Session 1

Which of the following products would be considered scarce?

• golf clubs

• Picasso paintings

• apples

• All of the above are correct.

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

• goods are scarce.

• people face tradeoffs.

• income must be earned.

• households face many decisions.

Economists build economic models by

• generating data.

• conducting controlled experiments in a lab.

• making assumptions.

• reviewing statistical forecasts.

In the simple circular-flow diagram, the participants in the economy are

• firms and government.

• households and firms.

• households and government.

• elected officials and ordinary citizens.

The amount by which firms’ sales revenue exceeds their payments to factors of production is called

• rent.

• capital.

• profit.

• interest.

Comparative advantage is related most closely to which of the following?

• output per hour

• opportunity cost

• efficiency

• bargaining strength in international trade

The forces that make market economies work are

• work and leisure.

• demand and supply.

• regulation and restraint.

• taxes and government spending.

A legal maximum price at which a good can be sold is a price

• floor.

• stabilization.

•     support.

• ceiling.

Microeconomics is the study of

• how money affects the economy.

• how individual households and firms make decisions.

• how government affects the economy.

• how the economy as a whole works.

Macroeconomics is the study of

• individual decision makers.

• international trade.

• economy-wide phenomena.

• markets for large products.