Question 1

Explain the following statement: "The relative scarcity of resources makes the operation of any economic system a matter of choosing among various alternatives."

Accepted Answer

The statement "The relative scarcity of resources makes the operation of any economic system a matter of choosing among various alternatives" refers to the fundamental economic problem of scarcity. Scarcity exists because resources are limited, while human wants and needs are unlimited. This scarcity forces individuals, businesses, and governments to make choices about how to allocate these limited resources among competing uses.

In any economic system, whether it be a market economy, command economy, or mixed economy, the allocation of resources is a central concern. This allocation involves making choices about what goods and services to produce, how to produce them, and for whom they should be produced. These choices are influenced by factors such as consumer demand, production costs, technology, and government policies.

Because resources are scarce, choosing among various alternatives is necessary. For example, a business may have to decide whether to invest in new machinery or hire more workers, a government may have to choose between funding healthcare or education programs, and individuals may have to prioritize spending on different goods and services based on their limited income.

Ultimately, the relative scarcity of resources means that all economic systems must grapple with the challenge of making choices about how to allocate these resources in the most efficient and equitable manner. This process of decision-making and trade-offs is at the heart of economics and is a key factor in shaping the functioning of any economic system.

Question 2

The study of how people choose among the alternatives available to them is the:

Accepted Answer

A)  definition of economics. 
B)  model of demand. 
C)  theory of opportunity costs. 
D)  method of distinguishing between microeconomics and macroeconomics. 
A)  definition of economics. 
B)  model of demand. 
C)  theory of opportunity costs. 
D)  method of distinguishing between microeconomics and macroeconomics. A

Question 3

A free good is:

Accepted Answer

A)  also a scarce good. 
B)  a relatively abundant good. 
C)  a good with no opportunity cost. 
D)  a good with relatively low opportunity cost. 
A)  also a scarce good. 
B)  a relatively abundant good. 
C)  a good with no opportunity cost. 
D)  a good with relatively low opportunity cost. C

Question 4

The three fundamental economic questions of what, how, and for whom:

Accepted Answer

A)  exist because of scarcity. 
B)  are much more serious in a socialist system. 
C)  are not serious in a capitalistic system. 
D)  are not relevant in the industrialized world of today. 
A)  exist because of scarcity. 
B)  are much more serious in a socialist system. 
C)  are not serious in a capitalistic system. 
D)  are not relevant in the industrialized world of today.

Question 5

A good is scarce if we must sacrifice something to obtain it.

Accepted Answer

A) True 
 B)False

Question 6

A theory that has won virtually universal acceptance is a:

Accepted Answer

A)  model. 
B)  hypothesis. 
C)  law. 
D)  variable. 
A)  model. 
B)  hypothesis. 
C)  law. 
D)  variable.

Question 7

Many disagreements among economists result because:

Accepted Answer

A)  economists deal only with positive economics. 
B)  economists sometimes make normative judgments. 
C)  economics is a social science. 
D)  economics deals so much with theories and models. 
A)  economists deal only with positive economics. 
B)  economists sometimes make normative judgments. 
C)  economics is a social science. 
D)  economics deals so much with theories and models.

Question 8

The Case in Point on the Simpsons indicated that even fictional characters face:

Accepted Answer

A)  diminishing marginal product. 
B)  opportunity costs. 
C)  the fallacy of false cause. 
D)  positive statements. 
A)  diminishing marginal product. 
B)  opportunity costs. 
C)  the fallacy of false cause. 
D)  positive statements.

Question 9

Economics is a:

Accepted Answer

A)  social science that deals with making choices among alternatives. 
B)  natural science that concerns itself with allocating relatively scarce resources among alternative ends. 
C)  science that has no theories or models based on the scientific method. 
D)  humanities course that mainly concerns itself with limited wants versus unlimited resources. 
A)  social science that deals with making choices among alternatives. 
B)  natural science that concerns itself with allocating relatively scarce resources among alternative ends. 
C)  science that has no theories or models based on the scientific method. 
D)  humanities course that mainly concerns itself with limited wants versus unlimited resources.

Question 10

The existence of alternative uses of a resource implies that it is:

Accepted Answer

A)  free. 
B)  scarce. 
C)  expensive. 
D)  plentiful. 
A)  free. 
B)  scarce. 
C)  expensive. 
D)  plentiful.

Question 11

Which of the following statements is (are) true?

Accepted Answer

A)  A model is a set of simplifying assumptions about some aspect of the real world. 
B)  Models are based on assumed conditions that are simpler than those of the real world. 
C)  A model cannot be a complete representation of the real world. 
D)  All of the above are true. 
A)  A model is a set of simplifying assumptions about some aspect of the real world. 
B)  Models are based on assumed conditions that are simpler than those of the real world. 
C)  A model cannot be a complete representation of the real world. 
D)  All of the above are true.

Question 12

An answer to the question "For whom" determines:

Accepted Answer

A)  tastes and preferences. 
B)  how resources are combined in production. 
C)  the kinds and quantities of goods produced. 
D)  who gets the goods and services produced. 
A)  tastes and preferences. 
B)  how resources are combined in production. 
C)  the kinds and quantities of goods produced. 
D)  who gets the goods and services produced.

Question 13

The problem of determining for whom to produce exists because:

Accepted Answer

A)  government regulations prevent firms from producing the kinds of goods that consumers want. 
B)  a decision that one person or group will receive a good or service usually means that another person or group will not. 
C)  taxes on firms make it more costly for them to produce all the goods that people want. 
D)  taxes on consumers make it more difficult for them to buy all the goods they want. 
A)  government regulations prevent firms from producing the kinds of goods that consumers want. 
B)  a decision that one person or group will receive a good or service usually means that another person or group will not. 
C)  taxes on firms make it more costly for them to produce all the goods that people want. 
D)  taxes on consumers make it more difficult for them to buy all the goods they want.

Question 14

A theory or model is a simplification of reality, in much the same way that a road map shows only those features needed to get from one point to another.

Accepted Answer

A) True 
 B)False

Question 15

Each of the following statements about the use of models in the study of economics is true EXCEPT:

Accepted Answer

A)  models fit the observed facts exactly. 
B)  models are sometimes revised in light of new research findings. 
C)  models are easier to manipulate than the reality they represent. 
D)  models contain the essential features of the economic behavior being studied. 
A)  models fit the observed facts exactly. 
B)  models are sometimes revised in light of new research findings. 
C)  models are easier to manipulate than the reality they represent. 
D)  models contain the essential features of the economic behavior being studied.

Question 16

The answer to, "What goods are to be produced?" deals with:

Accepted Answer

A)  who gets the goods. 
B)  how tastes and preferences are determined. 
C)  how resources are combined to produce goods and services. 
D)  the kinds and quantities of goods and services produced. 
A)  who gets the goods. 
B)  how tastes and preferences are determined. 
C)  how resources are combined to produce goods and services. 
D)  the kinds and quantities of goods and services produced.

Question 17

Economists concerned about the behavior of individual households, firms, and industries are studying:

Accepted Answer

A)  microeconomics. 
B)  macroeconomics. 
C)  neither macroeconomics nor microeconomics. 
D)  the "forest" of economic behavior, rather than the "trees." 
A)  microeconomics. 
B)  macroeconomics. 
C)  neither macroeconomics nor microeconomics. 
D)  the "forest" of economic behavior, rather than the "trees."

Question 18

An example of a positive statement is:

Accepted Answer

A)  The rate of unemployment should be 4 percent. 
B)  A high rate of economic growth is good for the country. 
C)  an increase in investment spending tends to reduce unemployment. 
D)  Everyone in the country needs to be covered by national health insurance. 
A)  The rate of unemployment should be 4 percent. 
B)  A high rate of economic growth is good for the country. 
C)  an increase in investment spending tends to reduce unemployment. 
D)  Everyone in the country needs to be covered by national health insurance.

Question 19

The economic way of thinking includes:

Accepted Answer

A)  more attention paid to benefits rather than the costs involved in any choice. 
B)  the assumption that individuals choose to average out some objective. 
C)  emphasis on how choices are made at the margin. 
D)  the notion that the industrialized nations have solved the problem of scarcity. 
A)  more attention paid to benefits rather than the costs involved in any choice. 
B)  the assumption that individuals choose to average out some objective. 
C)  emphasis on how choices are made at the margin. 
D)  the notion that the industrialized nations have solved the problem of scarcity.

Question 20

Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume.This primarily addresses the economic question of:

Accepted Answer

A)  How will each good be produced? 
B)  For whom shall the goods be produced? 
C)  Why will the resources be used to produce goods? 
D)  What goods and services should a society produce? 
A)  How will each good be produced? 
B)  For whom shall the goods be produced? 
C)  Why will the resources be used to produce goods? 
D)  What goods and services should a society produce?

Explain the following statement: "The relative scarcity of resources makes the operation of any economic system a matter of choosing among various alternatives."

The study of how people choose among the alternatives available to them is the:

A free good is:

The three fundamental economic questions of what, how, and for whom:

A good is scarce if we must sacrifice something to obtain it.

A theory that has won virtually universal acceptance is a:

Many disagreements among economists result because:

The Case in Point on the Simpsons indicated that even fictional characters face:

Economics is a:

The existence of alternative uses of a resource implies that it is:

Which of the following statements is (are) true?

An answer to the question "For whom" determines:

The problem of determining for whom to produce exists because:

A theory or model is a simplification of reality, in much the same way that a road map shows only those features needed to get from one point to another.

Each of the following statements about the use of models in the study of economics is true EXCEPT:

The answer to, "What goods are to be produced?" deals with:

Economists concerned about the behavior of individual households, firms, and industries are studying:

An example of a positive statement is:

The economic way of thinking includes:

Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume.This primarily addresses the economic question of:

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 1: Economics: The Study of Choice

Explain the following statement: "The relative scarcity of resources makes the operation of any economic system a matter of choosing among various alternatives."

The study of how people choose among the alternatives available to them is the:

A free good is:

The three fundamental economic questions of what, how, and for whom:

A good is scarce if we must sacrifice something to obtain it.

A theory that has won virtually universal acceptance is a:

Many disagreements among economists result because:

The Case in Point on the Simpsons indicated that even fictional characters face:

Economics is a:

The existence of alternative uses of a resource implies that it is:

Which of the following statements is (are) true?

An answer to the question "For whom" determines:

The problem of determining for whom to produce exists because:

A theory or model is a simplification of reality, in much the same way that a road map shows only those features needed to get from one point to another.

Each of the following statements about the use of models in the study of economics is true EXCEPT:

The answer to, "What goods are to be produced?" deals with:

Economists concerned about the behavior of individual households, firms, and industries are studying:

An example of a positive statement is:

The economic way of thinking includes:

Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume.This primarily addresses the economic question of:

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters