AP Unit 1 Review

In economics, the pleasure, happiness, or satisfaction received from a product is called:

• status fulfillment

• marginal cost

• rational outcome

• utility

Economics may best be defined as the:

• interaction between macro and micro considerations.

• social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants.

• empirical testing of value judgments through the use of logic.

• use of policy to refute facts and hypotheses.

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.

There is too little of a good thing when its marginal:

• benefit exceeds its marginal cost.

• cost exceeds its marginal benefit.

• cost equals its marginal benefit.

• benefit is still positive.

Marginal costs exist because:

• the decision to produce more of some product means the sacrifice of other products.

• wants are scarce relative to resources.

• households and businesses make rational decisions.

• most decisions do not involve sacrifices or tradeoffs.

Which of the following statements is true?

• The process of deriving economic theories and principles is known as policy economics.

• Full employment, price-level stability, and economic growth are widely accepted macroeconomics goals in the United States.

• Normative economics deals with "what is," whereas positive economics deals with "what ought to be."

• There can be too little of a good thing, but never too much of a good thing.

Which of the following is a labor resource?

• a computer programmer

• a computer

• silicon (sand) used to make computer chips

• a piece of software used by a firm

The study of economics exists because:

• government interferes with the efficient allocation of scarce resources.

• resources are scarce in relation to economic wants.

• the market system is an obstacle to the efficient use of plentiful resources to satisfy constrained wants.

• resources are overly abundant as compared to wants; thus, an allocation problem exists.

Which of the following lists includes only capital resources (and therefore no labor or land resources)?

• an ice arena; a professional hockey player; hockey uniforms.

• the owner of a new startup firm; a chemistry lab; a researcher.

• a hydroelectric dam; water behind the dam; power lines.

• autos owned by a car rental firm; computers at the car rental agency; the vans that shuffle rental customers

The money payments made to owners of land, labor, capital, and entrepreneurial ability are:

• interest, wages, rent, and profits respectively.

• rent, wages, dividends, and interest respectively.

• rent, profits, wages, and interest respectively.

• rent, wages, interest, and profits respectively.