Economics Unit 1

The definition of economics is the study of

• how governments set social policy.This is a wrong answer

• the influence of the Federal Reserve on history.This is a wrong answer

• how govt dictate which bus. succeed or fail in a country.This is a wrong answer

• the use of scarce resources that have alternative uses.This is a correct answer the use of scarce resources that have alternative uses.This is a correct answer

If you have $20 and must make a choice how to spend, but cannot do all this illustrates

• resources are scarce

• consumers seek to increase their pay, to be able to afford all they want

• resources are mutually exclusive

• inflation has occurred during the past decade

You are looking at what happens to the price of cranberry's, if the local crop is destroyed you are doing

• microeconomics

• positive economics

• macroeconomics

If you are predicting what will happen to unemployment if the government raises income tax rates, you are doing

• microeconomics

• positive economics

• macroeconomics

• normative economics

You are evaluating alternative proposals for next years budget and making recommendations you are doing

• microeconomics

• positive economics

• macroeconomics

• normative economics

You have $20 you have 3 options, but cannot do all three. Regardless of which you choose

• You will not have enough money to afford all of your alternatives

• You will be unhappy because you wanted to do all the alternatives

• the economics of the situation do not change

• You are making trade-off by not choose 1 of the other alternatives

You have $40 and have three choice; 1st is to buy gas, 2nd is to go on a date, 3rd is to buy clothes. If you buy gas, the opportunity cost is

• $20

• taking a date to the movies

• buying new clothes

• both taking a date to the movies and buying new clothes

You received a free shirt, someone had to actually pay for it, illustrates the concept of:

• trade-offs

• opportunity cost

• TANSTAAFL ("There Ain't No Such Thing As A Free Lunch")

• scarcity

When evaluating the trade-offs of making a choice, you

• quantify each trade-off in terms of dollars and cents

• count the number of benefits you get from your choice

• count the number of opportunity costs of making the choice

• evaluate the costs verse the benefits of each possible choice

After doing a cost-benefit analysis, you generally choose the option in which

• the benefits outweigh the costs

• the costs outweigh the benefits

• the costs and benefits are equal

• the dollar value is the best for your budget