Principles of Economics 5th Edition By Frank – Test Bank
|1. Economics is best defined as the study of:|
|A. prices and quantities.
B. inflation and interest rates.
C. how people make choices under the conditions of scarcity and the results of those choices.
D. wages and incomes.
|2. Economic questions always deal with:|
|A. financial matters.
B. political matters.
C. insufficient resources.
D. choice in the face of limited resources.
|3. The range of topics or issues that fit within the definition of economics is:|
|A. limited to market activities, e.g., buying soap.
B. limited to individuals and firms.
C. extremely wide, requiring only the ideas of choice and scarcity.
D. very limited.
|4. The central concern of economics is:|
C. wealth accumulation.
|5. The scarcity principle indicates that:|
|A. no matter how much one has, it is never enough.
B. compared to 100 years ago, individuals have less time today.
C. with limited resources, having more of “this” means having less of “that”.
D. because tradeoffs must be made, resources are therefore scarce.
|6. The logical implication of the scarcity principle is that:|
|A. one will never be satisfied with what one has.
B. as wealth increases, making choices becomes less necessary.
C. as wealth decreases, making choices becomes less necessary.
D. choices must be made.
|7. If all the world’s resources were to magically increase a hundredfold, then:|
|A. the scarcity principle would still govern behavior.
B. economics would no longer be relevant.
C. the scarcity principle would disappear.
D. tradeoffs would become unnecessary.
|8. The principle of scarcity applies to:|
|A. the poor exclusively.
B. all consumers.
C. all firms.
D. everyone—consumers, firms, governments, and nations.
|9. At the very least, Joe Average and Bill Gates are both identically limited by:|
|A. their wealth.
B. the 24 hours that comprise a day.
C. their knowledge.
D. their influence.
|10. Forest is a mountain man living in complete isolation in Montana. He is completely self-sufficient|
|through hunting, fishing, and farming. He has not been in the city to buy anything in five years. One can
A. the scarcity principle does not apply to Forest.
B. Forest is not required to make choices.
C. the scarcity principle still applies because more hunting means less fishing and farming.
D. Forest is very satisfied.
|11. The scarcity principle applies to:|
|A. all decisions.
B. only market decisions, e.g., buying a car.
C. only non-market decisions, e.g., watching a sunset.
D. only the poor.
|12. Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and|
|study or go to the gym and work out. The decision Chris must make is:
A. not an economic problem because neither one costs money.
B. not an economic problem because it’s an hour that is wasted no matter what Chris does.
C. an economic problem because the tuition Chris pays covers both the gym and the library.
D. an economic problem because Chris has only one hour during which he can study or work out.
|13. Josh wants to go to the football game this weekend, but he has a paper due on Monday. It will take him|
|the whole weekend to write the paper. Josh decided to stay home and work on the paper. According to the
scarcity principle, the reason Josh didn’t go to the game is that:
A. Josh prefers schoolwork to football games.
B. writing the paper is easier than going to the game.
C. Josh doesn’t have enough time for writing the paper and going to the game.
D. it’s too expensive to go to the game.
|14. Whether studying the size of the U.S. economy or the number of children a couple will choose to have,|
|the unifying concept is that wants are:
A. limited, resources are limited, and thus choices must be made.
B. unlimited, resources are limited, and thus choices must be made.
C. unlimited, resources are limited to some but not to others, and thus some people must make choices.
D. unlimited, resources are limited, and thus government needs to do more.
|15. The cost-benefit principle indicates that an action should be taken:|
|A. if the total benefits exceed the total costs.
B. if the average benefits exceed the average costs.
C. if the net benefit (benefit minus cost) is zero.
D. if the extra benefit is greater than or equal to the extra costs.