The Principles and Practice of Economics

Which of the following statements is TRUE?

• All economic agents are necessarily individuals.

• A worker who shirks work is not an economic agent.

• A government is an example of an economic agent.

• A street gang is not an economic agent.

Which of the following best describes scarce resources?

• Resources that most people cannot afford to buy

• Resources that can only be distributed efficiently by the government

• Resources for which the quantity demanded is the same for all economic agents

• Resources for which the quantity that people want exceeds the quantity that is freely available

Which of the following is NOT a scarce resource?

• Gold

• Pollution

• Petroleum

• iPhones

Economics is primarily the study of ________.

• the mental functions and behavior of individuals and groups

• the state, nation, government, and politics and policies of governments

• the problems related to the existence and evolution of society

• how agents choose to allocate scarce resources and how these choices affect society

Which of the following is an example of a positive economic statement?

• The government should ideally work as a welfare state.

• An increase in income causes an increase in savings.

• Economics is the most useful social science.

• Eliminating poverty is more important than reducing inflation.

________ is the study of how individuals, households, governments, and firms make choices and how those choices affect prices, the allocation of resources, and the well-being of other agents.

• Cost-benefit analysis

• Microeconomics

• Macroeconomics

• Empiricism

Empiricism is analysis that uses ________ to test theories.

• data

• illustrations

• philosophy

• value judgments

A consumer has $50 to spend. He has to decide between buying two goods: magazines priced at $5 each and DVDs priced at $10 each. Which of the following combinations of the two goods will entirely exhaust his budget constraint?

• 3 magazines and 4 DVDs

• 2 magazines and 4 DVDs

• 6 magazines and 1 DVD

• 2 magazines and 2 DVDs

................ is a calculation that adds up the costs and benefits using a common unit of measurement, like dollar values.

• Cost-benefit analysis

• Revenue-income analysis

• Budget constraint analysis

• Expenditure-income analysis

Roberta is moving to be closer to her children. Roberta is a nurse and makes $45 per hour. She has to decide whether to hire movers to pack up her belongings or pack it all up herself. The movers will charge $1,000 to supply packing materials and pack up all of Roberta's belongings. It would take 20 hours for her to pack up herself, and she would need to spend $300 on packing materials.

Refer to the scenario above. What is the total cost to Roberta of packing up herself?

• $1200

• $900

• $300

• $1000