Economics - MCQ L1 Intro

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Econ MCQ - L1 Intro

1) All economic questions

are about

A) how

to make money.

B)

what to produce.

C) how

to cope with scarcity.

D) how

to satisfy all our wants.

Answer:

2) When an economist

talks of scarcity, the economist is referring to the

A)

ability of society to employ all of its resources.

B)

ability of society to consume all that it produces.

C)

inability of society to satisfy all human wants because of limited resources.

D)

ability of society to continually make technological breakthroughs and increase

production.

Answer:

3) An inducement to take

a particular action is called

A) the

marginal benefit.

B) the

marginal cost.

C)

opportunity cost.

D) an

incentive.

Answer:

4) Economics is best

defined as

A) how

people make money and profits in the stock market.

B)

making choices from an unlimited supply of goods and services.

C)

making choices with unlimited wants but facing a scarcity of resources.

D)

controlling a budget for a household.

Answer:

5) Studying the

determination of prices in individual markets is primarily a concern of

A)

positive economics.

B)

negative economics.

C)

macroeconomics.

D)

microeconomics.

Answer:

6) Which of the following

questions is NOT a microeconomic question?

A) Can

the Federal Reserve keep income growing by cutting interest rates?

B) How

would a tax on e-commerce affect eBay?

C)

What is Britney's opportunity cost of having another baby?

D)

Does the United States have a comparative advantage in information technology services?

Answer:

7) In broad terms the

difference between microeconomics and macroeconomics is that

A)

they use different sets of tools and ideas.

B)

microeconomics studies decisions of individual people and firms and

macroeconomics studies the entire national economy.

C)

macroeconomics studies the effects of government regulation and taxes on the

price of individual goods and services whereas microeconomics does not.

D)

microeconomics studies the effects of government taxes on the national

unemployment rate.

Answer:

8) Macroeconomic topics

include

A)

total, nationwide employment.

B)

studying what factors influence the price and quantity of automobiles.

C)

studying the determination of wages and production costs in the software

industry.

D) the

impact of government regulation of markets.

Answer:

9) Keeping in mind

economists' definition of factors of production, which of the following is NOT

a factor of production?

A)

money

B)

low-skilled labor

C)

coal

D) an

engineer

Answer:

10) The income earned by

the people who sell the services of the factor of production ________ is called

________.

A)

capital; rent

B)

entrepreneurship; wages

C)

land; profit

D)

entrepreneurship; profit

Answer:

11) Which of the

following best defines capital as a factor of production?

A) The

gifts of nature that businesses use to produce goods and services.

B) The

knowledge and skills that people obtain from education and use in production of

goods and services.

C)

Financial assets used by businesses.

D)

Instruments, machines, and buildings used in production.

Answer:

12) Human capital is

A) all

capital owned by individuals, but not by corporations or governments.

B) all

capital owned by individuals or corporations, but not by governments.

C)

machinery that meets or exceeds federal safety standards for use by humans.

D) the

skill and knowledge of workers.

Answer:

13) Which of the

following is NOT an investment in human capital?

A) a

business student takes a seminar in using a laptop computer

B) a student

purchases a laptop computer

C) a

computer science student learns how to repair a laptop computer

D) a

computer science student takes a course on programming a laptop computer

Answer:

14) Entrepreneurs do all

of the following EXCEPT

A)

organize labor, land, and capital.

B)

come up with new ideas about what and how to produce.

C)

bear risk from business decisions.

D) own

all the other resources used in the production process.

Answer:

15) In economics we learn

that

A)

tradeoffs allow us to have more of everything we value.

B)

tradeoffs allow us to avoid the problem of opportunity cost.

C)

opportunity costs are all of the possible alternatives given up when we make a

choice.

D)

None of the above answers is correct.

Answer:

16) The loss of the highest-valued

alternative defines the concept of

A)

marginal benefit.

B)

scarcity.

C)

entrepreneurship.

D)

opportunity cost.

Answer:

17) Opportunity cost

means the

A)

accounting cost minus the marginal cost.

B)

highest-valued alternative forgone.

C) accounting

cost minus the marginal benefit.

D)

monetary costs of an activity.

Answer:

18) The night before a

midterm exam, you decide to go to the movies instead of studying for the exam.

You score 60 percent on your exam. If you had studied the night before, you'd

have scored 70 percent. What was the opportunity cost of your evening at the

movies?

A) 10

percent off your grade

B) 60

percent

C) 70

percent

D)

zero

Answer:

19) You decide to take a

vacation and the trip costs you $2,000. While you are on vacation, you do not

go to work where you could have earned $750. In terms of dollars, the

opportunity cost of the vacation is

A)

$2,000.

B)

$750.

C)

$2,750.

D)

$1,250

Answer:

20) Jill, an economics

student, has already spent 5 hours cleaning her room. In deciding whether or

not to continue cleaning for another hour, she applies the economic principle

of

A)

scarcity.

B)

ceteris paribus.

C)

choosing at the margin.

D)

productivity.

Answer:

21) In economics,

positive statements are about

A) the

way things ought to be.

B) the

way things are.

C)

macroeconomics, not microeconomics.

D)

microeconomics, not macroeconomics.

Answer:

22) Which of the

following are true regarding "positive" statements?

I. They describe what "ought to be."

II. They describe what is believed about

how the world appears.

III. They can be tested as to their

truthfulness.

A) I

and II

B) II

and III

C) I

and III

D) I,

II and III

Answer:

23) Which of the following

is a positive statement?

A) The

United States should fight inflation even if it raises unemployment.

B)

What to do with Social Security is the most important economic issue today.

C) A 5

percent increase in income leads to a 3 percent increase in the consumption of

orange juice.

D)

Because they decrease productivity, labor unions should be eliminated.

Answer:

24) Panasonic sends its

HDTV salespeople to training sessions. This is an example of

A) a

macroeconomic decision.

B)

scarcity.

C) a

firm investing in workers' human capital

D)

entrepreneurship.

Answer:

25) "As part of the

financial crisis bailout plan in 2009, the Federal Reserve bought stakes in

banks. This policy will result in an increase in the inflation rate." This

is an example of

A) a

positive statement.

B) a

normative statement.

C) a

microeconomic statement.

D) an

economic model.

Answer:

26) "OPEC should

supply more oil so that the world's economies can grow more rapidly." This

is an example of

A) a

normative statement.

B) a

positive statement.

C) a

decision at the margin.

D)

OPEC overcoming scarcity

Answer:

Question

Answer

1

C

2

C

3

D

4

C

5

D

6

A

7

B

8

A

9

A

10

D

11

D

12

D

13

B

14

D

15

D

16

D

17

B

18

A

19

C

20

C

21

B

22

B

23

C

24

C

25

A

26

A