Copy of Copy of Copy of Unit 1 Post Test

1. Why might some historians consider Adam Smith one of the most influential people in history?

• A. He taught that all people should be economic equals.
• B. He introduced a way of thinking about economic ideas.
• C. He argued for a larger role for the government in the economy.
• D. He wrote the economic argument for American independence.

2. Which of these statements is an example of normative economics?

• A. "Taxes ought to be lowered."
• B. "Inflation is higher this year."
• C. "The bond market is in decline."
• D. "Speculation caused a recession."

3. A limitation of using graphs to represent relationships is that they

• A. must be presented in a small space.
• B. typically show the less important variables.
• C. omit factors other than those being graphed.
• D. are hard for anyone but economists to interpret.

4. Which statement is the best example of thinking at the margin?

• A. John has six shirts and is trying to decide whether to buy a seventh.
• B. Mary observes that the average cost of shoes is higher than last year.
• C. David decides to volunteer this summer instead of working for pay.
• D. Jane wants to buy a car but decides she cannot afford the insurance.

5. What are the factors of production?

• A. goods and services
• B. risk and opportunity
• C. land, labor, and capital
• D. wages, salaries, and profits

6. Ocean waves can be used to generate energy. Ocean waves are considered which type of resource?

• A. capital
• B. nonrenewable
• C. perpetual
• D. renewable

7. Which of these items is a measure of productivity?

• years of education
• B. bushels of corn per acre
• C. number of workers employed
• D. dollars invested in new equipment

8. Why are tradeoffs necessary?

• A. Resources are limited.
• B. Every product has flaws.
• C. People want different things.
• D. Advertisers promote products.

9. Which scenario best illustrates the law of diminishing marginal utility?

• A. A car breaks down more ofen as it gets older.
• B. A collector of china figurines is eager to get a new one.
• C. Someone who doesn't listen to music does not care about getting a new CD.
• D. A new toy is less exciting to a child with many toys than to a child with just a few.

10. Choose the best word to fill in the blank. The three fundamental economic questions are what to produce, ______________, and for whom.

• A. why
• B. how
• C. when
• D. where