A rational decision maker takes an action only if

marginal benefit is greater than the marginal cost.

marginal benefit is less than the marginal cost.

average benefit is greater than the average cost.

marginal benefit is greater than both the average cost and the marginal cost.

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

compare the cost of staying one more semester to the benefits of staying one more semester.

compare the total cost of your education to the total benefits of your education.

compare the total cost of your education to the benefits of staying one more semester.

compare the total benefits of your education to the cost of staying one more semester.

Which markets are represented in the simple circular-flow diagram?

markets for goods and services and markets for factors of production

markets for goods and services and markets for financial assets

markets for factors of production and markets for financial assets

markets for goods and services and markets for imports and exports

The two loops in the circular-flow diagram represent

the flows of inputs and outputs and the flow of dollars.

the flow of goods and the flow of services.

the flow of dollars and the flow of financial assets.

the flow of inputs into production processes and the flow of outputs from production processes.

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

the nation is not using all available resources or is using inferior technology or both.

the nation is producing beyond its capacity, so inflation will occur.

the nation is producing an efficient combination of goods.

there will be a large opportunity cost if the nation tries to increase production of any good.

An economy’s production of two goods is efficient if

it is impossible to produce more of one good without producing less of the other.

all members of society consume equal portions of the goods.

the goods are produced using only some of society’s available resources.

the opportunity cost of producing more of one good is zero.

Which of the following statements is correct about the roles of economists?

In trying to explain the world, economists are scientists; in trying to improve the world, they are policy advisers.

Economists are best viewed as policy advisers.

Economists are best viewed as scientists.

In trying to explain the world, economists are policy advisers; in trying to improve the world, they are scientists.

Economists speaking like scientists make

claims about how the world should be.

More than one of the above is correct.

The most common data for testing economic theories come from

historical episodes of economic change.

carefully controlled and conducted laboratory experiments.

In most societies, resources are allocated by

the combined actions of millions of households and firms.

a small number of central planners.

those firms that use resources to provide goods and services.

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

Joe needs to pay his rent and his electric bill.

Pete must choose between buying a new flat screen television and buying his textbooks for this semester.

Kevin must decide between studying for his economics exam and working at his part-time job.

Lisa can spend her money on a new sweater or a pair of jeans.

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

benefit of leaving was greater than the marginal cost.

cost of leaving was greater than the marginal benefit.

benefit of teaching was greater than the marginal cost.

Central planning refers to

government guiding economic activity. Today many countries that had this system have abandoned it.

markets guiding economic activity. Today many countries that had this system have abandoned it.

markets guiding economic activity. Today many countries that did not have this system have implemented it.

government guiding economic activity. Today many countries that did not have this system have implemented it.

An example of an externality is the impact of

pollution from a factory on the health of people in the vicinity of the factory.

bad weather on the income of farmers.

the personal income tax on a person's ability to purchase goods and services.

increases in health care costs on the health of individuals in society.

With respect to how economists study the economy, which of the following statements is most accurate?

Economists devise theories, collect data, and analyze the data to test the theories.

Economists study the past, but they do not try to predict the future.

Economists use "rules of thumb" to predict the future.

Economists use controlled experiments in much the same way that biologists and physicists do.

Which of the following statements about models is correct?

Models assume away irrelevant details.

The more details a model includes, the better the model.

Models cannot be used to explain how the economy functions.

Models cannot be used to make predictions.

Which of the following is not correct about most economic models?

They contribute very little to economists’ understanding of the real world.

They are composed of equations and diagrams.

They omit many features of the real-world economy.

In constructing models, economists make assumptions.

In economics, capital refers to

buildings and machines used in the production process.

the finances necessary for firms to produce their products.

the money households use to purchase firms' output.

In the simple circular-flow diagram, households

consume only some of the goods and services that firms produce.

In the simple circular-flow diagram,

households own the factors of production.

households buy all the goods and services that firms produce.

land, labor, and capital flow from households to firms.

In the circular-flow diagram, which of the following items flows from households to firms through the markets for the factors of production?

dollars spent on goods and services

A production possibilities frontier can shift outward if

there is a technological improvement.

government increases the amount of money in the economy.

resources are shifted from the production of one good to the production of the other good.

the economy abandons inefficient production methods in favor of efficient production methods.

Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

the effect of a sales tax on the cigarette industry

the effect of foreign direct investment on economic growth

the effect of an investment tax credit on the economy’s capital stock

the effect of a war on government spending

A microeconomist — as opposed to a macroeconomist — might study

the effect of rising oil prices on employment in the airline industry.

the effect of borrowing by the federal government on the inflation rate.

changes in the nation’s unemployment rate over short periods of time.

alternative policies to promote higher living standards throughout the nation.

Economists view positive statements as

descriptive, making a claim about how the world is.

affirmative, justifying existing economic policy.

optimistic, putting the best possible interpretation on things.

prescriptive, making a claim about how the world ought to be.

Economists view normative statements as

prescriptive, making a claim about how the world ought to be.

descriptive, making a claim about how the world is.

statements about the normal condition of the world.

pessimistic, putting the worst possible interpretation on things.

Eco01H_Revision_Chapter 1

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Social Studies

11th Grade

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40 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The phenomenon of scarcity stems from the fact that

most economies’ production methods are not very good.

in most economies, wealthy people consume disproportionate quantities of goods and services.

governments restrict production of too many goods and services.

resources are limited.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Economists use the word equality to describe a situation in which

each member of society has the same income.

each member of society has access to abundant quantities of goods and services, regardless of his or her income.

society is getting the maximum benefits from its scarce resources.

society's resources are used efficiently.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Denise decides to spend three hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is

the $30 she earns working.

the $30 minus the enjoyment she would have received from watching the video.

the enjoyment she would have received had she watched the video.

nothing, since she would have received less than $30 of enjoyment from the video.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Making rational decisions "at the margin" means that people

make those decisions that do not impose a marginal cost

evaluate how easily a decision can be reversed if problems arise.

compare the marginal costs and marginal benefits of each decision.

always calculate the dollar costs for each decision.

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Eco01H_Revision_Chapter 1

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

The phenomenon of scarcity stems from the fact that

Economists use the word equality to describe a situation in which

Efficiency means that

When computing the opportunity cost of attending a concert you should include

Denise decides to spend three hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is

Making rational decisions "at the margin" means that people

A rational decision maker takes an action only if

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

In the circular-flow diagram, which of the following is not a factor of production?

Access all questions and much more by creating a free account

Popular Resources on Wayground

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