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Name: __________________________ Date: _____________
1.
Which topic is studied in macroeconomics?
A)
the change in automobile sales due to a change in the price of automobiles
B)
the effect of a tax reduction on the profits of an individual business
C)
recessions
D)
the unemployment of workers displaced by technological change in the typesetting
industry
2.
The basic concern of microeconomics is to:
A)
keep business firms from losing money.
B)
prove that capitalism is better than socialism.
C)
study the choices people make.
D)
use unlimited resources to produce goods and services to satisfy limited wants.
3.
How people choose among the alternatives available to them is:
A)
not part of the study of economics.
B)
impossible to describe.
C)
the study of microeconomics.
D)
not important in the study of microeconomics.
4.
Scarcity in economics means that:
A)
we often do not have sufficient resources to achieve our objectives.
B)
the wants of people are limited.
C)
there must be poor people in rich countries.
D)
shortages exist in nearly all markets.
5.
If resources are scarce, it means that they:
A)
are insufficient to provide enough goods and services to satisfy all human material
wants and needs.
B)
have no opportunity cost.
C)
are probably not valued by consumers.
D)
have an unlimited supply.
6.
A central and fundamental theme in economics is that:
A)
wants are limited.
B)
the United States is a rich country, but we are simply not aware of it.
C)
people have unlimited wants but limited means to satisfy them.
D)
resources are unlimited.
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7.
The problem of scarcity is confronted by:
A)
industrialized societies only.
B)
preindustrial societies only.
C)
societies governed by communist philosophies only.
D)
all societies.
8.
When we are forced to make choices, we are facing the concept of:
A)
human capital.
B)
inflation.
C)
scarcity.
D)
market failure.
9.
We are forced to make choices because of:
A)
exploitation.
B)
efficiency.
C)
scarcity.
D)
the margin.
10.
Scarcity exists when:
A)
making choices among two or more alternatives is not necessary.
B)
individuals can have more of any good without giving up anything.
C)
individuals can have more of one good but only by giving up something else.
D)
resources are unlimited.
11.
Although freshwater is very abundant in most places, it is scarce because:
A)
it has no alternative uses.
B)
there is not enough of it to meet all needs.
C)
it is a free good.
D)
scarce goods in general are not all that costly.
12.
Freshwater is considered a scarce good because:
A)
not enough of it is available for all needs.
B)
it does not have any uses.
C)
scarce goods are not expensive.
D)
not enough of it is available for all needs and because it is not expensive.
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13.
The problem of determining what goods and services society should produce:
A)
exists because we can produce more than we need or want.
B)
exists because there are not enough resources to provide all of the goods and
services that people want.
C)
would not exist if all goods and services were scarce.
D)
would not exist if government owned all of the resources.
14.
Which resource is NOT one that pertains to the production of rice?
A)
fertile land
B)
labor
C)
capital equipment
D)
money
15.
A resource is anything that:
A)
can be used in production.
B)
you pay for.
C)
is in scarce supply.
D)
can be consumed.
16.
We have to make choices because:
A)
we have unlimited income.
B)
resources are scarce.
C)
resources are infinite.
D)
with good planning, trade-offs can be avoided.
17.
When a chef prepares a dinner for a customer, which factor is physical capital?
A)
the chef
B)
the oven
C)
the food ingredients
D)
the chef’s training and experience
18.
Manny is attending college and majoring in economics. By doing so, Manny is
improving his:
A)
land.
B)
labor.
C)
capital.
D)
human capital.
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19.
Which factor is NOT an example of a resource?
A)
land
B)
labor
C)
capital
D)
production
20.
Which factor can BEST be considered to be a resource used in the production of
computers?
A)
money from investors
B)
wages of computer engineers
C)
computer engineers
D)
taxes on the profits from the sale of the computers
21.
Opportunity cost is:
A)
about half of the monetary cost of a product.
B)
the dollar payment for a product.
C)
the benefit derived from a product.
D)
the value of the best alternative forgone in making any choice.
22.
The opportunity cost of something is:
A)
larger during periods of rising prices.
B)
equal to the monetary cost.
C)
smaller during periods of falling prices.
D)
what is given up to acquire it.
23.
Whenever a choice is made:
A)
the cost of that choice is the opportunity cost.
B)
the cost is easy to measure in dollar terms.
C)
efficiency is improved.
D)
scarcity is not a problem.
24.
You can spend $100 on either a new economics textbook or a new tablet computer. If
you choose to buy the new economics textbook, the opportunity cost is:
A)
$100.
B)
your enjoyment of the new tablet computer.
C)
both the $100 and your enjoyment of the new tablet computer.
D)
impossible to determine.
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25.
Margo spends $30,000 on one year’s college tuition. The opportunity cost of spending
one year in college for Margo is:
A)
$30,000.
B)
whatever she would have purchased with the $30,000 instead.
C)
whatever she would have earned had she not been in college.
D)
whatever she would have purchased with the $30,000 plus whatever she would
have earned had she not been in college.
26.
If the state government allocates additional spending on education programs, the
opportunity cost is:
A)
zero.
B)
the dollar amount of the additional spending.
C)
considered only if taxes have to be raised to fund the spending.
D)
measured in terms of the best alternative uses for that money.
27.
Khalil is offered a free ticket to the opera, which he cannot resell. His opportunity cost
of going to the opera is:
A)
zero—the tickets were free.
B)
the price listed on the ticket.
C)
whatever Khalil would have done had he not gone to the opera.
D)
the price listed on the ticket and whatever Khalil would have done had he not gone
to the opera.
28.
A new fast-food restaurant offered a prize—a free meal (valued at $5) each week for a
year—to its first 100 customers. Ramona camped out for 48 hours before the opening to
be one of the first 100 customers, and she successfully obtained the prize. The cost to
Ramona of obtaining the “free meal a week for a year” prize was:
A)
zero.
B)
$260.
C)
whatever else she would have done with the 48 hours.
D)
The cost is impossible to determine.
29.
The Taco Hut charges the same price for everything on its menu: $3 will buy a taco, a
burrito, or nachos. You buy the taco and think that if you had not purchased the taco,
you would have purchased the burrito. The opportunity cost of the taco is:
A)
$3.
B)
your enjoyment of the burrito.
C)
$3 and your enjoyment of the burrito.
D)
$3, your enjoyment of the burrito, and your enjoyment of the nachos.
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30.
For an economist, the cost of something is:
A)
the amount of money you paid for it.
B)
what you gave up to get it.
C)
always equal to its market value.
D)
the quantity of resources used to produce it.
31.
The BEST measure of the opportunity cost of any choice is:
A)
the monetary cost of that choice.
B)
whatever you have given up to make that choice, even if no monetary costs are
involved.
C)
the cost associated with not taking full advantage of the opportunity offered by that
choice.
D)
your hourly wage.
32.
While buying refreshments for an upcoming party, you notice that a six-pack of
Americana Beer costs $2 and a six-pack of Bavarian Beer costs $4. You buy the
six-pack of Bavarian Beer, although you wonder if maybe two six-packs of Americana
Beer would have been a better choice. The opportunity cost of the Bavarian Beer is:
A)
$4.
B)
a six-pack of Americana Beer.
C)
two six-packs of Americana Beer.
D)
$4 and the six-pack of Americana Beer.
33.
Your elderly grandma tells you: “I haven’t been taking my beloved walks because I’m
concerned about falling and getting hurt. See, there is always a cost to doing something.
But if you don’t do anything, then there is no cost.” Your grandma does not understand
the economic concept of:
A)
scarcity.
B)
efficiency.
C)
opportunity cost.
D)
marginal analysis.
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34.
Zoe’s grandparents are excited about finally paying off their mortgage because, as they
say, “Our cost of housing is now zero.” Zoe should explain to them the economic
concept of:
A)
marginal analysis: if the additional cost of housing is zero, then their additional
benefit is also zero.
B)
opportunity cost: by living in the house, they are giving up the opportunity to sell
the house, buy a smaller one, and pocket the difference.
C)
efficiency: If their cost of housing is now zero, they should let Zoe move in without
charging her any rent. Zoe is better off, and her grandparents aren’t hurt.
D)
equity: it is unfair that some people are still paying off their mortgage.
35.
The university recently inherited a large mansion from a wealthy alumnus. The
university plans to use the mansion for faculty parties and to house distinguished guests.
The opportunity cost of the mansion to the university is:
A)
zero because it was a gift.
B)
the original cost of building the mansion.
C)
the amount the university would receive if it sold the mansion.
D)
the cost of catering the parties at the mansion.
36.
A new startup airline is offering a free round-trip ticket to Hawaii to the first 600 people
who enter the airline’s main office on the airline’s first day of business. You arrive 24
hours before it is scheduled to open to be sure to get the free ticket, and you buy food
from vendors while waiting in line. You successfully obtain the ticket. What was the
cost to you for obtaining the ticket?
A)
zero
B)
the cost of food while you wait in line
C)
the cost of food while you wait in line and the opportunity cost of your time spent
in line
D)
the actual value of the ticket
37.
A friend comes up to you and offers you a free ticket to a professional baseball game
that night. You decide to attend the game. The game takes five hours and costs you $15
for transportation. If you had not attended the game, you would have worked at your
part-time job for $8 an hour. What is the cost to you of attending the game?
A)
The cost is zero—the ticket is free.
B)
$65
C)
$40
D)
$55
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38.
For a student who owns his or her own home and doesn’t plan to live in the dorm, the
cost of going to college is:
A)
tuition and the cost of housing.
B)
tuition, the cost of housing, and the cost of books and other school materials.
C)
tuition, the cost of books and other school materials, and forgone income.
D)
forgone income only.
39.
You have $1 to spend on a vending machine snack. A bag of chips will cost you $1 and
a candy bar will also cost you $1. If you choose the bag of chips, the opportunity cost of
buying the chips is:
A)
$1 plus the enjoyment you would have received from the candy bar.
B)
$2 minus the enjoyment you received from the bag of chips.
C)
$1.
D)
the enjoyment you would have received from the candy bar.
40.
A college student is faced with a difficult decision of how to spend one hour tonight.
She could babysit her professor’s child at an hourly wage of $7; she could work at the
college library at a wage of $6; or she could finish her economics homework
assignment. If she chooses to complete her homework assignment, she has incurred an
opportunity cost equal to:
A)
$7.
B)
$6.
C)
$13.
D)
$0.
41.
If you decide to go to Cancún with your friends during spring break, you cannot go to
Paris with your sister in the summer. Which economic principle does this statement
BEST represent?
A)
The true cost of something is its opportunity cost.
B)
“How much” is a decision at the margin.
C)
People usually respond to incentives, exploiting opportunities to make themselves
better off.
D)
There are gains from trade.
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42.
You decide to join the economics club, but this means you can’t join the accounting club
because it meets at the same time. Which economic prinicple does this statement BEST
represent?
A)
The true cost of something is its opportunity cost.
B)
“How much” is a decision at the margin.
C)
People usually respond to incentives, exploiting opportunities to make themselves
better off.
D)
There are gains from trade.
43.
The student center on campus has burritos, bagels, or burgers for lunch, and they all cost
the same. You decide to have a burger today, but if they were out of burgers, you would
have bought a bagel. Your opportunity cost of buying a burger is your enjoyment of the:
A)
burger.
B)
bagel.
C)
burrito.
D)
bagel and the burrito.
44.
The economic way of thinking entails:
A)
the analysis of benefits but not costs.
B)
the analysis of costs but not benefits.
C)
making choices at the margin.
D)
making the distinction between microeconomics and macroeconomics.
45.
A choice made _____ is a choice whether to do a little more or a little less of an activity.
A)
at the front end
B)
in the beginning
C)
at the margin
D)
ceteris paribus
46.
Which decision is the BEST example of making a choice at the margin?
A)
buying a new car
B)
quitting your job
C)
drinking another cup of coffee
D)
attending college
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47.
You decide whether to eat one more slice of pizza based on how hungry you feel.
Which economic principle does this statement BEST represent?
A)
Choices are necessary because resources are scarce.
B)
The true cost of something is its opportunity cost.
C)
“How much” is a decision at the margin.
D)
There are gains from trade.
48.
The concept of the margin decision deals with:
A)
making incremental choices.
B)
choosing all or none of something.
C)
engaging in unethical activities.
D)
making difficult choices.
49.
A choice made _____ is a choice whether to do a little more or a little less of an activity.
A)
at the fringe
B)
in the beginning
C)
at the margin
D)
after the fact
50.
The BEST example of making a choice at the margin is whether to:
A)
buy a new computer.
B)
quit your job.
C)
eat another slice of pizza.
D)
attend college.
51.
Marla will make $10 by tutoring for an additional hour, but she will lose an hour of
studying for her economics test. Marla decides to study, rather than tutor. Marla’s choice
indicates that she:
A)
values an additional hour of studying more than the $10 she would earn tutoring.
B)
values an hour of studying less than the $10 she would earn tutoring.
C)
does not understand that there is no benefit from studying.
D)
doesn’t need the money.
52.
Thinking in economic terms, when Mary Sweet-Tooth is deciding whether to eat
another brownie, she:
A)
considers only the price of the brownie.
B)
considers only how much additional exercise she will need to do to work off the
calories associated with eating another brownie.
C)
compares all of the benefits and costs of eating another brownie.
D)
considers whether she can do so without anyone else noticing.
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53.
For which decision would marginal analysis be MOST relevant?
A)
Should I go to college or work after graduating from high school?
B)
Should I eat another doughnut?
C)
Should I use $20,000 as a down payment on a house or to buy a car?
D)
Should I get married?
54.
For which decision would marginal analysis be MOST relevant?
A)
Should George accept a job with Delta Airlines or with Greenpeace?
B)
Should Mary go to graduate school after graduating from college?
C)
Should Vivek emigrate to the United States or stay in India?
D)
Should Hong work an additional hour or take a short nap?
55.
Which of the following questions would NOT involve marginal analysis:
A)
How many minutes should I exercise?.
B)
How many workers should I hire?.
C)
What is an acceptable rate of negative side effects from a new medicine?.
D)
Should I attend college?
56.
Marginal analysis:
A)
refers to decisions about whether or not to engage in a particular activity.
B)
is primarily used when making an either-or choice.
C)
is used primarily when deciding how much of an activity should be done.
D)
does not help when making a “how much” choice.
57.
Your neighbor is mowing her yard one afternoon when she stops to have some
lemonade. She drinks one glass and is now deciding whether or not to have a second
glass. This is an example of _____ analysis.
A)
marginal
B)
benefit
C)
cost
D)
equilibrium
58.
After eating three slices of pizza, you decide to eat one more piece. Your decision is an
example of the economic concept called:
A)
opportunity-cost decision.
B)
people responding to incentives.
C)
equity decision.
D)
marginal decision making.
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59.
You are planning to study eight hours this week for your economics final and are
considering studying a ninth hour. You should:
A)
compare the benefits of one more hour of study with the cost of one less hour of
sleep.
B)
compare the benefits of one more hour of study with the cost of one less hour of
studying calculus.
C)
compare the benefits of one more hour of study with the cost of one less hour of
work at your part-time job.
D)
make your decision based on the cost of the next best alternative use of your time
compared to the benefit of one more hour of study.
60.
Marginal analysis studies how individuals decide:
A)
whether to live on the margin of society.
B)
whether to do a bit more of an activity versus a bit less of it.
C)
whether to go to college.
D)
how much down payment to make when buying stocks.
61.
You are analyzing a trade-off when you compare the _____ and _____ of doing
something.
A)
direct costs; opportunity costs
B)
marginal benefits; total benefits
C)
costs; benefits
D)
direct costs; total costs
62.
For which decision would marginal analysis be MOST relevant?
A)
Should I invest all of my savings in real estate or should I keep it all in a savings
account?
B)
After I graduate from college, should I go to graduate school or should I get a job?
C)
How many hours should I study for my exam?
D)
Should I keep a pet?
63.
Some baseball fans leave the game in the seventh or eighth inning to avoid the postgame
traffic. These fans are:
A)
not considering that they have already paid for their tickets.
B)
making a marginal decision by comparing the cost of leaving early to the benefit of
leaving early.
C)
thinking only about the benefits of avoiding traffic.
D)
underestimating the value of staying for the rest of the game.
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64.
Which question is an example of marginal analysis?
A)
What additional output does a family business produce when it hires one more
worker?
B)
How do tax cuts change the growth rate of median income?
C)
What is the impact of a trade embargo on labor cost?
D)
Should a commuter take the bus to work instead of driving.
65.
Which decision is an example of marginal analysis?
A)
ordering a pizza, rather than eating leftover meatloaf
B)
deciding whether to eat one more slices of pizza
C)
using a coupon to save $2 on a pizza
D)
writing a check to pay for the pizza, rather than using a credit card
66.
Which statement demonstrates how people respond to incentives to make themselves
better off?
A)
More students major in economics when they hear that salaries for economists are
rising.
B)
Students are assigned dorm rooms through a lottery system.
C)
Students are encouraged to donate blood because it is the right thing to do.
D)
Students and faculty are encouraged to wear college apparel to support the college
athletic teams.
67.
Which of the following policies is MOST likely to reduce traffic congestion in a large
metropolitan area because people usually exploit opportunities to make themselves
better off?
A)
a limited number of free early-bird parking passes given only to those who arrive
prior to 6 A.M.
B)
a toll road that requires each car to pay a fee to enter the city center
C)
an increase in the price of subway and bus fare to and from the city
D)
asking citizens to carpool
68.
Which method of encouraging recycling is likely to be MOST effective given that
people usually exploit opportunities to make themselves better off?
A)
appealing to consumers to be a good citizen
B)
publicizing the advantages of recycling
C)
imposing a tax per unit of garbage generated
D)
advertising different ways of recycling
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69.
Which method of discouraging speeding is likely to be MOST effective given that
people usually exploit opportunities to make themselves better off?
A)
increasing the number of signs stating the speed limit
B)
increasing the fine associated with speeding tickets
C)
public service announcements reminding drivers of the dangers of speeding
D)
asking drivers to reduce speed
70.
In an attempt to reduce shooting deaths, some cities have offered money to people who
turn in illegal guns. This program is an example of the government using _____ to
influence behavior.
A)
financial incentives
B)
law
C)
marginal analysis
D)
the gains from trade
71.
Because people usually exploit opportunities to make themselves better off, if the price
of gasoline rises and stays high for an extended period, we expect people to:
A)
increase the number of miles they drive.
B)
buy larger and less fuel-efficient cars.
C)
use more public transportation.
D)
ride their bicycles less.
72.
Because people usually exploit opportunities to make themselves better off, if the price
of gasoline falls and stays low for an extended period, we expect people to:
A)
reduce their reliance on gasoline-powered cars.
B)
buy larger and less fuel-efficient cars.
C)
use more public transportation.
D)
ride bicycles.
73.
To encourage people to retire later, given that people usually exploit opportunities to
make themselves better off, the government could:
A)
reduce Social Security benefits.
B)
raise the tax rate on older, unretired individuals.
C)
provide free housing to all retirees
D)
increase Social Security benefits.
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74.
Because people usually exploit opportunities to make themselves better off, to
encourage young people to go to college in their home state, state universities can:
A)
charge higher tuition to in-state students.
B)
award special scholarships to out-of-state students.
C)
offer high-interest loans to in-state students.
D)
offer lower tuition to in-state students.
75.
Because people usually exploit opportunities to make themselves better off, which
method of reducing pollution is likely to be MOST effective?
A)
appealing to the polluter to be a good citizen
B)
asking citizens to voluntarily reduce pollution
C)
imposing a tax per unit of pollution generated
D)
advertising the negative impact of pollution
76.
Economists tend to believe that to change people’s behavior you must:
A)
appeal to their concern for society.
B)
change their incentives.
C)
legislate the change.
D)
appeal to their religious values.
77.
Which statement is NOT true according to standard economic theory?
A)
Resources are scarce when they can satisfy everyone’s wants.
B)
The true cost of a choice is what you must give up to enjoy that choice.
C)
People typically make choices that will make them better off.
D)
Rational people use marginal analysis when making “how much” decisions.
78.
Corner offices in high-rise office buildings usually cost more to rent than other offices.
This BEST illustrates the economic concept of:
A)
specialization.
B)
scarcity.
C)
equilibrium.
D)
opportunity costs.
79.
In Ventura County, California, strawberry production is limited by the number of acres
available for agriculture production. Which economic concept does this statement BEST
represent?
A)
Scarcity
B)
Marginal Analysis.
C)
Equilibrium.
D)
Opportunity Cost.
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80.
You like to read Vogue and Sports Illustrated. You have only $5 to spend, so you buy
only Sports Illustrated. Which economic concept does this statement BEST represent?
A)
Scarcity
B)
Equilibrium
C)
Marginal Analysis
D)
Specialization
81.
Intel finds it difficult to hire enough skilled computer engineers. Which economic
concept does this statement BEST represent?
A)
scarcity
B)
specialization
C)
ceteris paribus
D)
trade-off
82.
In Colorado, there has been a drought, and rural communities are fighting with urban
areas over water. Which economic concept does this statement BEST represent?
A)
scarcity
B)
specialization
C)
incentive
D)
equilibrium
83.
Which statement is NOT one of the four principles that underlie individual choice?
A)
Choices are necessary because resources are scarce.
B)
Overall spending sometimes gets out of line with the economy’s productive
capacity.
C)
“How much” is a decision at the margin.
D)
People usually respond to incentives, exploiting opportunities to make themselves
better off.
84.
When the San Francisco city manager faces a complaint that the city council chamber
podium is not accessible to individuals with disabilities, he responds that the $1 million
improvement will not happen because “that money could be spent building 70 curb
ramps.” Which economic principle does this statement BEST represent?
A)
Markets move toward equilibrium.
B)
The true cost of something is its opportunity cost .
C)
“How much” is a decision at the margin.
D)
When markets don’t achieve efficiency, government intervention can improve
society’s welfare.
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85.
The student center on campus has burritos, bagels, or burgers for lunch, and they all cost
the same. You love burgers and bagels, but you decide to have a burger today. If they
were out of burgers, you would have bought a bagel. Which economic principle does
this statement BEST represent?
A)
The true cost of something is its opportunity cost.
B)
“How much” is a decision at the margin.
C)
One person’s spending is another person’s income.
D)
There are gains from trade.
86.
After swimming 100 laps at the pool, Erik decides to swim 10 more before lifting
weights. Which economic principle does this statement BEST represent?
A)
Choices are necessary because resources are scarce.
B)
The true cost of something is its opportunity cost.
C)
“How much” is a decision at the margin.
D)
There are gains from trade.
87.
Nara has gone to three movies this week. She has some extra money, so she decides to
go to another. Which economic principle does this statement BEST represent?
A)
Choices are necessary because resources are scarce.
B)
The true cost of something is its opportunity cost.
C)
“How much” is a decision at the margin.
D)
There are gains from trade.
88.
A busy professor needs to decide whether to stay in his office to grade papers for
another hour or to go home and go to bed. This is an example of:
A)
equity versus efficiency.
B)
how one person’s spending is another person’s income.
C)
economic incentives.
D)
marginal analysis.
89.
Which principle underlies the economics of individual choices?
A)
There are gains from trade.
B)
Markets move toward equilibrium.
C)
People usually respond to incentives, exploiting opportunities to make themselves
better off.
D)
Resources should be used as efficiently as possible to achieve society’s goals.
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90.
Which statement is one of the four principles of individual choice?
A)
Resources are usually renewable.
B)
The true cost of something is impossible to measure.
C)
People take advantage of opportunities to make themselves better off only if there
is no risk involved.
D)
Choices are necessary because resources are scarce.
91.
Which statement is an example of individual choice?
A)
The government announces plans to ban smoking in all Florida restaurants.
B)
Lauren spends her allowance on pillows for her bed.
C)
France decides to withhold funding to rebuild Iraq.
D)
Africa decides to accept U.S. aid for humanitarian efforts.
92.
Which statement is NOT one of the four principles of individual choice?
A)
Choices are necessary because resources are scarce.
B)
Unpaid volunteer work is irrational since economic rationality dictates that
individuals should only engage in work they are paid for.
C)
The true cost of something is its opportunity cost.
D)
“How Much” is a decision at the margin.
93.
Florida schools offered cash bonuses to students who scored high on the state’s
standardized exams. The cash bonuses are motivated by which economic principle?
A)
Choices are necessary because resources are scarce.
B)
The true cost of something is its opportunity cost.
C)
“How Much” is a decision at the margin.
D)
People usually respond to incentives, exploiting opportunities to make themselves
better off.
94.
Grades are low in your biology class, so your professor offers an optional 10-point
extra-credit assignment. Most of the students turn in the assignment. Which economic
prinicple does this statement BEST represent?
A)
The true cost of something is its opportunity cost.
B)
“How much” is a decision at the margin.
C)
People usually respond to incentives, exploiting opportunities to make themselves
better off.
D)
There are gains from trade.
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95.
Your health club is offering a free one-year membership for the person who attends the
most yoga classes in March. This results in more people attending yoga. Which
economic principle does this statement BEST represent?
A)
The true cost of something is its opportunity cost.
B)
People usually respond to incentives, exploiting opportunities to make themselves
better off.
C)
There are gains from trade.
D)
Markets move toward equilibrium.
96.
Specialization and trade usually lead to:
A)
lower economic growth.
B)
the exchange of goods and services in markets.
C)
lower living standards.
D)
higher prices.
97.
Which book illustrates the advantages of specialization using an eighteenth-century pin
factory as an example?
A)
Free to Choose, by Milton Friedman
B)
The Wealth of Nations, by Adam Smith
C)
Das Kapital, by Karl Marx
D)
The General Theory, by John Maynard Keynes
98.
Who wrote The Wealth of Nations, a book that many credit with establishing economics
as a discipline?
A)
Karl Marx
B)
David Ricardo
C)
Adam Smith
D)
John Maynard Keynes
99.
Increases in total output realized when individuals specialize in particular tasks and
trade are known as:
A)
the gains from trade.
B)
the profits obtained from sales of a good or service.
C)
marginal analysis.
D)
a trade-off.
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100.
Gains from trade arise because of:
A)
specialization in production.
B)
specialization in consumption.
C)
marginal analysis.
D)
individual choice.
101.
Gains from trade exist for:
A)
individuals only.
B)
states only.
C)
countries only.
D)
individuals, states, and countries.
102.
According to economic models of trade, when the United States and Mexico trade:
A)
the United States will be worse off because wages in Mexico are so low.
B)
Mexico will be worse off because the United States is a stronger economic power.
C)
both Mexico and the United States will be better off.
D)
both Mexico and the United States will be worse off.
103.
If every individual were required to be self-sufficient:
A)
living standards would fall.
B)
living standards for some individuals would fall, but for others they would rise.
C)
living standards would rise.
D)
it’s impossible to say how living standards would change.
104.
Which statement is NOT true?
A)
Resource scarcity is a major economic concern in the rich countries of the world.
B)
Most opportunity costs are zero.
C)
An economic situation is in equilibrium when no individual would be better off
taking a different action.
D)
Very talented individuals, who can do most things better than most people, may
still benefit greatly from specializing in doing one thing.
105.
Specialization and trade should NOT lead to:
A)
individuals learning specific skills and earning a salary.
B)
a decrease in total economic output.
C)
higher living standards.
D)
the exchange of goods and services in markets.