,Macroeconomics: Prin., Apps, & Tools, 8e (O'Sullivan) TB2
Chapter 1 Introduction: What Is Economics?
1.1 What Is Economics?
1) Economics is best defined as the study of:
A) financial decision-making.
B) how consumers make purchasing decisions.
C) choices made by people faced with scarcity.
D) inflation, unemployment, and economic growth.
Answer: C
Diff: 1
Topic: What is Economics?
Skill: Definition
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
2) Economics is the study of:
A) how to invest in the stock market.
B) how society uses limited resources.
C) the role of money in markets.
D) how government officials decide which goods and services are produced.
Answer: B
Diff: 1
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
3) Scarcity can best be defined as a situation in which:
A) there are no buyers willing to purchase what sellers have produced.
B) there are not enough goods to satisfy all of the buyers demands.
C) resources are limited in quantity and can be used in different ways.
D) there is more than enough money to satisfy consumers wants.
Answer: C
Diff: 1
Topic: What is Economics?
Skill: Definition
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
1
Copyright © 2014 Pearson Education, Inc.
,4) Because resources are limited:
A) only the very wealthy can get everything they want.
B) firms will be forced out of business.
C) the availability of goods will be limited but the availability of services will not.
D) people must make choices.
Answer: D
Diff: 2
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
5) Which of the following is not a factor of production?
A) money
B) human capital
C) physical capital
D) labor
Answer: A
Diff: 2
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
6) Printing presses, forklifts and assembly plants are examples of which factor of production?
A) physical capital
B) human capital
C) entrepreneurship
D) labor
Answer: A
Diff: 1
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
2
Copyright © 2014 Pearson Education, Inc.
, 7) The effort used to coordinate the factors of production and produce goods and services is
called:
A) entrepreneurship.
B) capital accumulation.
C) land ownership.
D) land.
Answer: A
Diff: 1
Topic: What is Economics?
Skill: Definition
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
8) When Bob, a recent college grad, took an internship at an accounting firm, he is accumulating
which factor of production?
A) physical capital
B) human capital
C) entrepreneurship
D) natural resources
Answer: B
Diff: 1
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
9) The factors of production include:
A) natural resources.
B) labor.
C) entrepreneurship.
D) all of the above.
Answer: D
Diff: 2
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
3
Copyright © 2014 Pearson Education, Inc.
Chapter 1 Introduction: What Is Economics?
1.1 What Is Economics?
1) Economics is best defined as the study of:
A) financial decision-making.
B) how consumers make purchasing decisions.
C) choices made by people faced with scarcity.
D) inflation, unemployment, and economic growth.
Answer: C
Diff: 1
Topic: What is Economics?
Skill: Definition
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
2) Economics is the study of:
A) how to invest in the stock market.
B) how society uses limited resources.
C) the role of money in markets.
D) how government officials decide which goods and services are produced.
Answer: B
Diff: 1
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
3) Scarcity can best be defined as a situation in which:
A) there are no buyers willing to purchase what sellers have produced.
B) there are not enough goods to satisfy all of the buyers demands.
C) resources are limited in quantity and can be used in different ways.
D) there is more than enough money to satisfy consumers wants.
Answer: C
Diff: 1
Topic: What is Economics?
Skill: Definition
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
1
Copyright © 2014 Pearson Education, Inc.
,4) Because resources are limited:
A) only the very wealthy can get everything they want.
B) firms will be forced out of business.
C) the availability of goods will be limited but the availability of services will not.
D) people must make choices.
Answer: D
Diff: 2
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
5) Which of the following is not a factor of production?
A) money
B) human capital
C) physical capital
D) labor
Answer: A
Diff: 2
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
6) Printing presses, forklifts and assembly plants are examples of which factor of production?
A) physical capital
B) human capital
C) entrepreneurship
D) labor
Answer: A
Diff: 1
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
2
Copyright © 2014 Pearson Education, Inc.
, 7) The effort used to coordinate the factors of production and produce goods and services is
called:
A) entrepreneurship.
B) capital accumulation.
C) land ownership.
D) land.
Answer: A
Diff: 1
Topic: What is Economics?
Skill: Definition
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
8) When Bob, a recent college grad, took an internship at an accounting firm, he is accumulating
which factor of production?
A) physical capital
B) human capital
C) entrepreneurship
D) natural resources
Answer: B
Diff: 1
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
9) The factors of production include:
A) natural resources.
B) labor.
C) entrepreneurship.
D) all of the above.
Answer: D
Diff: 2
Topic: What is Economics?
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Identify the basic principles of economics and explain how to think like an
economist.
3
Copyright © 2014 Pearson Education, Inc.
