Test Bank For Essentials of Economics 6th Edition By Paul Krugman, Robin Wells
Chapter 1
1. Which of the following topics would be studied in macroeconomics?
a. changes in airline travelers’ vacation plans due to changes in the prices of airline tickets
b. the effects of a tax reduction on the profits of Home Depot
c. recessions
d. unemployment among workers displaced as more firms move to cloud-based applications
ANSWER: c
SC
2. The basic concern of microeconomics is to:
a. ensure that the government pursues the public good during pandemics.
b. make sure small businesses thrive.
c. study the choices people make, given unlimited wants.
O
d. determine how unlimited resources can best be used to satisfy limited wants.
ANSWER: c
R
3. How people choose among the alternatives available to them is:
a. not part of the study of economics.
b. impossible to describe.
EG
c. studied in microeconomics.
d. unimportant to the study of microeconomics.
ANSWER: c
4. Which of the following is a microeconomic topic?
a. reasons why a consumer buys more cheese
U
b. reasons why inflation is rising
c. what the government will do to address unemployment
d. the effect of the budget deficit on the rate of interest
ID
ANSWER: a
5. Scarcity occurs in economics because:
a. we often do not have sufficient resources to achieve our objectives.
ES
b. the wants of individual consumers are limited.
c. there are poor people even in rich countries.
d. taxes keep prices higher than they would otherwise be.
ANSWER: a
6. If resources are scarce:
a. they are insufficient to provide enough goods and services to satisfy all human material wants and
needs.
b. there are not enough of them for firms to produce goods and services.
c. they are probably overvalued by consumers.
,Name: Class: Date:
Chapter 1
d. their supply is unlimited.
ANSWER: a
7. A central and fundamental theme in economics is that:
a. for me to have something, someone else must be willing to give it up.
SC
b. the United States is a rich country, but we are simply not aware of it.
c. there are not enough resources available to satisfy all the ways a society wants to use them.
d. we can build as much as we want, since resources are unlimited.
ANSWER: c
O
8. In a society with a market economy, decisions made by society as a whole emerge from many individual
choices. Which of the following exemplifies this phenomenon?
a. The volume of work performed by the American workforce.
R
b. The market demand for oranges.
c. Whether a firm is profitable enough to remain in business.
d. All of these exemplify this phenomenon.
EG
ANSWER: d
9. , that is, decisions by an individual about what to do and what not to do, is the basis for
economics.
a. Opportunity cost
b. Utility
U
c. Marginal choice
d. Individual choice
ANSWER: d
ID
10. forces us to make choices.
a. Opportunity cost
b. Marginal decision making
ES
c. Scarcity
d. Market failure
ANSWER: c
11. In our interactions with other consumers (or individuals), we are forced to make choices because of:
a. utility and demand exploitation.
b. efficiency considerations.
c. scarcity.
d. decisions made at the margin.
ANSWER: c
,Name: Class: Date:
Chapter 1
12. Scarcity exists when:
a. making choices among two or more alternatives is unnecessary (i.e., there is no opportunity cost).
b. individuals can have as much of any good as they wish without giving up anything else.
c. individuals can have more of a good only by giving up something else.
d. the trade-off that arises because resources are limited is not a consideration.
SC
ANSWER: c
13. There are many freshwater lakes in the United States. However, freshwater is scarce because:
a. it has no alternative uses.
b. there is not enough of it to meet all needs.
O
c. the government limits its use through regulations.
d. it has a high opportunity cost.
ANSWER: b
R
14. Fresh water is considered a scarce good because:
a. not enough of it is available to meet all needs.
EG
b. it has limited uses.
c. most fresh water is hard to access.
d. it is mostly privately owned.
ANSWER: a
15. The problem of determining what goods and services society should produce:
U
a. exists because we can produce any amount of a good we need or want, making choice difficult.
b. exists because there are not enough resources to provide all the goods and services that people want.
c. would not exist if all levels of government would agree to supply goods and services to those that do
ID
not have enough.
d. would not exist if a central planning bureau were to decide how to allocate resources.
ANSWER: b
ES
16. Which resource does NOT pertain to the production of avocados?
a. fertile land on which to grow avocado trees
b. workers to tend the land and water the plants
c. equipment to aid planting and harvesting avocado trees
d. income obtained from the sale of avocados
ANSWER: d
17. A resource is anything that:
a. can be used to produce of goods and services.
b. you pay for.
, Name: Class: Date:
Chapter 1
c. must be given up to get something else.
d. can be consumed readily by a market participant.
ANSWER: a
18. We have to make choices because:
SC
a. we have unlimited income and must decide what to purchase.
b. the resources available to us are scarce.
c. the resources we would like to use in production are infinite.
d. with good planning, trade-offs can be avoided.
ANSWER: b
O
19. A sushi chef prepares a California roll for a customer. Which of the following factors is physical capital?
a. the sushi chef
R
b. the knife use to cut the sushi
c. the ingredients used to prepare the dish
d. the skills the sushi chef has acquired that enables him to perform this feat
EG
ANSWER: b
20. Susan is attending university and majoring in actuarial mathematics. Susan is thereby accumulating:
a. land.
b. labor.
c. physical capital.
U
d. human capital.
ANSWER: d
ID
21. Which item is NOT an example of a resource?
a. land
b. employees working for wages at your local McDonald’s
c. a factory used to make airplane engines
ES
d. a loaf of bread purchased at your local grocery store
ANSWER: d
22. Which factor can BEST be described as a resource used to produce iPhones?
a. money from investors
b. wages of software engineers who code iPhones
c. software engineers who code iPhones
d. taxes on profits from the sale of iPhones
ANSWER: c
Chapter 1
1. Which of the following topics would be studied in macroeconomics?
a. changes in airline travelers’ vacation plans due to changes in the prices of airline tickets
b. the effects of a tax reduction on the profits of Home Depot
c. recessions
d. unemployment among workers displaced as more firms move to cloud-based applications
ANSWER: c
SC
2. The basic concern of microeconomics is to:
a. ensure that the government pursues the public good during pandemics.
b. make sure small businesses thrive.
c. study the choices people make, given unlimited wants.
O
d. determine how unlimited resources can best be used to satisfy limited wants.
ANSWER: c
R
3. How people choose among the alternatives available to them is:
a. not part of the study of economics.
b. impossible to describe.
EG
c. studied in microeconomics.
d. unimportant to the study of microeconomics.
ANSWER: c
4. Which of the following is a microeconomic topic?
a. reasons why a consumer buys more cheese
U
b. reasons why inflation is rising
c. what the government will do to address unemployment
d. the effect of the budget deficit on the rate of interest
ID
ANSWER: a
5. Scarcity occurs in economics because:
a. we often do not have sufficient resources to achieve our objectives.
ES
b. the wants of individual consumers are limited.
c. there are poor people even in rich countries.
d. taxes keep prices higher than they would otherwise be.
ANSWER: a
6. If resources are scarce:
a. they are insufficient to provide enough goods and services to satisfy all human material wants and
needs.
b. there are not enough of them for firms to produce goods and services.
c. they are probably overvalued by consumers.
,Name: Class: Date:
Chapter 1
d. their supply is unlimited.
ANSWER: a
7. A central and fundamental theme in economics is that:
a. for me to have something, someone else must be willing to give it up.
SC
b. the United States is a rich country, but we are simply not aware of it.
c. there are not enough resources available to satisfy all the ways a society wants to use them.
d. we can build as much as we want, since resources are unlimited.
ANSWER: c
O
8. In a society with a market economy, decisions made by society as a whole emerge from many individual
choices. Which of the following exemplifies this phenomenon?
a. The volume of work performed by the American workforce.
R
b. The market demand for oranges.
c. Whether a firm is profitable enough to remain in business.
d. All of these exemplify this phenomenon.
EG
ANSWER: d
9. , that is, decisions by an individual about what to do and what not to do, is the basis for
economics.
a. Opportunity cost
b. Utility
U
c. Marginal choice
d. Individual choice
ANSWER: d
ID
10. forces us to make choices.
a. Opportunity cost
b. Marginal decision making
ES
c. Scarcity
d. Market failure
ANSWER: c
11. In our interactions with other consumers (or individuals), we are forced to make choices because of:
a. utility and demand exploitation.
b. efficiency considerations.
c. scarcity.
d. decisions made at the margin.
ANSWER: c
,Name: Class: Date:
Chapter 1
12. Scarcity exists when:
a. making choices among two or more alternatives is unnecessary (i.e., there is no opportunity cost).
b. individuals can have as much of any good as they wish without giving up anything else.
c. individuals can have more of a good only by giving up something else.
d. the trade-off that arises because resources are limited is not a consideration.
SC
ANSWER: c
13. There are many freshwater lakes in the United States. However, freshwater is scarce because:
a. it has no alternative uses.
b. there is not enough of it to meet all needs.
O
c. the government limits its use through regulations.
d. it has a high opportunity cost.
ANSWER: b
R
14. Fresh water is considered a scarce good because:
a. not enough of it is available to meet all needs.
EG
b. it has limited uses.
c. most fresh water is hard to access.
d. it is mostly privately owned.
ANSWER: a
15. The problem of determining what goods and services society should produce:
U
a. exists because we can produce any amount of a good we need or want, making choice difficult.
b. exists because there are not enough resources to provide all the goods and services that people want.
c. would not exist if all levels of government would agree to supply goods and services to those that do
ID
not have enough.
d. would not exist if a central planning bureau were to decide how to allocate resources.
ANSWER: b
ES
16. Which resource does NOT pertain to the production of avocados?
a. fertile land on which to grow avocado trees
b. workers to tend the land and water the plants
c. equipment to aid planting and harvesting avocado trees
d. income obtained from the sale of avocados
ANSWER: d
17. A resource is anything that:
a. can be used to produce of goods and services.
b. you pay for.
, Name: Class: Date:
Chapter 1
c. must be given up to get something else.
d. can be consumed readily by a market participant.
ANSWER: a
18. We have to make choices because:
SC
a. we have unlimited income and must decide what to purchase.
b. the resources available to us are scarce.
c. the resources we would like to use in production are infinite.
d. with good planning, trade-offs can be avoided.
ANSWER: b
O
19. A sushi chef prepares a California roll for a customer. Which of the following factors is physical capital?
a. the sushi chef
R
b. the knife use to cut the sushi
c. the ingredients used to prepare the dish
d. the skills the sushi chef has acquired that enables him to perform this feat
EG
ANSWER: b
20. Susan is attending university and majoring in actuarial mathematics. Susan is thereby accumulating:
a. land.
b. labor.
c. physical capital.
U
d. human capital.
ANSWER: d
ID
21. Which item is NOT an example of a resource?
a. land
b. employees working for wages at your local McDonald’s
c. a factory used to make airplane engines
ES
d. a loaf of bread purchased at your local grocery store
ANSWER: d
22. Which factor can BEST be described as a resource used to produce iPhones?
a. money from investors
b. wages of software engineers who code iPhones
c. software engineers who code iPhones
d. taxes on profits from the sale of iPhones
ANSWER: c
