Test Bank
,Name: Class: Date:
Ch 01: MC Algo
1. Resources are
a. scarce for households but plentiful for economies.
b. plentiful for households but scarce for economies.
c. scarce for households and scarce for economies.
d. plentiful for households and plentiful for economies
. ANSWER: c
2. Fundamentally, economics deals with
a. scarcity.
b. money.
c. poverty.
d. banking
. ANSWER: a
3. The overriding reason why households and societies face many decisions is that
a. resources are scarce.
b. goods and services are not scarce.
c. incomes fluctuate with business cycles.
d. people, by nature, tend to disagree
. ANSWER: a
4. The phenomenon of scarcity stems from the fact that
a. most economies' production methods are not very good.
b. in most economies, wealthy people consume disproportionate quantities of goods and services.
c. governments restrict production of too many goods and services.
d. resources are limited
. ANSWER: d
5. In most societies, resources are allocated by
a. a single central planner.
b. a small number of central planners.
c. those firms that use resources to provide goods and services.
d. the combined actions of millions of households and firms
. ANSWER: d
6.Naturalgasisconsideredtobeanonrenewableenergysource.Whichofthefollowingstatementsiscorrect?
a. Natural gas is an unlimited resource.
b. Natural gas is a scarce resource.
c. Natural gas is a nonscarce resource.
d. Natural gas is not a resource
. ANSWER: b
7. Economics is the study of how society manages
its a. limited wants and unlimited resources.
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,Name: Class: Date:
Ch 01: MC Algo
b. unlimited wants and unlimited resources.
c. limited wants and limited resources.
d. unlimited wants and limited resources.
ANSWER: d
8. What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services
people wish to have?
a. inefficiency
b. inequality
c. scarcity
d. market failure
ANSWER: c
9. The adage, "There ain't no such thing as a free lunch," means
a. even people on welfare have to pay for food.
b. the cost of living is always increasing.
c. people face tradeoffs.
d. all costs are included in the price of a product.
ANSWER: c
10. Which of the following statements best represents the principle of the adage, "There ain't no such thing as a free
lunch"?
a. Isaiah can go bike riding only if he takes his sister with him.
b. Jada is starving and homeless.
c. Alivia must put gas in her truck before she can drive it to school.
d. Sachi must decide between going to New York or Montreal for fall break.
ANSWER: d
11. Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the
latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can
only choose one activity. This illustrates the basic principle that
a. people respond to incentives.
b. rational people think at the margin.
c. people face tradeoffs.
d. improvements in efficiency sometimes come at the expense of equality.
ANSWER: c
12. While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the
regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This
statement illustrates the principle that
a. trade can make everyone better off.
b. rational people think at the margin.
c. people face tradeoffs.
d. people respond to incentives.
ANSWER: c
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, Name: Class: Date:
Ch 01: MC Algo
13. When society requires that firms reduce pollution, there is
a. a tradeoff because of reduced incomes to the firms' owners and workers.
b. a tradeoff only if some firms are forced to close.
c. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements.
d. no tradeoff, since everyone benefits from reduced pollution.
ANSWER: a
14. Efficiency means that
a. society is conserving resources in order to save them for the future.
b. society's goods and services are distributed equally among society's members.
c. society's goods and services are distributed fairly, though not necessarily equally, among society's members.
d. society is getting the most it can from its scarce resources.
ANSWER: d
15. The property of society getting the most it can from its scarce resources is called
a. efficiency.
b. equality.
c. externality.
d. productivity.
ANSWER: a
16. Efficiency
a. and equality both refer to how much a society can produce with its resources.
b. and equality both refer to how fairly the benefits from using resources are distributed between members of a
society.
c. refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from
using resources are distributed among members of society.
d. refers to how evenly the benefits from using resources are distributed between members of society. Equality
refers to how much a society can produce with its resources.
ANSWER: c
17. The terms equality and efficiency are similar in that they both refer to benefits to society. However, they are different
in that
a. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from
scarce resources.
b. equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of
those benefits.
c. equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the
benefits.
d. equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical
tradeoffs.
ANSWER: a
18. When society gets the most it can from its scarce resources, then the outcome is called
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,Name: Class: Date:
Ch 01: MC Algo
1. Resources are
a. scarce for households but plentiful for economies.
b. plentiful for households but scarce for economies.
c. scarce for households and scarce for economies.
d. plentiful for households and plentiful for economies
. ANSWER: c
2. Fundamentally, economics deals with
a. scarcity.
b. money.
c. poverty.
d. banking
. ANSWER: a
3. The overriding reason why households and societies face many decisions is that
a. resources are scarce.
b. goods and services are not scarce.
c. incomes fluctuate with business cycles.
d. people, by nature, tend to disagree
. ANSWER: a
4. The phenomenon of scarcity stems from the fact that
a. most economies' production methods are not very good.
b. in most economies, wealthy people consume disproportionate quantities of goods and services.
c. governments restrict production of too many goods and services.
d. resources are limited
. ANSWER: d
5. In most societies, resources are allocated by
a. a single central planner.
b. a small number of central planners.
c. those firms that use resources to provide goods and services.
d. the combined actions of millions of households and firms
. ANSWER: d
6.Naturalgasisconsideredtobeanonrenewableenergysource.Whichofthefollowingstatementsiscorrect?
a. Natural gas is an unlimited resource.
b. Natural gas is a scarce resource.
c. Natural gas is a nonscarce resource.
d. Natural gas is not a resource
. ANSWER: b
7. Economics is the study of how society manages
its a. limited wants and unlimited resources.
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,Name: Class: Date:
Ch 01: MC Algo
b. unlimited wants and unlimited resources.
c. limited wants and limited resources.
d. unlimited wants and limited resources.
ANSWER: d
8. What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services
people wish to have?
a. inefficiency
b. inequality
c. scarcity
d. market failure
ANSWER: c
9. The adage, "There ain't no such thing as a free lunch," means
a. even people on welfare have to pay for food.
b. the cost of living is always increasing.
c. people face tradeoffs.
d. all costs are included in the price of a product.
ANSWER: c
10. Which of the following statements best represents the principle of the adage, "There ain't no such thing as a free
lunch"?
a. Isaiah can go bike riding only if he takes his sister with him.
b. Jada is starving and homeless.
c. Alivia must put gas in her truck before she can drive it to school.
d. Sachi must decide between going to New York or Montreal for fall break.
ANSWER: d
11. Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the
latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can
only choose one activity. This illustrates the basic principle that
a. people respond to incentives.
b. rational people think at the margin.
c. people face tradeoffs.
d. improvements in efficiency sometimes come at the expense of equality.
ANSWER: c
12. While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the
regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This
statement illustrates the principle that
a. trade can make everyone better off.
b. rational people think at the margin.
c. people face tradeoffs.
d. people respond to incentives.
ANSWER: c
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, Name: Class: Date:
Ch 01: MC Algo
13. When society requires that firms reduce pollution, there is
a. a tradeoff because of reduced incomes to the firms' owners and workers.
b. a tradeoff only if some firms are forced to close.
c. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements.
d. no tradeoff, since everyone benefits from reduced pollution.
ANSWER: a
14. Efficiency means that
a. society is conserving resources in order to save them for the future.
b. society's goods and services are distributed equally among society's members.
c. society's goods and services are distributed fairly, though not necessarily equally, among society's members.
d. society is getting the most it can from its scarce resources.
ANSWER: d
15. The property of society getting the most it can from its scarce resources is called
a. efficiency.
b. equality.
c. externality.
d. productivity.
ANSWER: a
16. Efficiency
a. and equality both refer to how much a society can produce with its resources.
b. and equality both refer to how fairly the benefits from using resources are distributed between members of a
society.
c. refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from
using resources are distributed among members of society.
d. refers to how evenly the benefits from using resources are distributed between members of society. Equality
refers to how much a society can produce with its resources.
ANSWER: c
17. The terms equality and efficiency are similar in that they both refer to benefits to society. However, they are different
in that
a. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from
scarce resources.
b. equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of
those benefits.
c. equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the
benefits.
d. equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical
tradeoffs.
ANSWER: a
18. When society gets the most it can from its scarce resources, then the outcome is called
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