Economics Quiz chap 1&2

When a society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

• scarcity

• surpluses

• inefficiencies

• inequalities

Economics is the study of

• production methods

• how society manages its scarce resources

• how households decide who performs which tasks

• the interaction of business and government

The adage, 'There is no such thing as a free lunch,' means

• even people on welfare have to pay for food

• the cost of living is always increasing

• people face tradeoffs

• all costs are included in the price of a product

The principle that 'people face tradeoffs' applies to

• individuals

• families

• societies

• All of the above are correct

Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that

• people respond to incentives

• rational people think at the margin

• people face tradeoffs

• improvements in efficiency sometimes come at the expense of equality

Efficiency means that

• society is conserving resources in order to save them for the future

• 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 getting the maximum benefits from its scarce resources

When the government attempts to improve equality in an economy the result is often

• an increase in overall output in the economy

• additional government revenues since overall income will increase

• a reduction in equality

• a reduction in inefficiency

In economics, the cost of something is

• the dollar amount of obtaining it

• always measured in units of time given up to get it

• what you give up to get it

• often impossible to quantify, even in principle

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

• the value of your time, but not the price you pay for the ticket

• neither the price of the ticket nor the value of your time

Ellie decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is

• the value of the knowledge she would have received had she attended class

• the $24 she could have earned if she had worked at her job for those two hours

• the value of her nap less the value of attending class

• nothing, since she valued sleep more than attendance at class