UNIT 1 ECON EXAM QUESTIONS & ANSWERS
B. social science concerned with how individuals, institutions, and society make optimal
choices under conditions of scarcity. - Answers - Economics may best be defined as
the
A. interaction between macro and micro considerations.
B. social science concerned with how individuals, institutions, and society make optimal
choices under conditions of scarcity.
C. empirical testing of value judgments through the use of logic.
D. study of why people are rational.
B. limited resources to satisfy virtually unlimited wants. - Answers - The economizing
problem is one of deciding how to make the best use of
A. virtually unlimited resources to satisfy virtually unlimited wants.
B. limited resources to satisfy virtually unlimited wants.
C. unlimited resources to satisfy limited wants.
D. limited resources to satisfy limited wants.
B. study of the large aggregates of the economy or the economy as a whole. - Answers
- Macroeconomics can best be described as the
A. analysis of how a consumer tries to spend income.
B. study of the large aggregates of the economy or the economy as a whole.
C. analysis of how firms attempt to maximize their profits.
D. study of how supply and demand determine prices in individual markets.
A. look for and pursue opportunities to increase their utility. - Answers - When
economists say that people act rationally in their self-interest, they mean that individuals
A. look for and pursue opportunities to increase their utility.
B. generally disregard the interests of others.
C. are mainly creatures of habit.
D. are usually impulsive and unpredictable.
C. 'normative' statement - Answers - "All Americans should have access to health
care" is an example of a
A. factual statement
B. 'positive' statement
C. 'normative' statement
D. microeconomic argument
Economic resources are also called
A. Free gifts of nature.
B. Consumption goods.
C. Units of money capital.
D. factors of production. - Answers - D. factors of production.
,A. who owns the factors of production and the methods used to coordinate economic
activity - Answers - Economic systems differ according to which two main
characteristics?
A. who owns the factors of production and the methods used to coordinate economic
activity
B. the technology used in production and the quantity and quality of natural resources
C. how goods are produced and who gets them
D. the political system in place and the degree of scarcity facing the economy
B. land, labor, capital, and entrepreneurial ability. - Answers - The four 'factors of
production are
A. land, labor, capital, and money.
B. land, labor, capital, and entrepreneurial ability.
C. land, capital, technology, and entrepreneurial ability.
D. land, capital, entrepreneurial ability, and money.
A. "Goods and services that are profitable." - Answers - The market system's answer
to the fundamental question "What will be produced?" is essentially
A. "Goods and services that are profitable."
B. "Low-cost goods and services."
C. "Goods and services that can be produced using large amounts of capital."
D. "Goods and services that possess lasting value."
A. the division of output is decided by central planning rather than by individuals
operating freely through markets. - Answers - A fundamental difference between the
command system and laissez-faire capitalism is that, in command systems,
A. the division of output is decided by central planning rather than by individuals
operating freely through markets.
B. all economic decisions are made by the government, whereas there is no
government in laissez-faire capitalism.
C. scarcity does not exist, whereas it does in laissez-faire capitalism.
D. money is not used, whereas it is in laissez-faire capitalism.
A. "Those most willing and able to pay for them." - Answers - The market system's
answer to the fundamental question "Who will get the goods and services?" is
essentially
A. "Those most willing and able to pay for them."
B. "Those who physically produced them."
C. "Those who most need them."
D. "Those who get utility for them."
A. individuals pursuing their self-interest will try to produce goods and services that
people in society want and are willing to purchase. - Answers - The "invisible hand"
promotes society's interests because
A. individuals pursuing their self-interest will try to produce goods and services that
people in society want and are willing to purchase.
, B. individuals will produce goods for others out of concern for their fellow human beings.
C. it makes sure that everyone wins for competition in the market.
D. government regulations pushes business into producing the right mix of goods and
services.
C. minimal government intervention - Answers - Which of the following is a
distinguishing feature of laissez-faire capitalism?
A. private ownership of all capital
B. central planning
C. minimal government intervention
D. a circular flow of goods resources, and money
B. central planning - Answers - Which of the following is a distinguishing feature of a
command system?
A. private ownership of all capital
B. central planning
C. heavy reliance on markets
D. widespread dispersion of economic power
C. encourages owners to maintain or improve their property so as to preserve or
enhance value. - Answers - Private property
A. discourages corporations because people don't want to part with what they own.
B. discourages innovation, as people are often afraid to risk losing their own property.
C. encourages owners to maintain or improve their property so as to preserve or
enhance value.
D. does everything indicated by the other answers.
D. coordination problem under central planning - Answers - "Because the outputs of
many industries are the inputs to other industries, the failure of any single industry to
fulfill the output quantities specified in the central plan caused a chain reaction of
adverse repercussions on production." This quotation best identifies the
A. incentive problem under central planning
B. self-sufficiency dilemma under communism
C. resource overcommitment problem under communism
D. coordination problem under central planning
D. encourages innovation because successful innovators are rewarded with economic
profits. - Answers - The competitive market system
A. encourages innovation because government provides tax breaks and subsidies to
those who develop new products or new productive techniques.
B. discourages innovation because it is difficult to acquire additional capital in the form
of new machinery and equipment.
C. discourages innovation because firms want to get all the profits possible from
existing machinery and equipment.
D. encourages innovation because successful innovators are rewarded with economic
profits.
B. social science concerned with how individuals, institutions, and society make optimal
choices under conditions of scarcity. - Answers - Economics may best be defined as
the
A. interaction between macro and micro considerations.
B. social science concerned with how individuals, institutions, and society make optimal
choices under conditions of scarcity.
C. empirical testing of value judgments through the use of logic.
D. study of why people are rational.
B. limited resources to satisfy virtually unlimited wants. - Answers - The economizing
problem is one of deciding how to make the best use of
A. virtually unlimited resources to satisfy virtually unlimited wants.
B. limited resources to satisfy virtually unlimited wants.
C. unlimited resources to satisfy limited wants.
D. limited resources to satisfy limited wants.
B. study of the large aggregates of the economy or the economy as a whole. - Answers
- Macroeconomics can best be described as the
A. analysis of how a consumer tries to spend income.
B. study of the large aggregates of the economy or the economy as a whole.
C. analysis of how firms attempt to maximize their profits.
D. study of how supply and demand determine prices in individual markets.
A. look for and pursue opportunities to increase their utility. - Answers - When
economists say that people act rationally in their self-interest, they mean that individuals
A. look for and pursue opportunities to increase their utility.
B. generally disregard the interests of others.
C. are mainly creatures of habit.
D. are usually impulsive and unpredictable.
C. 'normative' statement - Answers - "All Americans should have access to health
care" is an example of a
A. factual statement
B. 'positive' statement
C. 'normative' statement
D. microeconomic argument
Economic resources are also called
A. Free gifts of nature.
B. Consumption goods.
C. Units of money capital.
D. factors of production. - Answers - D. factors of production.
,A. who owns the factors of production and the methods used to coordinate economic
activity - Answers - Economic systems differ according to which two main
characteristics?
A. who owns the factors of production and the methods used to coordinate economic
activity
B. the technology used in production and the quantity and quality of natural resources
C. how goods are produced and who gets them
D. the political system in place and the degree of scarcity facing the economy
B. land, labor, capital, and entrepreneurial ability. - Answers - The four 'factors of
production are
A. land, labor, capital, and money.
B. land, labor, capital, and entrepreneurial ability.
C. land, capital, technology, and entrepreneurial ability.
D. land, capital, entrepreneurial ability, and money.
A. "Goods and services that are profitable." - Answers - The market system's answer
to the fundamental question "What will be produced?" is essentially
A. "Goods and services that are profitable."
B. "Low-cost goods and services."
C. "Goods and services that can be produced using large amounts of capital."
D. "Goods and services that possess lasting value."
A. the division of output is decided by central planning rather than by individuals
operating freely through markets. - Answers - A fundamental difference between the
command system and laissez-faire capitalism is that, in command systems,
A. the division of output is decided by central planning rather than by individuals
operating freely through markets.
B. all economic decisions are made by the government, whereas there is no
government in laissez-faire capitalism.
C. scarcity does not exist, whereas it does in laissez-faire capitalism.
D. money is not used, whereas it is in laissez-faire capitalism.
A. "Those most willing and able to pay for them." - Answers - The market system's
answer to the fundamental question "Who will get the goods and services?" is
essentially
A. "Those most willing and able to pay for them."
B. "Those who physically produced them."
C. "Those who most need them."
D. "Those who get utility for them."
A. individuals pursuing their self-interest will try to produce goods and services that
people in society want and are willing to purchase. - Answers - The "invisible hand"
promotes society's interests because
A. individuals pursuing their self-interest will try to produce goods and services that
people in society want and are willing to purchase.
, B. individuals will produce goods for others out of concern for their fellow human beings.
C. it makes sure that everyone wins for competition in the market.
D. government regulations pushes business into producing the right mix of goods and
services.
C. minimal government intervention - Answers - Which of the following is a
distinguishing feature of laissez-faire capitalism?
A. private ownership of all capital
B. central planning
C. minimal government intervention
D. a circular flow of goods resources, and money
B. central planning - Answers - Which of the following is a distinguishing feature of a
command system?
A. private ownership of all capital
B. central planning
C. heavy reliance on markets
D. widespread dispersion of economic power
C. encourages owners to maintain or improve their property so as to preserve or
enhance value. - Answers - Private property
A. discourages corporations because people don't want to part with what they own.
B. discourages innovation, as people are often afraid to risk losing their own property.
C. encourages owners to maintain or improve their property so as to preserve or
enhance value.
D. does everything indicated by the other answers.
D. coordination problem under central planning - Answers - "Because the outputs of
many industries are the inputs to other industries, the failure of any single industry to
fulfill the output quantities specified in the central plan caused a chain reaction of
adverse repercussions on production." This quotation best identifies the
A. incentive problem under central planning
B. self-sufficiency dilemma under communism
C. resource overcommitment problem under communism
D. coordination problem under central planning
D. encourages innovation because successful innovators are rewarded with economic
profits. - Answers - The competitive market system
A. encourages innovation because government provides tax breaks and subsidies to
those who develop new products or new productive techniques.
B. discourages innovation because it is difficult to acquire additional capital in the form
of new machinery and equipment.
C. discourages innovation because firms want to get all the profits possible from
existing machinery and equipment.
D. encourages innovation because successful innovators are rewarded with economic
profits.
