Economics - Chapter 1 Quiz
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Questions and Answers

What does scarcity require individuals to do?

  • Allocate their time and money (correct)
  • Randomly choose goods and services
  • Ignore opportunity costs
  • Make irrational decisions

    • What does opportunity cost refer to?

  • A perfect decision-making process
  • The emotions attached to a decision
  • A random decision-making process
  • The value placed on a choice (correct)

    • According to economics, what does 'rational self-interest' mean?

  • Assuming perfect decision-making
  • Pursuing opportunities to maximize satisfaction (correct)
  • Being immune from faulty logic
  • Making random decisions

    • What does 'marginal' mean in economics?

    <p>A change in</p> Signup and view all the answers

    Why is marginal analysis important in decision making?

    <p>To compare marginal benefits and costs</p> Signup and view all the answers

    What is a well-tested and widely accepted economic theory referred to as?

    <p>An economic law</p> Signup and view all the answers

    What are economic principles expressed as?

    <p>Tendencies of average consumers, workers, or business firms</p> Signup and view all the answers

    What assumption do economists use when constructing theories?

    <p>Ceteris paribus assumption</p> Signup and view all the answers

    What are the general categories into which economists classify economic resources?

    <p>Land, labor, capital, and entrepreneurial ability</p> Signup and view all the answers

    Which resource consists of the physical and mental talents of individuals used in producing goods and services?

    <p>Labor</p> Signup and view all the answers

    What does the resource capital include for economists?

    <p>Manufactured aids used in producing consumer goods and services</p> Signup and view all the answers

    What does a production possibilities table list?

    <p>Different combinations of two products that can be produced with a specific set of resources</p> Signup and view all the answers

    What is the special human resource, distinct from labor, called according to economists?

    <p>Entrepreneurial ability</p> Signup and view all the answers

    How are the economy's output of capital goods and consumer goods represented on a production possibilities curve?

    <p>Consumer goods on the horizontal axis and capital goods on the vertical axis</p> Signup and view all the answers

    What does a point lying inside the production possibilities curve imply?

    <p>It reflects less total output and is less desirable than points on the curve</p> Signup and view all the answers

    What does the law of increasing opportunity costs indicate?

    <p>The opportunity cost of each additional unit of pizzas is greater than the opportunity cost of the preceding one</p> Signup and view all the answers

    According to the optimization rule, when should an economic activity be expanded?

    <p>When marginal benefit exceeds marginal cost</p> Signup and view all the answers

    What does the optimal quantity of pizza production indicate?

    <p>The point where marginal benefit equals marginal cost</p> Signup and view all the answers

    How do unemployment and unused production capacity relate to the production possibilities model?

    <p>Less output is produced than at full employment</p> Signup and view all the answers

    What does a shift from the inner curve to curve A’ B’ C’ D’ E’ in Figure 1.5 indicate?

    <p>Economic growth</p> Signup and view all the answers

    What contributes to economic growth according to the text?

    <p>Increases in supplies of resources, improvements in resource quality, and technological advances</p> Signup and view all the answers

    What does a point outside the production possibilities curve indicate?

    <p>Unattainable level of production</p> Signup and view all the answers

    Upon what specific assumptions is the production possibilities curve based?

    <p>Full employment and fixed resources</p> Signup and view all the answers

    What is the main concern of economics?

    <p>Satisfying unlimited wants with limited resources</p> Signup and view all the answers

    What is the definition of economics according to the text?

    <p>The social science concerned with how to make optimal choices under conditions of scarcity</p> Signup and view all the answers

    What is the main characteristic of the market system according to the text?

    <p>Private ownership and freedom of choice</p> Signup and view all the answers

    What does microeconomics focus on?

    <p>Individual units such as a person, a household, a firm, or an industry</p> Signup and view all the answers

    How do economists view the world according to the text?

    <p>Through the lens of scarcity</p> Signup and view all the answers

    What does the economic perspective emphasize according to the text?

    <p>Scarcity and choice</p> Signup and view all the answers

    Which of the following is an example of positive economics?

    <p>'The unemployment rate in France is higher than that in the United States.'</p> Signup and view all the answers

    What does a budget line visualize?

    <p>Various combinations of two products a consumer can purchase with a specific money income</p> Signup and view all the answers

    What causes people to be forced to make choices according to the text?

    <p>Limited productive capacity of scarce resources</p> Signup and view all the answers

    What does society's economizing problem stem from?

    <p>Limited or scarce economic resources</p> Signup and view all the answers

    What is the fundamental problem faced by society according to the text?

    <p>The mismatch between wants and resources</p> Signup and view all the answers

    What is the focus of macroeconomics?

    <p>The economy as a whole or its basic subdivisions or aggregates</p> Signup and view all the answers

    What does economics focus on?

    <p>How individuals, institutions, and society make optimal choices under conditions of scarcity</p> Signup and view all the answers

    Which statement best describes normative economics?

    <p>Incorporates value judgments or what particular policy actions should be recommended</p> Signup and view all the answers

    What does positive economics focus on?

    <p>Facts and cause-and-effect relationships</p> Signup and view all the answers

    What is the economizing problem faced by individuals?

    <p>'We desire various goods and services that provide utility.'</p> Signup and view all the answers

    Economics is the social science concerned with how individuals, institutions, and society make ______ choices under conditions of ______.

    <p>optimal - scarcity</p> Signup and view all the answers

    Economists view the world through the lens of ______.

    <p>scarcity</p> Signup and view all the answers

    What does scarce economic resources mean?

    <p>Limited goods and services</p> Signup and view all the answers

    What is the definition of opportunity cost?

    <p>The value of the next best alternative forgone</p> Signup and view all the answers

    How would you describe the decision-making process in economics, where individuals weigh costs and benefits to make decisions?

    <p>Purposeful and rational</p> Signup and view all the answers

    What condition ensures profitability when selling a ticket to a standby passenger?

    <p>If the passenger pays more than the marginal cost</p> Signup and view all the answers

    What is the correct sequence of steps in the economics scientific method (procedure) described?

    <p>Observing real-world behavior, forming a hypothesis, accepting or rejecting the hypothesis, ongoing testing, evolving into a theory.</p> Signup and view all the answers

    What term is used to describe a thoroughly tested and widely accepted economic theory, often referred to as a fundamental concept in economics?

    <p>Economic law</p> Signup and view all the answers

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