Principles of Economics, 14th Edition Test Bank - Case & Fair

Principles of Economics, 14e (Case/Fair/Oster)


Chapter 1 The Scope and Method of Economics

1.1 Why Study Economics?

1) Which of the following is not listed in the book as a reason to study economics?
A) to learn a way of thinking
B) to understand society
C) to be an informed citizen
D) to learn how to make lots of money
Answer: D
Diff: 1
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1

2) Among the fundamental concepts in economics is
A) opportunity cost.
B) marginalism.
C) efficient markets.
D) all of the above
Answer: D
Diff: 1
Topic: Why Study Economics?
Status: New question
Learning Outcome: Micro-1

3) Which of the following is the best definition of economics?
A) the study of how individuals and societies choose to use the scarce resources that nature and previous
generations have provided
B) the study of how consumers spend their income
C) the study of how business firms decide what inputs to hire and what outputs to produce
D) the study of how the federal government allocates tax dollars
Answer: A
Diff: 1
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1




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,4) The rise of the modern factory system in England during the late eighteenth and early nineteenth centuries is
known as the
A) Great Migration.
B) Industrial Revolution.
C) Wealth of Nations.
D) Dark Ages.
Answer: B
Diff: 1
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1

5) Which of the following statements is not correct?
A) Economics is a behavioral science.
B) In large measure, economics is the study of how people make choices.
C) If poverty were eliminated, there would be no reason to study economics.
D) Economic analysis can be used to explain how both individuals and societies make decisions.
Answer: C
Diff: 1
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1

6) The study of economics
A) is a very narrow endeavor.
B) is a way of analyzing decision-making processes caused by scarcity.
C) is concerned with proving that capitalism is better than socialism.
D) focuses on how a business should function.
Answer: B
Diff: 1
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1

7) Which of the following is not one of the three fundamental concepts of economics?
A) profit maximization
B) marginalism
C) opportunity cost
D) the working of efficient markets
Answer: A
Diff: 1
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1




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,8) Suppose that you purchased a ticket to a jazz festival for $100 from an online ticket broker. Once you arrived
at the festival, you discovered that parking costs you an additional $15. In this situation, the additional $15 you
pay for parking is an example of
A) an economic loss.
B) opportunity cost.
C) marginal cost.
D) an inefficient cost.
Answer: C
Diff: 2
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1

9) You have decided that you want to attend a costume party as Black Panther. You estimate that it will cost $40
to assemble your costume. After spending $40 on the costume, you realize that the additional pieces you need
will cost you $25 more. The marginal cost of completing the costume is
A) $15.
B) $25.
C) $40.
D) $65.
Answer: B
Diff: 2
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1

10) The concept of opportunity cost
A) is relevant only to economics.
B) can be applied to the analysis of any decision-making process.
C) applies to consumers but not to firms.
D) refers only to actual payments and incomes.
Answer: B
Diff: 1
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1

11) Opportunity cost is
A) that which we forgo, or give up, when we make a choice or a decision.
B) a cost that cannot be avoided, regardless of what is done in the future.
C) the additional cost of producing an additional unit of output.
D) the additional cost of buying an additional unit of a product.
Answer: A
Diff: 1
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1




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, 12) The reason that opportunity costs arise is that
A) an economy relies on money to facilitate exchange of goods and services.
B) resources are scarce.
C) there are no alternative decisions that could be made.
D) people have limited wants.
Answer: B
Diff: 1
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1

13) Which of the following is not an opportunity cost of attending college?
A) the tuition you pay
B) the income you could have earned if you didn't attend college
C) the alternative uses of the time you spend studying
D) the cost of the food that you consume while you are attending college
Answer: D
Diff: 2
Topic: Why Study Economics?
Status: 13e modified
Learning Outcome: Micro-1

14) If your tuition is $5,000 this semester, your books cost $600, you can only work 20 rather than 40 hours per
week during the 15 weeks you are taking classes and you make $15 per hour, and your room and board is
$3,000 this semester (same as if not attending college), then your opportunity cost of attending college this
semester is
A) $5,600.
B) $5,900.
C) $10,100.
D) $11,600.
Answer: C
Diff: 3
Topic: Why Study Economics?
Status: 13e question
Learning Outcome: Micro-1




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