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CHAPTER 1 The Nature and Scope of Economics
EXAMINATION QUESTIONS
Multiple Choice
b 1. Generally, in economics we study how b. the size of the total national output
people depends on the size of total spending
a. react to changes in government policy c. the output of a product is influenced by
the cost of production for the product
b. make choices when resources are scarce
d. all of the above
c. react to rising prices
d 5. The interactions of producers and
d. get increases in income consumers in individual markets are part of
c 2. Economics can be classified best the study of
as a(n) a. macroeconomics
a. exact science b. monetary economics
b. physical science
c. normative economics
c. social science
d. microeconomics
d. natural science
b 6. The process of allocating the total
d 3. Which of the following areas of study is
product among the resources involved is
included in the field of macroeconomics?
referred to as
a. electricians’ wage rates
a. geographic distribution
b. monopolistic pricing
b. functional distribution
c. price of automobiles
c. marketing distribution
d. general price level
d. frictional distribution
b 4. An example of a macroeconomic
d 7. Putting a business venture together is the
model is
function of the
a. the price of chicken influences the
a. capitalist
quantity of chicken bought
b. manager
, c. labor leader a. building economic models
d. entrepreneur b. trying to find out “what would happen
if…”
a 8. As economists use the term, capital
means c. understanding what causes what, in
economics
a. such things as machinery and equipment
d. all of the above
b. such things as money and credit
b 13. If an economist is trying to figure out, in a
c. the profits that come from hiring and certain situation, “what would happen if…”,
using labor and natural resources then that economist is working in the area of
d. all of the above a. normative economics
c 9. The largest share of the total income of
b. positive economics
the United States is currently being
distributed in the form of c. the theory of the firm
a. interest d. welfare economics
b. rent c 14. Which of the following is the study of
“what is” rather than “what ought to be”?
c. wages
a. normative economics
d. profits
b. subjective economics
c 10. For the use of their capital in production,
owners receive c. positive economics
a. wages d. the theory of the origin of humanity
b. rent b 15. Determining “what ought to be” in the
economy is considered
c. interest
a. positive economics
d. profit
b. normative economics
a 11. For the use of the employee’s participation
in production, an employee receives c. distributive economics
a. wages d. mesoeconomics
b. rent c 16. An editorial in a newspaper calling for the
government to abolish the minimum wage
c. interest because it takes advantage of consumers is an
d. profit example of a(n)
d 12. Positive economics is concerned with a. positive economic statement
, b. pure economic statement a. usefulness
c. normative economic statement b. scarcity
d. abstract economic statement c. transferability
b 17. If you heard someone say that coal miners d. tangibility
should be paid more wages to enable them to
adequately support their families, that would d 22. For a good to be scarce, it must be
be a statement of something that
a. positive economics a. has economic value
b. normative economics b. people find useful
c. radical economics c. is available only in limited quantities
d. none of the above d. all of the above
b 18. Utility as an economic term refers to b 23. The total value of the goods and services
produced over a period of time represents an
a. the amount of electricity generated economy’s
b. the ability of a good to satisfy a want a. planned savings
c. tangible goods only b. total income
d. services only c. total wealth
d 19. An economic service need not be d. capital
a. useful c 24. Macroeconomic policymakers do not
include
b. scarce
a. the president of the United States
c. transferable
b. the U.S. Congress
d. tangible
c. the president of GM
c 20. An example of a free good is
d. the secretary of the U.S. Treasury
a. public education
d 25. Profits can be thought of as
b. CARE packages provided free to poor
people overseas a. the return to enterprise
c. the water bubbling up from the natural b. the reward for taking a risk and winning
spring in your backyard
c. what is left over after all wages, rent, and
d. the ride you give a hitchhiker interest have been paid
b 21. A free good lacks the element of d. all of the above
, d 26. The resource most directly associated a. tangibility
with profits is
b. desirability
a. land
c. utility
b. labor
d. satisfying
c. capital
b 31. Economists divide productive resources
d. enterprise into which of the following four broad
categories?
b 27. In economics, the entrepreneur is the
person who a. land, labor, money, enterprise
a. acts as the go-between among different b. land, labor, capital, enterprise
manufacturers
c. minerals, unskilled labor, semi-skilled
b. puts together land, labor, and capital and labor, skilled labor
tries to make a profit
d. land, buildings, machinery, money
c. is a shrewd business executive who works
d 32. An economic good must be
as a consultant to other businesses to
show them more profitable methods of a. useful
operation
b. scarce
d. is a visiting diplomat from France
c. transferable
a 28. The difference between a capital good and
a consumer good depends on d. all of the above
a. the purpose for which it is used d 33. Public parks and libraries are examples of
b. how it was produced a. economic goods
c. what it is b. free goods
d. how quickly it is used up c. intangible goods
a 29. A bulldozer used by a construction firm is d. public goods
known as a
b 34. The rules and principles of economics that
a. capital good serve as a guide for action are known as
b. consumer good a. economic policy
c. free good b. economic theory
d. public good c. macroeconomics
c 30. The ability of a good or service to satisfy a d. microeconomics
want is known as
CHAPTER 1 The Nature and Scope of Economics
EXAMINATION QUESTIONS
Multiple Choice
b 1. Generally, in economics we study how b. the size of the total national output
people depends on the size of total spending
a. react to changes in government policy c. the output of a product is influenced by
the cost of production for the product
b. make choices when resources are scarce
d. all of the above
c. react to rising prices
d 5. The interactions of producers and
d. get increases in income consumers in individual markets are part of
c 2. Economics can be classified best the study of
as a(n) a. macroeconomics
a. exact science b. monetary economics
b. physical science
c. normative economics
c. social science
d. microeconomics
d. natural science
b 6. The process of allocating the total
d 3. Which of the following areas of study is
product among the resources involved is
included in the field of macroeconomics?
referred to as
a. electricians’ wage rates
a. geographic distribution
b. monopolistic pricing
b. functional distribution
c. price of automobiles
c. marketing distribution
d. general price level
d. frictional distribution
b 4. An example of a macroeconomic
d 7. Putting a business venture together is the
model is
function of the
a. the price of chicken influences the
a. capitalist
quantity of chicken bought
b. manager
, c. labor leader a. building economic models
d. entrepreneur b. trying to find out “what would happen
if…”
a 8. As economists use the term, capital
means c. understanding what causes what, in
economics
a. such things as machinery and equipment
d. all of the above
b. such things as money and credit
b 13. If an economist is trying to figure out, in a
c. the profits that come from hiring and certain situation, “what would happen if…”,
using labor and natural resources then that economist is working in the area of
d. all of the above a. normative economics
c 9. The largest share of the total income of
b. positive economics
the United States is currently being
distributed in the form of c. the theory of the firm
a. interest d. welfare economics
b. rent c 14. Which of the following is the study of
“what is” rather than “what ought to be”?
c. wages
a. normative economics
d. profits
b. subjective economics
c 10. For the use of their capital in production,
owners receive c. positive economics
a. wages d. the theory of the origin of humanity
b. rent b 15. Determining “what ought to be” in the
economy is considered
c. interest
a. positive economics
d. profit
b. normative economics
a 11. For the use of the employee’s participation
in production, an employee receives c. distributive economics
a. wages d. mesoeconomics
b. rent c 16. An editorial in a newspaper calling for the
government to abolish the minimum wage
c. interest because it takes advantage of consumers is an
d. profit example of a(n)
d 12. Positive economics is concerned with a. positive economic statement
, b. pure economic statement a. usefulness
c. normative economic statement b. scarcity
d. abstract economic statement c. transferability
b 17. If you heard someone say that coal miners d. tangibility
should be paid more wages to enable them to
adequately support their families, that would d 22. For a good to be scarce, it must be
be a statement of something that
a. positive economics a. has economic value
b. normative economics b. people find useful
c. radical economics c. is available only in limited quantities
d. none of the above d. all of the above
b 18. Utility as an economic term refers to b 23. The total value of the goods and services
produced over a period of time represents an
a. the amount of electricity generated economy’s
b. the ability of a good to satisfy a want a. planned savings
c. tangible goods only b. total income
d. services only c. total wealth
d 19. An economic service need not be d. capital
a. useful c 24. Macroeconomic policymakers do not
include
b. scarce
a. the president of the United States
c. transferable
b. the U.S. Congress
d. tangible
c. the president of GM
c 20. An example of a free good is
d. the secretary of the U.S. Treasury
a. public education
d 25. Profits can be thought of as
b. CARE packages provided free to poor
people overseas a. the return to enterprise
c. the water bubbling up from the natural b. the reward for taking a risk and winning
spring in your backyard
c. what is left over after all wages, rent, and
d. the ride you give a hitchhiker interest have been paid
b 21. A free good lacks the element of d. all of the above
, d 26. The resource most directly associated a. tangibility
with profits is
b. desirability
a. land
c. utility
b. labor
d. satisfying
c. capital
b 31. Economists divide productive resources
d. enterprise into which of the following four broad
categories?
b 27. In economics, the entrepreneur is the
person who a. land, labor, money, enterprise
a. acts as the go-between among different b. land, labor, capital, enterprise
manufacturers
c. minerals, unskilled labor, semi-skilled
b. puts together land, labor, and capital and labor, skilled labor
tries to make a profit
d. land, buildings, machinery, money
c. is a shrewd business executive who works
d 32. An economic good must be
as a consultant to other businesses to
show them more profitable methods of a. useful
operation
b. scarce
d. is a visiting diplomat from France
c. transferable
a 28. The difference between a capital good and
a consumer good depends on d. all of the above
a. the purpose for which it is used d 33. Public parks and libraries are examples of
b. how it was produced a. economic goods
c. what it is b. free goods
d. how quickly it is used up c. intangible goods
a 29. A bulldozer used by a construction firm is d. public goods
known as a
b 34. The rules and principles of economics that
a. capital good serve as a guide for action are known as
b. consumer good a. economic policy
c. free good b. economic theory
d. public good c. macroeconomics
c 30. The ability of a good or service to satisfy a d. microeconomics
want is known as
