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WorksheetsPrelim Exam-Economics
Total questions: 30
Worksheet time: 46mins
The word that comes from the Greek word for “one who manages a household” is
market
consumer
producer
economy
Households and economies have each of the following in common EXCEPT both
must allocate scarce resources.
face many decisions.
must allocate the goods and services they produce
must have a central decision maker.
Economics deals primarily with the concept of
scarcity.
poverty.
change
power.
Which of the following is NOT included in the decisions that every society must make?
what goods will be produced
who will produce goods
what determines consumer preferences
who will consume the goods
A good is considered scarce in a society when
more output of the good is possible.
everyone in that society cannot have all they want of the good.
the government restricts production of the good.
only the richest people in the economy can buy all they want of the good.
Economics is the study of
how society manages its scarce resources.
the government’s role in society.
how a market system functions
how to increase production.
Which of the following is NOT a major area of study for economists?
how people make decisions
how countries choose national leaders
how people interact with each other
how forces and trends affect the overall economy
The adage, “There is no such thing as a free lunch,” is used to illustrate the concept of
tradeoffs.
scarcity.
productivity.
efficiency.
Guns and butter are used to represent the classic societal tradeoff between spending on
durable and nondurable goods.
imports and exports.
national defense and consumer goods.
law enforcement and agriculture.
Which of the following is true?
Efficiency refers to the size of the economic pie; equity refers to how the pie is divided.
Fortunately, government policies are designed to promote both equity and efficiency.
As long as the economic pie continually gets larger, no one will have to go hungry.
Efficiency and equity can both be achieved if the economic pie is cut into equal pieces
What you give up to obtain an item is called your
opportunity cost.
b. explicit cost.
true cost.
direct cost.
The opportunity cost of going to college is
the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses.
the value of the best opportunity a student gives up to attend college.
zero for students who are fortunate enough to have all of their college expenses paid by someone else.
zero, since a college education will allow a student to earn a larger income after graduation.
For most students, the largest single cost of a college education is
the wages given up to attend school.
tuition, fees, and books.
room and board.
transportation, parking, and entertainment.
The word “margin” means
edge.
distance.
space.
measure.
Making 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 marginal dollar costs for each decision.
A marginal change is a
. long-term trend.
large, significant adjustment.
change for the worse, and so is usually short-term.
small incremental adjustment.
Economists understand that people respond to
laws.
incentives.
threats more than rewards.
positives, but not negatives.
The decisions of firms and households are guided by profit and self-interest in a
command economy.
traditional economy.
market economy.
All of the above are correct.
In a market economy, economic activity is guided by
the government.
corporations.
central planners.
prices.
The invisible hand works to promote general well-being in the economy primarily through
government intervention.
the political process.
self interest.
altruism
The primary determinant of a country’s standard of living is
the ability to reduce foreign competition.
its ability to produce goods and services.
the total supply of money in the economy.
the average age of the country’s labor force.
The income of a typical worker in a country is most closely linked to which of the following?
population
productivity
the number of labor unions
government policies
Productivity is defined as the
amount of goods and services produced from each hour of a worker’s time.
number of workers required to produce a given amount of goods and services.
amount of labor which can be saved by replacing workers with machines.
actual amount of effort workers put into an hour of working time.
To improve living standards, policymakers should
impose restriction on foreign competition.
formulate policies designed to increase productivity.
impose tougher immigration policies. d.
provide tax breaks for the middle class.
An increase in the overall level of prices in an economy is referred to as
economic growth.
inflation.
monetary policy
supply shocks
Scarcity means that there is less of a good or resource available than people wish to have
True
False
Economics is the study of how fairly goods and services are distributed within society
True
False
Equity means everyone in the economy should receive an equal share of the goods and services produced.
True
False
Trade with any nation can be mutually beneficial.
True
False
With careful planning, we can usually get something that we like without having to give up something else that we like
True
False
