Chapter 1 Review

Fundamentally, economics deals with

• scarcity
• money
• banking
• poverty

The phenomenon of scarcity stems from the fact that

• resources are limited.
• in most economies, wealthy people consume disproportionate quantities of goods and services.
• most economies' production methods are not very good.
• governments restrict production of too many goods and services.

In most societies, resources are allocated by

• the combined actions of millions of households and firms.
• a small number of central planners.
• a single central planner.
• those firms that use resources to provide goods and services.

Coal is considered to be a nonrenewable energy source. Which of the following statements is correct?

• Coal is a scarce resource.
• Coal is a nonscarce resource.
• Coal is not a resource.
• Coal is an unlimited resource.

The adage, "There ain't no such thing as a free lunch," means

• people face tradeoffs.
• all costs are included in the price of a product.
• even people on welfare have to pay for food.
• the cost of living is always increasing.

Efficiency means that

• society is getting the most it can from its scarce resources.
• society's goods and services are distributed equally among society's members.
• society's goods and services are distributed fairly, though not necessarily equally, among society's members.
• society is conserving resources in order to save them for the future.

Efficiency

• refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society.
• and equality both refer to how much a society can produce with its resources.
• refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources.
• and equality both refer to how fairly the benefits from using resources are distributed between members of a society.

The opportunity cost of an item is

• what you give up to get that item.
• usually less than the dollar value of the item.
• the number of hours needed to earn money to buy the item.
• the dollar value of the item.

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

• 315
• 0
• 305
• 15

When computing the opportunity cost of attending a concert you should include

• the price you pay for the ticket and the value of your time.
• the price you pay for the ticket, but not the value of your time.
• neither the price of the ticket nor the value of your time.
• the value of your time, but not the price you pay for the ticket.