Economics Quiz

Which of the following activities describes the opportunity cost of attending an economics class?

• The value of the time it takes to get to campus every day

• The cost of the gasoline needed to drive a car to campus

• The value of the highest valued alternative that must be forgone because of attending the class

• Transportation costs plus the cost of tuition and textbooks for the course

When private ownership rights are well-defined and enforced, owners

• can ignore the wishes of others, without bearing the cost.

• have little incentive to take care of things.

• can do anything they want with their property.

• can be held accountable for damage to others through misuse of their property.

Entrepreneurs are

• profit-seeking decision makers who decide which business projects to undertake.

• people who loan money to other business decision makers.

• managers who generally work for a salary because they are unwilling to take risks.

• people who carry out the auditing and checking of a company's books and records.

The process by which new products and methods of production are continuously replacing old ones is known as

• the invisible hand principle.

• the production possibilities frontier.

• creative destruction.

• the fallacy of composition.

Which of the following most accurately reflects the opportunity cost to a pharmacist who drives a taxi?

• The dollars spent on his previously acquired education in pharmacy

• The revenue derived from operating the cab

• Zero if the pharmacist received his education on a scholarship that paid his full tuition

• The value of the pharmacist’s time in its highest valued use other than driving a cab

The creation of a new product or process, often facilitated by the knowledge of engineering and scientific relationships, is known as

• invention.

• innovation.

• application.

• sublimation.

In a market economy,

• a larger income for one person means a smaller one for another.

• the government answers all the basic economic questions.

• a larger income for one person means it is possible for others to earn more too.

• economic output shrinks as we discover better ways of doing things.

The government enforces property rights by

• requiring property owners to pay property taxes.

• providing police and courts to apprehend and prosecute people who destroy or take property that does not belong to them.

• forcing people to own property.

• providing public parks and recreation facilities.

A system of economic organization in which the ownership and control of productive capital assets rests with the state and in which resources are allocated through central planning and political decision making is called

• socialism.

• a market economy.

• a corporate economy.

• capitalism.

Entrepreneurs have a strong incentive to

• discover new production techniques that reduce costs.

• provide accounting services to large companies.

• produce goods that are valued less than the resources required for their production.

• introduce innovative new products even if consumers do not value them as much as the resources required for their production.