Chapter 1 Quiz

Economics is the study of

• how to invest in the stock market.

• how society uses limited resources.

• the role of money in markets

• how government officials decide which goods and services are produced.

An arrangement that allows buyers and sellers to exchange things is called

• a contract.

• a market.

• money.

• efficient.

Because resources are limited

• only the very wealthy can get everything they want.

• firms will be forced out of business.

• the availability of goods will be limited but the availability of services will not.

• people must make choices.

If there is a trade-off between goals A and B:

• greater fulfillment of A means lesser fulfillment of B.

• goals A and B are positively correlated.

• causation exists between the two goals.

• greater fulfillment of A means greater fulfillment of B.

The knowledge and skills acquired by a worker through education and experience is a description of which factor of production?

• physical capital

• human capital

• labor

• entrepreneurship

The effort used to coordinate the factors of production is a description of

• physical capital.

• human capital.

• labor.

• entrepreneurship.

Which of the following is an example of a normative question?

• How will an increase in the inheritance tax affect tax revenues?

• What fraction of an income tax cut will be spent on imported goods?

• Should Florida implement a state income tax to reduce its deficit?

• How will an increase in unemployment benefits affect the unemployment rate?

Which of the following is a question answered with positive economic analysis?

• Should the college reduce tuition for out-of-state residents?

• Should the college charge higher tuition for part-time students?

• If the college increased its eligibility requirements for enrollment, will class sizes decline?

• Should the college eliminate its athletic program to cut its costs?

An economic model is a

• realistic version of an economic environment.

• detailed version of an economic issue.

• fictional representation of an entire economy.

• simplified representation of an economic environment.

When entering a building, Sam diverts his path to go through an open door rather than make the physical effort to open the closed door that is directly in his path. This is an example of:

• irrational behavior.

• a lazy person.

• marginal benefit-marginal cost analysis.

• programmed learning.