Test Bank - The Economy Today, 17th Edition by Bradley R. Schiller and Karen Gebhardt
Chap 01 17e - Schiller
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Scarcity results when available resources cannot satisfy all desired uses of those resources.
1) ______
▢ true ▢ false
2) Critics of government regulation argue that government interference in the marketplace
stifles the "animal spirits" of entrepreneurship.
2) ______
▢ true ▢ false
3) Opportunity cost is a theoretical concept with no practical application.
3) ______
▢ true ▢ false
4) Every time we use scarce resources in one way, we give up the opportunity to use them in
other ways.
4) ______
▢ true ▢ false
5) Production possibilities in an economy decrease as more resources and better technology are
utilized.
5) ______
▢ true ▢ false
6) All output combinations that lie outside a production possibilities curve are attainable with
available resources and technology.
6) ______
▢ true ▢ false
1
,7) Output combinations that lie inside the production possibilities curve are characterized by
efficient use of resources.
7) ______
▢ true ▢ false
8) If the economy is inside the production possibilities curve, then more output can be produced
using existing resources.
8) ______
▢ true ▢ false
9) All economies must make decisions concerning what to produce, how to produce it, and for
whom to produce.
9) ______
▢ true ▢ false
10) The essential feature of the market mechanism is the price signal.
10) ______
▢ true ▢ false
11) Government failure occurs when government intervention fails to improve economic
outcomes or makes them worse.
11) ______
▢ true ▢ false
12) Microeconomics is concerned with individual performance as well as the economy as a
whole.
12) ______
▢ true ▢ false
13) The Latin phrase ceteris paribus refers to holding other variables constant.
13) ______
▢ true ▢ false
2
,14) To calculate the slope of a line, find the vertical distance between two points and divide it by
the horizontal distance between the same two points.
14) ______
▢ true ▢ false
15) The slope of a production possibilities curve is positive.
15) ______
▢ true ▢ false
16) When a curve shifts, the underlying relationship between the two variables has changed.
16) ______
▢ true ▢ false
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
17) Which of the following is not one of the three core economic issues that must be resolved?
17) ______
A) how to produce the goods and services we select
B) what to produce with unlimited resources
C) who should get the goods and services we produce
D) what to produce with limited resources
18) The fundamental problem of economics is
18) ______
A) the law of increasing opportunity costs.
B) the scarcity of resources relative to human wants.
C) how to get government to operate efficiently.
D) how to create employment for everyone.
3
, 19) In economics, scarcity means that
19) ______
A) a shortage of a particular good will cause the price to fall.
B) a production possibilities curve cannot accurately represent the trade-off between two
goods.
C) society's desires exceed resources available.
D) the market mechanism has failed.
20) Given that resources are scarce,
20) ______
A) a "free lunch" is possible, but only for a limited number of people.
B) opportunity costs are experienced whenever choices are made.
C) poor countries must make choices, but rich countries with abundant resources do not
have to make choices.
D) some choices involve opportunity costs while other choices do not.
21) The fact that there are too few resources to satisfy all our wants is attributed to
21) ______
A) scarcity.
B) greed.
C) shortages.
D) lack of money.
22) There is no such thing as a free lunch because
22) ______
A) the producer must charge something to cover the cost of production.
B) resources used to produce the lunch could be used to produce other goods and
services.
C) the government must raise taxes to pay for the lunches.
D) no one would pay for lunch anymore if they could get it for free.
4
Chap 01 17e - Schiller
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Scarcity results when available resources cannot satisfy all desired uses of those resources.
1) ______
▢ true ▢ false
2) Critics of government regulation argue that government interference in the marketplace
stifles the "animal spirits" of entrepreneurship.
2) ______
▢ true ▢ false
3) Opportunity cost is a theoretical concept with no practical application.
3) ______
▢ true ▢ false
4) Every time we use scarce resources in one way, we give up the opportunity to use them in
other ways.
4) ______
▢ true ▢ false
5) Production possibilities in an economy decrease as more resources and better technology are
utilized.
5) ______
▢ true ▢ false
6) All output combinations that lie outside a production possibilities curve are attainable with
available resources and technology.
6) ______
▢ true ▢ false
1
,7) Output combinations that lie inside the production possibilities curve are characterized by
efficient use of resources.
7) ______
▢ true ▢ false
8) If the economy is inside the production possibilities curve, then more output can be produced
using existing resources.
8) ______
▢ true ▢ false
9) All economies must make decisions concerning what to produce, how to produce it, and for
whom to produce.
9) ______
▢ true ▢ false
10) The essential feature of the market mechanism is the price signal.
10) ______
▢ true ▢ false
11) Government failure occurs when government intervention fails to improve economic
outcomes or makes them worse.
11) ______
▢ true ▢ false
12) Microeconomics is concerned with individual performance as well as the economy as a
whole.
12) ______
▢ true ▢ false
13) The Latin phrase ceteris paribus refers to holding other variables constant.
13) ______
▢ true ▢ false
2
,14) To calculate the slope of a line, find the vertical distance between two points and divide it by
the horizontal distance between the same two points.
14) ______
▢ true ▢ false
15) The slope of a production possibilities curve is positive.
15) ______
▢ true ▢ false
16) When a curve shifts, the underlying relationship between the two variables has changed.
16) ______
▢ true ▢ false
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
17) Which of the following is not one of the three core economic issues that must be resolved?
17) ______
A) how to produce the goods and services we select
B) what to produce with unlimited resources
C) who should get the goods and services we produce
D) what to produce with limited resources
18) The fundamental problem of economics is
18) ______
A) the law of increasing opportunity costs.
B) the scarcity of resources relative to human wants.
C) how to get government to operate efficiently.
D) how to create employment for everyone.
3
, 19) In economics, scarcity means that
19) ______
A) a shortage of a particular good will cause the price to fall.
B) a production possibilities curve cannot accurately represent the trade-off between two
goods.
C) society's desires exceed resources available.
D) the market mechanism has failed.
20) Given that resources are scarce,
20) ______
A) a "free lunch" is possible, but only for a limited number of people.
B) opportunity costs are experienced whenever choices are made.
C) poor countries must make choices, but rich countries with abundant resources do not
have to make choices.
D) some choices involve opportunity costs while other choices do not.
21) The fact that there are too few resources to satisfy all our wants is attributed to
21) ______
A) scarcity.
B) greed.
C) shortages.
D) lack of money.
22) There is no such thing as a free lunch because
22) ______
A) the producer must charge something to cover the cost of production.
B) resources used to produce the lunch could be used to produce other goods and
services.
C) the government must raise taxes to pay for the lunches.
D) no one would pay for lunch anymore if they could get it for free.
4
