many different definitions for economics. At its core, economics is the
study of the consumption, production, and distribution of goods and services.
* Some economists define economics as the study of the distribution of limited resources
(scarcity) to satisfy unlimited wants.
An economy is
(A) the political organization of a nation.
(B) the geographical boundaries of a nation.
(C) the system society uses to coordinate productive activities.
(D) the group of individuals who lead a society. correct answers (C) the system society uses to
coordinate productive activities.
Why:
* An economy is the system by which society coordinates productive activities. It can be a
market economy where buyers and sellers trade to determine what is produced. An economy can
also be a command economy where a central authority decides what is produced.
Daniel has decided to open his own bakery using locally sourced ingredients and supplies. He
provides income and jobs to local suppliers. He also provides his community with a place to buy
delicious baked goods. This is an example of
(A) the invisible hand.
(B) a command economy.
(C) market failure.
(D) a recession. correct answers (A) the invisible hand.
Why:
* Notice, though, that Daniel and his suppliers do not set out to help society. They are motivated
by profit. Despite acting "selfishly" by trying to earn profit, they each are taking actions that
ultimately benefit society.
* The invisible hand is a term coined by Adam Smith that describes how people acting in their
own interest often make choices that benefit society as well.
,There are limited resources to satisfy all of society's wants.
(A) business cycle
(B) trade-off
(C) margins
(D) scarcity
(E) entrepreneurship
(F) recession
Comparing the benefits and costs of engaging in an activity
(A) scarcity
(B) trade-off
(C) recession
(D) margins
(E) financial capital
(F) resources correct answers (D) and (B)
Why:
* Economics is the study of how people use their limited resources to satisfy their unlimited
wants. In other words, it is the study of how people and society satisfy wants under conditions of
scarcity.
* Because of scarcity, people have to decide between alternatives, and may have to give up one
good in order to have another. Such decisions involve weighing the benefits of an activity against
its costs. This is called a trade-off.
Which is NOT an example of a resource?
(A) land
(B) firms
(C) labor
(D) human capital
(E) machinery correct answers (B) firms
Why:
A resource is anything used in the production of a product or service. The most common
examples of resources are land, labor, capital, and human capital. Firms are not examples of
resources in the economic sense. Firms typically turn resources into goods and services that are
sold in a market.
The $15 Kelly's Big Burger gift card that your friend gave you for your birthday expires today.
You can either use the gift card to buy yourself dinner at Kelly's Big Burger, or you can stay
home and eat a delicious home-cooked meal. What is the opportunity cost of eating the home-
cooked meal?
, (A) There is no opportunity cost since you did not pay for the gift card.
(B) The value of a $!5 meal at Kelly's Big Burger.
(C) The time it takes to eat your home-cooked meal, and the value of a $15 meal at Kelly's Big
Burger.
(D) the value of the ingredients that go into the home-cooked meal, and the value of a $15 meal
at Kelly's Big Burger.
(E) The value of the ingredients that go into the home-cooked meal. correct answers (D) the
value of the ingredients that go into the home-cooked meal, and the value of a $15 meal at
Kelly's Big Burger.
Why:
The opportunity cost of a decision is the value of the next best alternative. In this case, your next
best alternative is to get a $15 dinner at Kelly's Big Burger, and since you didn't use the
ingredient to make dinner, you can use the ingredients later. So, the opportunity cost includes the
value of the ingredients that went into the home-cooked meal, and the value of a $15 dinner at
Kelly's Big Burger. You can think of opportunity cost a the complete cost of doing something.
Which demonstrates a scenario with no opportunity cost?
(A) It's Friday night and you stay up late talking and hanging out with your friends.
(B) The chemistry club is giving out free pizza for lunch to all who come to their table to get it.
(C) Naomi, age 8, is at a bookstore and chooses to buy a book about a young wizard instead of
buying a math textbook.
(D) Chez Moi and Chez Nous, two premiere French restaurants with three Michelin stars, both
offer you a full time sous chef job at the same salary. You are ecstatic because you know it is a
win-win scenario and choose to work for Chez Nous.
(E) All of these scenarios have an opportunity cost. correct answers (E) All of these scenarios
have an opportunity cost.
Why:
All scenarios have an opportunity cost; that is part of individual choice. An opportunity cost is
what you have to give up to get what you want. While an opportunity cost can involve finances,
it doesn't necessarily have to be monetary, but could be one of many other costs, such as time or
resources.
For which of the following decisions is marginal analysis least beneficial?
(A) deciding which college to attend
(B) deciding between watching another episode of your favorite TV series and going to bed
(C) deciding whether to do more sit-ups at the gym
(D) deciding how fast to go on the freeway
(E) deciding whether to take a lunch break or knock on another door as a door-to-door
salesperson correct answers (A) deciding which college to attend
Why:
