The Micro Economy Today, 15e (Schiller)

Chapter 1   Economics: The Core Issues

1) Which of the following is not one of the three core economic issues that must be resolved?

1. A) How to produce the goods and services we select.
2. B) What to produce with unlimited resources.
3. C) Who should get the goods and services we produce?
4. D) What to produce with limited resources.

Answer:  B

Difficulty: 2 Medium

Topic:  Scarcity: The Core Problem

Learning Objective:  01-04 The three core economic questions that every society must answer.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

2) The fundamental problem of economics is

1. A) The law of increasing opportunity costs.
2. B) The scarcity of resources relative to human wants.
3. C) How to get the government to operate efficiently.
4. D) How to create employment for everyone.

Answer:  B

Difficulty: 1 Easy

Topic:  Scarcity: The Core Problem

Learning Objective:  01-01 What scarcity is?

Bloom’s:  Remember

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

3) In economics, scarcity means that

1. A) A shortage of a particular good will cause the price to fall.
2. B) A production possibilities curve cannot accurately represent the trade-off between two goods.
3. C) Society’s desires exceed the resources available.
4. D) The market mechanism has failed.

Answer:  C

Difficulty: 1 Easy

Topic:  Scarcity: The Core Problem

Learning Objective:  01-01 What scarcity is?

Bloom’s:  Remember

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

4) Given that resources are scarce,

1. A) A “free lunch” is possible, but only for a limited number of people.
2. B) Opportunity costs are experienced whenever choices are made.
3. C) Poor countries must make choices, but rich countries with abundant resources do not have to make choices.
4. D) Some choices involve opportunity costs while other choices do not.

Answer:  B

Difficulty: 2 Medium

Topic:  Scarcity: The Core Problem

Learning Objective:  01-02 How scarcity creates opportunity costs.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

5) A consequence of the economic problem of scarcity is that

1. A) Choices have to be made about how resources are used.
2. B) There is never too much of any good or service produced.
3. C) The production of goods and services must be controlled by the government.
4. D) The production possibilities curve is bowed outward.

Answer:  A

Difficulty: 2 Medium

Topic:  Scarcity: The Core Problem

Learning Objective:  01-02 How scarcity creates opportunity costs.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

6) The basic factors of production include

1. A) Land, labor, money, and capital.
2. B) Land, labor, money, and inputs.
3. C) Labor and money.
4. D) Land, labor, capital, and entrepreneurship.

Answer:  D

Difficulty: 2 Medium

Topic:  Scarcity: The Core Problem

Learning Objective:  01-01 What scarcity is.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

7) Factors of production are

1. A) Scarce in every society.
2. B) Scarce only in advanced countries.
3. C) Scarce only in the poorest countries of the world.
4. D) Unlimited in quantity.

Answer:  A

Difficulty: 2 Medium

Topic:  Scarcity: The Core Problem

Learning Objective:  01-01 What scarcity is.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

8) Which of the following is not a factor of production?

1. A) A psychiatrist.
2. B) $100,000 cash.
3. C) A bulldozer.
4. D) Six thousand acres of farmland.

Answer:  B

Difficulty: 2 Medium

Topic:  Scarcity: The Core Problem

Learning Objective:  01-01 What scarcity is.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

9) With respect to factors of production, which of the following statements is not true?

1. A) Factors of production are also known as resources.
2. B) In order to produce any good or service, it is necessary to have factors of production.
3. C) Factors of production include land, labor, capital, and entrepreneurship.
4. D) Only those resources that are privately owned are counted as factors of production.

Answer:  D

Difficulty: 2 Medium

Topic:  Scarcity: The Core Problem

Learning Objective:  01-01 What scarcity is.

Bloom’s:  Understand

AACSB:  Reflective Thinking

Accessibility:  Keyboard Navigation

 

10) Which of the following is the best example of land?

1. A) The ethanol is refined from corn.
2. B) A factory that produces new goods and services.
3. C) The water used to make a soft drink.
4. D) A barber’s chair.

Answer:  C