Multiple Choice Questions
1. Which of the following topics is related to microeconomics?
D. The rate of economic growth.
2. A society’s institutions
D. are not related to the control of society’s resources.
3. In a capitalist economy,
D. government officials decide what to produce, how to produce it and who gets it.
4. In a communist economy,
D. the market system is used to allocate resources.
5. In a ______ economy, the allocation of resources is governed by voluntary trading among
businesses and consumers.
D. traditional
6. In most countries, decisions that affect medical expenditures are
A. centralized.
7. The most common form of economic decentralization involves
D. government ownership of the means of production.
8. To an economist, a single market is associated with
D. all buyers living in a specific geographic location.
9. Economists think of products as being in the same market if they
A. are traded in the same geographic location.
10. According to economists, which of the following is the best example of a market?
A. A flea market.
11. Which of the follow is NOT an example of a market?
A. Retail trade of chocolate ice cream in Boston.
12. The rate at which someone can swap money for a good is called the _____ of the good.
D. rate of substitution
13. A _______ is an enforceable claim on a good or service.
A. deed
14. Trade can occur only if property rights are
D. not transferable.
15. In a free market system
A. there is no government involvement in the economy.
16. Microeconomics
D. cannot be used to address questions of what ought to be.
17. Microeconomists usually assume that people are motivated by
D. property rights.
18. In deciding on how to spend their resources, consumers try to
D. maximize profit.
19. Positive economic analysis
A. involves value judgments.
20. Questions that address what did, will or would actually happen are called ________
questions.
D. equity
21. Positive economic questions
A. involve value judgments.
22. Normative economic analysis addresses
D. are potentially testable.
23. Questions that address the cause-and-effect analysis of actions and their consequences
are
D. subjective.
24. Questions that involve value judgments are
D. Objective.
25. Which of the following is a positive question?
A. Is society better off if we restrict trade with other countries?
26. Which of the following is a normative question?
D. Will an increase in the minimum wage reduce poverty?
27. In conducting normative analysis, economists apply
D. objective value judgments.
28. In conducting positive economic analysis, economists apply
A. subjective value judgments.
29. In their study of the effect of legalized abortion on crime rates, Steven Levitt and John
Donohue applied
D. value judgments.
30. Which of the following top is NOT studied using microeconomics?
A. Ford’s decision to introduce a new car model.
31. The general procedure used to learn about natural phenomena is called
D. a theory.
32. A possible explanation for a natural phenomenon is called
D. normative economics.
33. A theory
A. is usually based on a set of value judgments.