Quiz on ch. 1

Among the fundamental concepts in economics are

• opportunity cost.

• marginalism

• Sacarcity

• all the above

2) Which of the following is the best definition of economics?

• the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided

• the study of how consumers spend their income

• the study of how business firms decide what inputs to hire and what outputs to produce

• the study of how the federal government allocates tax dollars

Opportunity cost is

• that which we forgo, or give up, when we make a choice or a decision.

• a cost that cannot be avoided, regardless of what is done in the future.

• the additional cost of producing an additional unit of output.

• the additional cost of buying an additional unit of a product.

The branch of economics that examines the functioning of individual industries and the behavior of individual decision-making units is

• positive economics.

• normative economics.

• macroeconomics.

• microeconomics.

Better insurance benefits increase the incentive of some individuals to work. This statement is best described as

• a positive statement.

• an example of the ceteris paribus assumption.

• a normative statement.

• a comparative economics statement.

The government should extend the duration of unemployment benefits to those workers who lost their jobs due to outsourcing. This statement is best described as

• an example of marginalism.

• an example of the fallacy of composition.

• a normative statement.

• a positive statement.

If you own a building and you decide to use that building to open a book store

• there is no opportunity cost of using this building for a book store because you own it.

• there is an opportunity cost of using this building for a book store because it could have been used in other ways.

• the opportunity costs equal the cost of inventory.

• the only cost relevant to this decision is the price you paid for the building.

A measure that can change from observation to observation is known as a(n)

• empirical measure.

• model.

• causality.

• variable.

The four criteria that are frequently used in judging the outcome of economic policy are

• efficiency, equity, stability, and economic growth.

• efficiency, equality, stability, and economic growth.

• efficiency, equality, profitability, and stability.

• efficiency, equity, profitability, and stability.

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