Test Bank For Microeconomics 3rd Edition
Chapter 1 The Principles and Practice of Economics
Chapter 1 The Principles and Practice of Economics
1.1 The Scope of Economics
1) Which of the following statements is TRUE?
A) All economic agents are necessarily individuals.
B) A worker who shirks work is not an economic agent.
C) A government is an example of an economic agent.
D) A street gang is not an economic agent.
Answer: C
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
2) Which of the following best describes scarce resources?
A) Resources that most people cannot afford to buy
B) Resources that can only be distributed efficiently by the government
C) Resources for which the quantity demanded is the same for all economic agents
D) Resources for which the quantity that people want exceeds the quantity that is freely available
Answer: D
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
3) Which of the following is NOT a scarce resource?
A) Gold
B) Pollution
C) Petroleum
D) iPhones
Answer: B
Difficulty: Easy
AACSB: Application of Knowledge
TopicEntry: Economic Agents and Economic Resources
4) In economics, scarcity refers to the situation of ________.
A) making the best use of limited information
B) having more wants than the amount of available resources
C) the government rationing available goods and services
D) sellers setting the prices of their products too high for people to be able to afford them
Answer: B
Difficulty: Medium
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
1
,Test Bank For Microeconomics 3rd Edition
Chapter 1 The Principles and Practice of Economics
5) Which of the following statements is TRUE?
A) Gold is not a scarce resource.
B) Both life-saving drugs and ice cream are examples of scarce goods.
C) If a scarce resource is given away for free, everyone will be able to consume it.
D) Scarcity means that there is an imbalance between unlimited resources and limited wants.
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
6) What are scarce resources? Why are economic agents concerned with the allocation of these
resources?
Answer: Scarce resources are resources for which the quantity that agents want exceeds the
quantity that is freely available. Economic agents need to satisfy their unlimited wants in a world
of limited resources. This makes it important for them to understand how these scarce resources
are to be used and distributed in order to optimize allocation.
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
7) Define economics. Who are economic agents?
Answer: Economics is the study of how agents choose to allocate scarce resources and how
these choices affect society. An economic agent is an individual or a group that makes choices.
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
8) Economics is primarily the study of ________.
A) the mental functions and behavior of individuals and groups
B) the state, nation, government, and politics and policies of governments
C) the problems related to the existence and evolution of society
D) how agents choose to allocate scarce resources and how these choices affect society
Answer: D
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Definition of Economics
9) Economics is primarily the study of ________.
A) the relationship between matter and its motion
B) agents' choices and their impact on society
C) events of the past and how these events affect present human behavior
D) the different types of governments and the impact of their policies on a nation
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
2
,Test Bank For Microeconomics 3rd Edition
Chapter 1 The Principles and Practice of Economics
TopicEntry: Definition of Economics
10) ________ is analysis that generates objective descriptions or predictions about the world that
can be verified with data.
A) Positive economics
B) Negative economics
C) Microeconomics
D) Normative economics
Answer: A
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Positive Economics and Normative Economics
11) Which of the following is an example of a positive economic statement?
A) The pricing policies followed in single-producer markets should be strictly supervised.
B) Unemployment is more harmful than inflation.
C) Higher interest rates will encourage more savings.
D) Pollution is one of the most serious economic problems.
Answer: C
Difficulty: Medium
AACSB: Application of Knowledge
TopicEntry: Positive Economics and Normative Economics
12) Which of the following is an example of a positive economic statement?
A) The government should ideally work as a welfare state.
B) An increase in income causes an increase in savings.
C) Economics is the most useful social science.
D) Eliminating poverty is more important than reducing inflation.
Answer: B
Difficulty: Medium
AACSB: Application of Knowledge
TopicEntry: Positive Economics and Normative Economics
13) ________ economics prescribes what an individual or society ought to do.
A) Positive
B) Negative
C) Behavioral
D) Normative
Answer: D
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Positive Economics and Normative Economics
3
, Test Bank For Microeconomics 3rd Edition
Chapter 1 The Principles and Practice of Economics
14) Which of the following is an example of a normative economic statement?
A) A cut in the tax rate will lead to an increase in consumption.
B) Relaxation of import duties will encourage imports.
C) An increase in subsidies to farmers will boost agricultural production.
D) An increase in social security benefits will increase the welfare of all economic agents.
Answer: D
Difficulty: Medium
AACSB: Application of Knowledge
TopicEntry: Positive Economics and Normative Economics
15) Which of the following is an example of a normative economic statement?
A) An increase in government expenditure will lead to an increase in well-being.
B) An increase in the money supply will lead to an increase in the inflation rate.
C) An increase in income is accompanied by an increase in savings.
D) An increase in income is accompanied by an increase in consumption.
Answer: A
Difficulty: Medium
AACSB: Application of Knowledge
TopicEntry: Positive Economics and Normative Economics
16) Which of the following statements is TRUE?
A) Positive economics deals with issues that are subjective.
B) Normative statements depend on personal preferences.
C) Positive economics recommends what people ought to do.
D) Normative economic statements can be confirmed or disproven.
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Positive Economics and Normative Economics
17) Which of the following statements correctly differentiates between positive and normative
economics?
A) Positive economics is descriptive, whereas normative economics is advisory.
B) Positive economics describes what people ought to do, whereas normative economics
describes what people actually do.
C) Positive economics is based on judgments, whereas normative economics is not.
D) Positive economics can only be applied to microeconomics, whereas normative economics
can be applied to both microeconomics and macroeconomics.
Answer: A
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Positive Economics and Normative Economics
4
Chapter 1 The Principles and Practice of Economics
Chapter 1 The Principles and Practice of Economics
1.1 The Scope of Economics
1) Which of the following statements is TRUE?
A) All economic agents are necessarily individuals.
B) A worker who shirks work is not an economic agent.
C) A government is an example of an economic agent.
D) A street gang is not an economic agent.
Answer: C
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
2) Which of the following best describes scarce resources?
A) Resources that most people cannot afford to buy
B) Resources that can only be distributed efficiently by the government
C) Resources for which the quantity demanded is the same for all economic agents
D) Resources for which the quantity that people want exceeds the quantity that is freely available
Answer: D
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
3) Which of the following is NOT a scarce resource?
A) Gold
B) Pollution
C) Petroleum
D) iPhones
Answer: B
Difficulty: Easy
AACSB: Application of Knowledge
TopicEntry: Economic Agents and Economic Resources
4) In economics, scarcity refers to the situation of ________.
A) making the best use of limited information
B) having more wants than the amount of available resources
C) the government rationing available goods and services
D) sellers setting the prices of their products too high for people to be able to afford them
Answer: B
Difficulty: Medium
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
1
,Test Bank For Microeconomics 3rd Edition
Chapter 1 The Principles and Practice of Economics
5) Which of the following statements is TRUE?
A) Gold is not a scarce resource.
B) Both life-saving drugs and ice cream are examples of scarce goods.
C) If a scarce resource is given away for free, everyone will be able to consume it.
D) Scarcity means that there is an imbalance between unlimited resources and limited wants.
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
6) What are scarce resources? Why are economic agents concerned with the allocation of these
resources?
Answer: Scarce resources are resources for which the quantity that agents want exceeds the
quantity that is freely available. Economic agents need to satisfy their unlimited wants in a world
of limited resources. This makes it important for them to understand how these scarce resources
are to be used and distributed in order to optimize allocation.
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
7) Define economics. Who are economic agents?
Answer: Economics is the study of how agents choose to allocate scarce resources and how
these choices affect society. An economic agent is an individual or a group that makes choices.
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Economic Agents and Economic Resources
8) Economics is primarily the study of ________.
A) the mental functions and behavior of individuals and groups
B) the state, nation, government, and politics and policies of governments
C) the problems related to the existence and evolution of society
D) how agents choose to allocate scarce resources and how these choices affect society
Answer: D
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Definition of Economics
9) Economics is primarily the study of ________.
A) the relationship between matter and its motion
B) agents' choices and their impact on society
C) events of the past and how these events affect present human behavior
D) the different types of governments and the impact of their policies on a nation
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
2
,Test Bank For Microeconomics 3rd Edition
Chapter 1 The Principles and Practice of Economics
TopicEntry: Definition of Economics
10) ________ is analysis that generates objective descriptions or predictions about the world that
can be verified with data.
A) Positive economics
B) Negative economics
C) Microeconomics
D) Normative economics
Answer: A
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Positive Economics and Normative Economics
11) Which of the following is an example of a positive economic statement?
A) The pricing policies followed in single-producer markets should be strictly supervised.
B) Unemployment is more harmful than inflation.
C) Higher interest rates will encourage more savings.
D) Pollution is one of the most serious economic problems.
Answer: C
Difficulty: Medium
AACSB: Application of Knowledge
TopicEntry: Positive Economics and Normative Economics
12) Which of the following is an example of a positive economic statement?
A) The government should ideally work as a welfare state.
B) An increase in income causes an increase in savings.
C) Economics is the most useful social science.
D) Eliminating poverty is more important than reducing inflation.
Answer: B
Difficulty: Medium
AACSB: Application of Knowledge
TopicEntry: Positive Economics and Normative Economics
13) ________ economics prescribes what an individual or society ought to do.
A) Positive
B) Negative
C) Behavioral
D) Normative
Answer: D
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Positive Economics and Normative Economics
3
, Test Bank For Microeconomics 3rd Edition
Chapter 1 The Principles and Practice of Economics
14) Which of the following is an example of a normative economic statement?
A) A cut in the tax rate will lead to an increase in consumption.
B) Relaxation of import duties will encourage imports.
C) An increase in subsidies to farmers will boost agricultural production.
D) An increase in social security benefits will increase the welfare of all economic agents.
Answer: D
Difficulty: Medium
AACSB: Application of Knowledge
TopicEntry: Positive Economics and Normative Economics
15) Which of the following is an example of a normative economic statement?
A) An increase in government expenditure will lead to an increase in well-being.
B) An increase in the money supply will lead to an increase in the inflation rate.
C) An increase in income is accompanied by an increase in savings.
D) An increase in income is accompanied by an increase in consumption.
Answer: A
Difficulty: Medium
AACSB: Application of Knowledge
TopicEntry: Positive Economics and Normative Economics
16) Which of the following statements is TRUE?
A) Positive economics deals with issues that are subjective.
B) Normative statements depend on personal preferences.
C) Positive economics recommends what people ought to do.
D) Normative economic statements can be confirmed or disproven.
Answer: B
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Positive Economics and Normative Economics
17) Which of the following statements correctly differentiates between positive and normative
economics?
A) Positive economics is descriptive, whereas normative economics is advisory.
B) Positive economics describes what people ought to do, whereas normative economics
describes what people actually do.
C) Positive economics is based on judgments, whereas normative economics is not.
D) Positive economics can only be applied to microeconomics, whereas normative economics
can be applied to both microeconomics and macroeconomics.
Answer: A
Difficulty: Easy
AACSB: Analytical Thinking
TopicEntry: Positive Economics and Normative Economics
4
