Student name:__________
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.
⊚ true
⊚ false
2) Critics of government regulation argue that government interference in the marketplace
stifles the "animal spirits" of entrepreneurship.
⊚ true
⊚ false
3) Opportunity cost is a theoretical concept with no practical application.
⊚ true
⊚ false
4) Every time we use scarce resources in one way, we give up the opportunity to use them in
other ways.
⊚ true
⊚ false
5) Production possibilities in an economy decrease as more resources and better technology
are utilized.
⊚ true
⊚ false
6) All output combinations that lie outside a production possibilities curve are attainable
with available resources and technology.
⊚ true
⊚ false
Version 1 1
,7) Output combinations that lie inside the production possibilities curve are characterized by
efficient use of resources.
⊚ true
⊚ false
8) If the economy is inside the production possibilities curve, then more output can be
produced using existing resources.
⊚ true
⊚ false
9) All economies must make decisions concerning what to produce, how to produce it, and
for whom to produce.
⊚ true
⊚ false
10) The essential feature of the market mechanism is the price signal.
⊚ true
⊚ false
11) Government failure occurs when government intervention fails to improve economic
outcomes or makes them worse.
⊚ true
⊚ false
12) Microeconomics is concerned with individual performance as well as the economy as a
whole.
⊚ true
⊚ false
Version 1 2
,13) The Latin phrase ceteris paribus refers to holding other variables constant.
⊚ true
⊚ false
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.
⊚ true
⊚ false
15) The slope of a production possibilities curve is positive.
⊚ true
⊚ false
16) When a curve shifts, the underlying relationship between the two variables has changed.
⊚ 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?
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
Version 1 3
, 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.
19) In economics, scarcity means that
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,
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) A consequence of the economic problem of scarcity is that
A) Choices have to be made about how resources are used.
B) There is never too much of any good or service produced.
C) The production of goods and services must be controlled by the government.
D) The production possibilities curve is bowed outward.
22) The basic factors of production include
Version 1 4
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.
⊚ true
⊚ false
2) Critics of government regulation argue that government interference in the marketplace
stifles the "animal spirits" of entrepreneurship.
⊚ true
⊚ false
3) Opportunity cost is a theoretical concept with no practical application.
⊚ true
⊚ false
4) Every time we use scarce resources in one way, we give up the opportunity to use them in
other ways.
⊚ true
⊚ false
5) Production possibilities in an economy decrease as more resources and better technology
are utilized.
⊚ true
⊚ false
6) All output combinations that lie outside a production possibilities curve are attainable
with available resources and technology.
⊚ true
⊚ false
Version 1 1
,7) Output combinations that lie inside the production possibilities curve are characterized by
efficient use of resources.
⊚ true
⊚ false
8) If the economy is inside the production possibilities curve, then more output can be
produced using existing resources.
⊚ true
⊚ false
9) All economies must make decisions concerning what to produce, how to produce it, and
for whom to produce.
⊚ true
⊚ false
10) The essential feature of the market mechanism is the price signal.
⊚ true
⊚ false
11) Government failure occurs when government intervention fails to improve economic
outcomes or makes them worse.
⊚ true
⊚ false
12) Microeconomics is concerned with individual performance as well as the economy as a
whole.
⊚ true
⊚ false
Version 1 2
,13) The Latin phrase ceteris paribus refers to holding other variables constant.
⊚ true
⊚ false
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.
⊚ true
⊚ false
15) The slope of a production possibilities curve is positive.
⊚ true
⊚ false
16) When a curve shifts, the underlying relationship between the two variables has changed.
⊚ 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?
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
Version 1 3
, 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.
19) In economics, scarcity means that
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,
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) A consequence of the economic problem of scarcity is that
A) Choices have to be made about how resources are used.
B) There is never too much of any good or service produced.
C) The production of goods and services must be controlled by the government.
D) The production possibilities curve is bowed outward.
22) The basic factors of production include
Version 1 4
