Ch 1 Pop Quiz

For economists, the word "utility" means

• versatility and flexibility
• rationality
• pleasure or satisfaction
• purposefulness

According to economists, economic self-interest: 

• is a reality that underlies economic behavior
• has the same meaning as selfishness
• means that people never make wrong decisions
• is usually self-defeating.

The economic perspective entails: 

• irrational behavior by individuals and institutions.
• a comparison of marginal benefits and marginal costs in decision making.
• short-term but not long-term thinking.
  
• rejection of the scientific method.

Opportunity costs exist because: 

• the decision to engage in one activity means forgoing some other activity.
• wants are scarce relative to resources.
• households and businesses make rational decisions.
• most decisions do not involve sacrifices or trade-offs.

The assertion that "there is no free lunch" means that: 

• there are always trade-offs between economic goals.
• all production involves the use of scarce resources and thus the sacrifice of alternative goods.
• marginal analysis is used in economic reasoning.
• choices need not be made if behavior is rational.

Macroeconomics approaches the study of economics from the viewpoint of: 

• the entire economy.
• governmental units.
• the operation of specific product and resource markets.
• individual firms.

Which of the following is associated with macroeconomics? 

• An examination of the incomes of Harvard Business School graduates.
• An empirical investigation of the general price level and unemployment rates since 1990.
• A study of the trend of pecan prices since the Second World War.
• A case study of pricing and production in the textbook industry.

The scarcity problem: 

• persists only because countries have failed to achieve continuous full employment.
• has been solved in all industrialized nations.
• has been eliminated in affluent societies such as the United States and Canada.
• persists because economic wants exceed available productive resources.

Which of the following is a capital resource? 

• A computer programmer.
• A corporate bond issued by a computer manufacturer.
• Silicon (sand) used to make computer chips.
• A piece of software used by a firm.

Economic resources are also called: 

• free gifts of nature.
• consumption goods.
• units of money capital.
• factors of production.