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WorksheetsReview-Ch. 1
Total questions: 29
Worksheet time: 15mins
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 society allocates its unlimited resources
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
Efficiency means everyone in the economy should receive an equal share of the goods and services
produced.
True
False
Government policies that improve equality usually increase efficiency at the same time
True
False
The cost of an action is measured in terms of foregone opportunities
True
False
Trade allows each person to specialize in the activities he or she does best, thus increasing each
individual's productivity
True
False
The government can potentially improve market outcomes if market inequalities or market failure exists
True
False
In the long run the primary effect of increasing the quantity of money is higher prices
True
False
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
Which of the following statements best represents the principle stating that people face trade offs
Melissa can attend the concert only if she takes her sister with her
Greg is hungry and homeless
Brian must repair the tire on his bike before he can ride it to class
Kendra must decide between going to Colorado or Cancun for spring break
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 is getting the maximum benefits from its scarce resources
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 redistributes income from the wealthy to the poor,
efficiency is improved, but equality is not.
both wealthy people and poor people benefit directly
people work less and produce fewer goods and services.
the government collects less revenue in total
The opportunity cost of an item is
the number of hours needed to earn money to buy the item
what you give up to get that item
usually less than the dollar value of the item.
the dollar value of the item
A rational decision maker takes an action only if the
marginal benefit is less than the marginal cost.
marginal benefit is greater 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 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 cost of staying one more semester to the benefits of staying one more semester.
compare the total benefits of your education to the cost of staying one more semester.
Which of the following statements exemplifies a principle of individual decision making?
Trade can make everyone better off
Governments can sometimes improve market outcomes
The cost of something is what you give up to get it.
All of the above are correct
The principle that "trade can make everyone better off" applies to interactions and trade between
families.
states within the United State
nations.
All of the above are correct.
Which of the following statements about markets is most accurate?
Markets are usually a good way to organize economic activity
Markets are usually inferior to central planning as a way to organize economic activity.
Markets fail and are therefore not an acceptable way to organize economic activity.
Markets are a good way to organize economic activity in developed nations, but not in less
developed nations.
For markets to work well, there must be
market power.
a central planner
property rights.
abundant, not scarce, resources
A rationale for government involvement in a market economy is as follows:
Markets sometimes fail to produce a fair distribution of economic well-being
Markets sometimes fail to produce an efficient allocation of resources
Property rights have to be enforced.
All of the above are correct.
The term market failure refers to
a situation in which the market on its own fails to allocate resources efficiently.
an unsuccessful advertising campaign which reduces demand for a product
a situation in which competition among firms becomes ruthless
a firm which is forced out of business because of losses
Causes of market failure include
market power and incorrect forecasts of consumer demand
externalities and market power
externalities and foreign competition
incorrect forecasts of consumer demand and foreign competition
An example of an externality is the impact of
bad weather on the income of farmers
the personal income tax on a person's ability to purchase goods and services
pollution from a factory on the health of people in the vicinity of the factory
increases in health care costs on the health of individuals in society
When a single person (or small group) has the ability to influence market prices, there is
competition
market power
an externality.
a lack of property rights
The amount of goods and services produced from each unit of labor input is called
opportunity cost.
externality
productivity
marginal benefit
The primary determinant of a country's standard of living is
the country’s ability to prevail over foreign competition
the country’s ability to produce goods and services
the total supply of money in the economy
the average age of the country's labor force.
Which of the following is the most correct statement about the relationship between inflation and
unemployment?
In the short run, falling inflation is associated with falling unemployment
In the short run, falling inflation is associated with rising unemployment
In the long run, falling inflation is associated with falling unemployment
In the long run, falling inflation is associated with rising unemployment
