,Microeconomics, 11e (Colander)
Chapter 1 Economics and Economic Reasoning
1) The answers to an economy's three central economic problems are determined by the
interaction of three forces: economic forces, political forces, and social forces.
Answer: TRUE
Explanation: Economic, political, and social forces determine how an economy operates and
thus answers the three economic problems.
Difficulty: 1 Easy
Topic: Economic Forces, Social Forces, and Political Forces
Learning Objective: 01-03 Explain real-world events in terms of economic forces, social forces,
and political forces.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2) Scarcity exists because economies cannot produce enough to meet the perceived desires of all
individuals.
Answer: TRUE
Explanation: Scarcity exists because what people desire exceeds what they are able to produce.
Difficulty: 1 Easy
Topic: What Economics Is
Learning Objective: 01-01 Define economics and identify its components.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3) Only marginal costs, not sunk costs, affect economic decisions if individuals are rational.
Answer: TRUE
Explanation: Sunk costs are costs that have already been incurred and cannot be recovered no
matter what action is taken. Marginal costs represent the additional costs associated with
undertaking an economic activity, and an individual must balance these costs against the
marginal benefit from the activity to make a rational choice.
Difficulty: 2 Medium
Topic: A Guide to Economic Reasoning
Learning Objective: 01-02 Discuss various ways in which economists use economic reasoning.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
1
Copyright © 2020 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written onsent of McGraw-Hill Education.
,4) The economic decision rule is to undertake an action only when the marginal benefits of that
action are greater than its total costs.
Answer: FALSE
Explanation: The economic decision rule is to undertake an action only when the marginal
benefits of that action are greater than its marginal costs.
Difficulty: 1 Easy
Topic: A Guide to Economic Reasoning
Learning Objective: 01-02 Discuss various ways in which economists use economic reasoning.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
5) The opportunity cost of undertaking an activity includes any sunk cost.
Answer: FALSE
Explanation: Sunk costs are costs that already have been incurred and cannot be recovered no
matter what action is taken. Thus, they do not represent an opportunity cost, which are an
additional cost.
Difficulty: 1 Easy
Topic: A Guide to Economic Reasoning
Learning Objective: 01-02 Discuss various ways in which economists use economic reasoning.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
6) The "invisible hand" is the price mechanism that guides people's actions in the market.
Answer: TRUE
Explanation: This statement matches the definition of the invisible hand in the text.
Difficulty: 1 Easy
Topic: Economic Forces, Social Forces, and Political Forces
Learning Objective: 01-03 Explain real-world events in terms of economic forces, social forces,
and political forces.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2
Copyright © 2020 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written onsent of McGraw-Hill Education.
, 7) Social and political forces affect the way in which the invisible hand works.
Answer: TRUE
Explanation: Social and political forces place cultural and legal limits on how the market
mechanism works.
Difficulty: 1 Easy
Topic: Economic Forces, Social Forces, and Political Forces
Learning Objective: 01-03 Explain real-world events in terms of economic forces, social forces,
and political forces.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
8) Macroeconomics is the study of how individual choices are affected by economic forces.
Answer: FALSE
Explanation: Macroeconomics is the study of the economy as a whole. This statement describes
microeconomics.
Difficulty: 1 Easy
Topic: What Economics Is
Learning Objective: 01-01 Define economics and identify its components.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
9) Deciding what the distribution of income should be is an example of normative economics.
Answer: TRUE
Explanation: This statement questions what the goals of the economy should be and is thus an
example of normative economics.
Difficulty: 2 Medium
Topic: Economic Policy Options
Learning Objective: 01-05 Distinguish among positive economics, normative economics, and
the art of economics.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3
Copyright © 2020 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written onsent of McGraw-Hill Education.
Chapter 1 Economics and Economic Reasoning
1) The answers to an economy's three central economic problems are determined by the
interaction of three forces: economic forces, political forces, and social forces.
Answer: TRUE
Explanation: Economic, political, and social forces determine how an economy operates and
thus answers the three economic problems.
Difficulty: 1 Easy
Topic: Economic Forces, Social Forces, and Political Forces
Learning Objective: 01-03 Explain real-world events in terms of economic forces, social forces,
and political forces.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2) Scarcity exists because economies cannot produce enough to meet the perceived desires of all
individuals.
Answer: TRUE
Explanation: Scarcity exists because what people desire exceeds what they are able to produce.
Difficulty: 1 Easy
Topic: What Economics Is
Learning Objective: 01-01 Define economics and identify its components.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3) Only marginal costs, not sunk costs, affect economic decisions if individuals are rational.
Answer: TRUE
Explanation: Sunk costs are costs that have already been incurred and cannot be recovered no
matter what action is taken. Marginal costs represent the additional costs associated with
undertaking an economic activity, and an individual must balance these costs against the
marginal benefit from the activity to make a rational choice.
Difficulty: 2 Medium
Topic: A Guide to Economic Reasoning
Learning Objective: 01-02 Discuss various ways in which economists use economic reasoning.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
1
Copyright © 2020 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written onsent of McGraw-Hill Education.
,4) The economic decision rule is to undertake an action only when the marginal benefits of that
action are greater than its total costs.
Answer: FALSE
Explanation: The economic decision rule is to undertake an action only when the marginal
benefits of that action are greater than its marginal costs.
Difficulty: 1 Easy
Topic: A Guide to Economic Reasoning
Learning Objective: 01-02 Discuss various ways in which economists use economic reasoning.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
5) The opportunity cost of undertaking an activity includes any sunk cost.
Answer: FALSE
Explanation: Sunk costs are costs that already have been incurred and cannot be recovered no
matter what action is taken. Thus, they do not represent an opportunity cost, which are an
additional cost.
Difficulty: 1 Easy
Topic: A Guide to Economic Reasoning
Learning Objective: 01-02 Discuss various ways in which economists use economic reasoning.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
6) The "invisible hand" is the price mechanism that guides people's actions in the market.
Answer: TRUE
Explanation: This statement matches the definition of the invisible hand in the text.
Difficulty: 1 Easy
Topic: Economic Forces, Social Forces, and Political Forces
Learning Objective: 01-03 Explain real-world events in terms of economic forces, social forces,
and political forces.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2
Copyright © 2020 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written onsent of McGraw-Hill Education.
, 7) Social and political forces affect the way in which the invisible hand works.
Answer: TRUE
Explanation: Social and political forces place cultural and legal limits on how the market
mechanism works.
Difficulty: 1 Easy
Topic: Economic Forces, Social Forces, and Political Forces
Learning Objective: 01-03 Explain real-world events in terms of economic forces, social forces,
and political forces.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
8) Macroeconomics is the study of how individual choices are affected by economic forces.
Answer: FALSE
Explanation: Macroeconomics is the study of the economy as a whole. This statement describes
microeconomics.
Difficulty: 1 Easy
Topic: What Economics Is
Learning Objective: 01-01 Define economics and identify its components.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
9) Deciding what the distribution of income should be is an example of normative economics.
Answer: TRUE
Explanation: This statement questions what the goals of the economy should be and is thus an
example of normative economics.
Difficulty: 2 Medium
Topic: Economic Policy Options
Learning Objective: 01-05 Distinguish among positive economics, normative economics, and
the art of economics.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3
Copyright © 2020 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written onsent of McGraw-Hill Education.
