Which one of the following twentieth-century nations eliminated the problem of
scarcity?
A) Socialist Cuba
B) Socialist China
C) Fascist Italy
D) The United States of America
E) None of the above.
Henry David Thoreau faced a choice: Stay in the village of Concord or move out to
Walden Pond. He decided to move to Walden. What was his” opportunity cost”?
A) There was no opportunity cost if he didn’t pay rent for his cabin on Walden Pond.
B) The satisfaction he would have enjoyed were he to stay in Concord
C) The sweat and toil of building his own cabin and living off the land at Walden Pond
D) There was no opportunity cost, because he made a free and voluntary decision to
live the way he preferred to live.
To say individuals seek an “economically efficient” course of action is another way of
saying they
A) waste precious resources.
B) are not concerned about the wellbeing of anybody else.
C) economize.
D) measure everything according to the bottom line: money.
Who among the following is exercising their right to pollute?
A) The group of campers burning a fire in a designated fire pit at a state forest campsite
B) The Sunday morning churchgoer whose auto emits carcinogens from its exhaust pipe
C) The publicly-owned and federally-regulated coal-fired electric utility
D) All of the above.
E) None of the above.
Of the following four motorists, who is speculating?
A) The one driving on empty, looking for the best gasoline price in town
B) The one who fills his gasoline tank believing he has found the lowest gas price
around
C) The one who fills his gasoline tank on news Iraq has once again invaded Kuwait
D) All of the above.
E) None of the above.
When the United States cannot produce all of the goods and services desired by its
citizens, the economy is
A) in a deep freeze.
B) inefficient.
C) in a shortage state.
D) facing scarcity.
Why are people more inclined to pick up a dime off the pavement in a parking lot, but
not so inclined to dig three feet into the earth for a previously-buried dime?
A) The entrepreneurial spirit of Americans is gone.
B) They don’t know the value of the dollaror dimeanymore.
C) They weigh the expected additional costs and benefits, and choose accordingly.
D) People haven’t taken enough economics in college.
Fill in the blanks: ________ attempts to reduce negative externalities by ________.
A) Adjudication; letting people work out the problem themselves
B) Adjudication; discovering who has which rights
C) Negotiation; creating new rights
D) Negotiation; appropriate taxation
Cartels rarely succeed for long because they find it difficult to
A) avoid losing the advantages from economics of scale.
B) keep marginal costs high and marginal revenue low.
C) keep members from offering discounts and new firms from entering.
D) keep members from reducing output below the optimal level.
E) prevent average cost from falling below marginal cost.
“Opportunity cost” is
A) the monetary cost of one’s actions.
B) the objective cost of one’s actions.
C) the regret one feels when making a sacrifice.
D) the value one places on the item, project, or plan he has chosen to pursue.
E) none of the above.
The slope of a producer’s production possibilities frontier represents the producer’s
A) sunk costs of production.
B) average costs of production.
C) marginal costs of production.
D) total costs of production.
People add to their stock of human capital
A) by being lucky.
B) by currying favor with powerful people.
C) by going to school.
D) by practicing their skills.
E) in all of the above ways.
If profit is commonly defined as “total revenue minus total cost,” then
A) there is no way to measure losses.
B) a negative profit implies a loss.
C) losses can only be measured as “total cost minus total revenue.”
D) profits must always equal losses.
To be unemployed is to be
A) without a job, but actively looking for a job.
B) without any source of income.
C) without an identity.
D) all of the above.
Coal-fired steam locomotives become more efficient for railroads relative to oil-burning
diesel locomotives as
A) the price of coal increases.
B) the price of oil increases.
C) coal-fired steam locomotives become larger.
D) railroad freight rates increase.
Rich people who have more money than they know how to spend
A) no longer act under scarcity.
B) no longer need to economize.
C) no longer have to choose to advance one project over another.
D) will still face a scarcity of their time.
The board of education of a school district faced with a surplus of teachers, but unable
to lower salaries because of union contracts, will
A) be unable to balance the quantity supplied with the quantity demanded.
B) have to hire fewer teachers than it wants to.
C) have to hire more teachers than it wants to.
D) tend to have relatively few young teachers on its payroll.
If Bonnie can produce either 10 hats or 20 scarves in a month, and Phil can produce
either 5 hats or 10 scarves in a month then
A) Bonnie is more efficient at producing hats, compared to Phil.
B) Bonnie is more efficient at producing scarves, compared to Phil.
C) both A and B above are true.
D) none of the above is true.
Rank the following goods from least to most elastic: school, prep school, Purebred Prep
School.
A) School, prep school, Purebred Prep School
B) Prep School, school, Purebred Prep School
C) Prep School, Purebred Prep School, School
D) Purebred Prep School, Prep School, School
E) None of the above.
Suppose an economy has the following characteristics: 100 people in the
noninstitutional population; 60 people employed; 20 people not in the labor force. How
many people are in the economy’s labor force?
A) 20
B) 40
C) 60
D) 80
E) 100
Let’s assume Ben can produce 3 units of a material good (M) or 3 units of a spiritual
good (S) in a day, while Cal can produce 1 M or 2 Ss in a day. Which statement below
is true?
A) Ben has a comparative advantage in producing spiritual goods.
B) Ben has a comparative advantage in producing material goods.
C) Cal has a comparative advantage in producing material goods.
D) Both A and B are true.
The existence of scarcity in economics comes from
A) resources being limited in supply.
B) people being stupid.
C) governments being corrupt.
D) the rich controlling most resources.
Official data on unemployment are based on
A) a survey of households by the Bureau of the Census.
B) employer data on hiring rates.
C) the number of actual payments for unemployment compensation.
D) the number of claims for unemployment compensation.
E) the number of responses to ads in the help-wanted section of major newspapers.
The democratic political process operating at the national level tends to result in
A) balanced budgets.
B) deficits.
C) surpluses.
D) surpluses alternating with deficits in a countercyclical manner.
Suppose a bank wants a 5% real return on its loans, and contemplates a 1% annual
inflation rate. The bank should therefore charge a nominal interest rate of
A) 1%.
B) 4%.
C) 5%.
D) 6%.
A merger between two commercial airlines is a
A) conglomerate merger.
B) diagonal merger.
C) horizontal merger.
D) vertical merger.
Which is an example of “capital”?
A) A carpenter’s skills
B) A singer’s voice
C) A judge’s unblemished reputation
D) A blast furnace
E) All of the above.
In the 1990s, Oprah Winfrey, the former national talk-show host, discouraged
Americans from eating beef. She argued beef consumption could create major health
problems, and, as a result, beef purchases and the price of beef fell substantially. Which
of the following occurred?
A) The supply curve of beef shifted to the left.
B) The demand curve for beef shifted to the left.
C) The supply curve of beef shifted to the right.
D) The demand curve for beef shifted to the right.
E) Neither the supply curve nor the demand curve for beef had changed.
Suppose the market-clearing price of milk is $3.00 per gallon, but consumer groups
persuade the government to set and enforce a maximum price cap at $2.00 per gallon.
The newly legislated price tends to
A) create a surplus of milk.
B) increase the demand for milk.
C) reduce the supply of milk.
D) do all of the above.
E) do none of the above.
A universal health insurance program, which lowers patient’s out-of-pocket expenses,
would tend to
A) reduce the number of patients seeking medical care.
B) reduce the number of doctors offering medical care.
C) increase the non-monetary costs of medical care, such as waiting longer in line.
D) generate all of the above.
Professor I.M. Dismal retired from his economics faculty position at the age of 66. Is he
now unemployed?
A) No, because he is retired.
B) No, because he is over the age of 65.
C) Yes, because he is not employed.
D) Yes, if he is looking for some other job.
Generally, any human decision is
A) speculative.
B) perfectly informed.
C) irrational at its base.
D) good.