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Test Canvas : TestBanks Chapter 01: First Principles
Microeconom ics, 3e
Test Canvas: TestBanks Chapter 01: First Principles
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1. True/False: Because the United States is a rich n...
Question Because the United States is a rich nation, free health care can be provided for all
citizens without considering the issue of scarcity.
2. True/False: The study of economics arises because...
Question The study of economics arises because of the necessity for choice, and the
necessity for choice arises because of the fundamental problem of scarcity of
resources.
3. True/False: Opportunity cost means that in the re...
Question Opportunity cost means that in the rebuilding of Iraq, if the United States spends
$87 billion, we have to forgo the opportunity to spend $87 billion on some other
program.
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4. True/False: In 2003, Congress passed a tax cut. S...
Question In 2003, Congress passed a tax cut. Since taxes were reduced, the country did not
incur any opportunity cost from this decision.
5. True/False: A trade-off involves weighing the cos...
Question A trade-off involves weighing the costs and the benefits.
6. True/False: Using marginal analysis to decide whe...
Question Using marginal analysis to decide whether to consume an additional slice of pizza
requires making a comparison of the benefits and costs associated with the
consumption of an additional slice of pizza.
7. True/False: Economists make predictions about ind...
Question Economists make predictions about individual behavior based on the assumption
that people exploit opportunities to make themselves better off. The fact that
different individuals make different choices when confronted with the same situation
implies that this assumption is often violated.
8. True/False: The principle that people will exploi...
Question The principle that people will exploit opportunities to do what is best for others is
the basis of all predictions by economists about individual behavior.
9. True/False: When people in Brazil engage in trade...
Question When people in Brazil engage in trade with people in Germany, the citizens of
each nation are made worse off.
10. True/False: As long as individuals know that they...
Question
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As long as individuals know that they can find the goods and services that they
want in the market, they are willing to forgo being self-sufficient and are willing to
specialize.
11. True/False: Trade allows people to get more of wh...
Question Trade allows people to get more of what they want.
12. True/False: In equilibrium there will be no furth...
Question In equilibrium there will be no further opportunities for gains from trade.
13. True/False: An economic situation is in equilibri...
Question An economic situation is in equilibrium when no individual would be better off taking
a different action.
14. True/False: Market equilibrium will always be eff...
Question Market equilibrium will always be efficient even if it is not equitable.
15. True/False: An economy is efficient if one person...
Question An economy is efficient if one person can be made better off by reallocating
resources without making anyone else worse off.
16. True/False: Equity is the same as efficiency.
Question Equity is the same as efficiency.
17. True/False: If an economy's resources are used ef...
Question
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If an economy's resources are used efficiently, then it is guaranteed that the
economy will also achieve equity.
18. True/False: Handicapped-designated parking spaces...
Question Handicapped-designated parking spaces are an example of the market economy
achieving efficiency.
19. True/False: The fact that individuals in a market...
Question The fact that individuals in a market economy act so as to make themselves better
off is a major reason why a market equilibrium is usually efficient.
20. True/False: According to the textbook, markets us...
Question According to the textbook, markets usually lead to efficiency.
21. True/False: Market failure occurs when the pursui...
Question Market failure occurs when the pursuit of self-interest leads to bad results.
22. Multiple Choice: Microeconomics deals with:
Question Microeconomics deals with:
Answer the working of the entire economy or large sectors of it.
23. Multiple Choice: The study of a single firm and how it...
Question The study of a single firm and how it determines prices would fall under the study
of:
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24. Multiple Choice: Macroeconomics deals with:
Question Macroeconomics deals with:
25. Multiple Choice: The primary emphasis in macroeconomic...
Question The primary emphasis in macroeconomics is on:
26. Multiple Choice: Which of the following would be studi...
Question Which of the following would be studied in macroeconomics?
Answer the change in automobile sales due to a change in the price of automobiles
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27. Multiple Choice: Scarcity in economics means:
Question Scarcity in economics means:
28. Multiple Choice: If resources are “scarce,&rdquo...
Question If resources are “scarce,” it means that they:
29. Multiple Choice: A key theme fundamental to all of eco...
Question A key theme fundamental to all of economics is:
30. Multiple Choice: The problem of scarcity is confronted...
Question The problem of scarcity is confronted by:
Answer industrialized societies only.
preindustrialized societies only.
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31. Multiple Choice: When we are forced to make choices, w...
Question When we are forced to make choices, we are facing the concept of:
Answer ceteris paribus.
32. Multiple Choice: The basic concern of microeconomics is:
Question The basic concern of microeconomics is:
Answer to keep business firms from losing money.
33. Multiple Choice: How people choose among the alternati...
Question How people choose among the alternatives available to them is:
Answer not part of the study of economics.
34. Multiple Choice: We are forced to make choices because...
Question We are forced to make choices because of:
Answer exploitation.
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35. Multiple Choice: Scarcity exists when:
Question Scarcity exists when:
Answer making choices among two or more alternatives is not necessary.
36. Multiple Choice: Scarcity in economics means:
Question Scarcity in economics means:
37. Multiple Choice: Although water is very abundant in mo...
Question Although water is very abundant in most places, it is scarce because:
Answer it has no alternative uses.
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38. Multiple Choice: Water is considered a scarce good bec...
Question Water is considered a scarce good because:
39. Multiple Choice: The problem of determining what goods...
Question The problem of determining what goods and services society should produce:
40. Multiple Choice: In China, which of the following woul...
Question In China, which of the following would not be a resource in the production of rice?
Answer fertile land
41. Multiple Choice: A resource is anything that:
Question A resource is anything that:
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42. Multiple Choice: We have to make choices because:
Question We have to make choices because:
Answer we have unlimited income.
43. Multiple Choice: When a chef creates a dinner plate of...
Question When a chef creates a dinner plate of food for a customer, which of the following
represents the physical capital resource?
Answer the chef himself or herself
44. Multiple Choice: Manny is attending college and majori...
Question Manny is attending college and majoring in economics. Manny is improving his:
Answer land.
45. Multiple Choice: Which is not an example of a resource?
Question Which is not an example of a resource?
Answer land
labor
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46. Multiple Choice: Which of the following can best be co...
Question Which of the following can best be considered the resources used in the production
of computers?
Answer money from investors
47. Multiple Choice: Opportunity cost is:
Question Opportunity cost is:
Answer about half of the monetary cost of a product.
48. Multiple Choice: The opportunity cost of something is:
Question The opportunity cost of something is:
Answer greater during periods of rising prices.
49. Multiple Choice: Whenever a choice is made:
Question Whenever a choice is made:
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50. Multiple Choice: You can spend $100 on either a new ec...
Question You can spend $100 on either a new economics textbook or a new CD player. If
you choose to buy the new economics textbook, the opportunity cost is:
Answer $100.
51. Multiple Choice: Margo spends $10,000 on one year's co...
Question Margo spends $10,000 on one year's college tuition. The opportunity cost of
spending one year in college for Margo is:
Answer $10,000.
52. Multiple Choice: If the state government allocates add...
Question If the state government allocates additional spending on education, the opportunity
cost is:
Answer zero.
the dollar amount of the additional spending.
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53. Multiple Choice: Khalil is offered a free ticket to th...
Question Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera
is:
Answer zero—the tickets were free.
54. Multiple Choice: The cost of leaving the skating champ...
Question The cost of leaving the skating championship before it ends is ________, while the
cost of staying for the entire match is ________.
Answer the opportunity cost of not seeing the perfect “10” performance that happens;
zero—the ticket to the championship is already paid, so there is no cost
55. Multiple Choice: A new fast-food restaurant offered a ...
Question A new fast-food restaurant offered a free meal (valued at $5) a 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. The cost of the free meal a week for a year for Ramona
was:
Answer zero.
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56. Multiple Choice: The local Taco Hut charges the same p...
Question The local 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:
Answer the $3.
57. Multiple Choice: For an economist, the cost of somethi...
Question For an economist, the cost of something is:
Answer the amount of money you paid for it.
58. Multiple Choice: The best measure of the opportunity c...
Question The best measure of the opportunity cost of any choice is:
Answer the monetary cost of that choice.
59. Multiple Choice: While buying refreshments for an upco...
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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:
Answer the $4.
60. Multiple Choice: Your elderly grandma tells you: &ldqu...
Question 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 concept of:
Answer scarcity in economics.
61. Multiple Choice: The cost of leaving a championship so...
Question The cost of leaving a championship soccer match before it ends is ________, while
the cost of staying for the entire match is ________.
Answer the opportunity cost of not seeing the winning goal with two minutes to go;
zero—the ticket to the match is already paid so there is no cost
62. Multiple Choice: Zoe's grandparents are excited about ...
Question
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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 principle of:
Answer marginal analysis: if the additional cost of housing is zero, then their additional
benefit is also zero.
63. Multiple Choice: The university recently inherited a l...
Question 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:
Answer zero, because it was a gift.
64. Multiple Choice: A new startup airline is offering fre...
Question A new startup airline is offering free round-trip tickets to anywhere to the first 600
people who enter the office on the airline's first day of business. You arrive 24 hours
before they are scheduled to open to be sure to get the free tickets, and you buy
food from vendors while waiting in line. The cost of the tickets to you is:
Answer zero.
65. Multiple Choice: A friend comes up to you and offers t...
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Question A friend comes up to you and offers to give you a free ticket to the local
professional team's 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?
Answer The cost is zero—the ticket is free.
66. Multiple Choice: The cost of going to college is:
Question The cost of going to college is:
Answer tuition and the cost of housing.
67. Multiple Choice: You have $1 to spend on a vending mac...
Question You have $1 to spend on a vending machine snack. A bag of chips will cost you $1
and the candy bar will also cost you $1. If you choose the bag of chips, the
opportunity cost of buying the chips is:
Answer $1 plus the enjoyment you would have received from the candy bar.
68. Multiple Choice: A college student is faced with a dif...
Question 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:
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69. Multiple Choice: If you decide to go to Cancun with yo...
Question If you decide to go to Cancun with your friends during spring break, you realize you
cannot go to Paris with your sister in the summer. This statement best represents
this economic concept:
70. Multiple Choice: You decide to join the economics club...
Question You decide to join the economics club, but this means you can't join the
accounting club because it meets at the same time. This statement best
represents this economic concept:
71. Multiple Choice: The student center on campus has burr...
Question 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 is:
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72. Multiple Choice: The economic way of thinking uses:
Question The economic way of thinking uses:
Answer the analysis of benefits but not costs.
73. Multiple Choice: A choice made ________ is a choice wh...
Question A choice made ________ is a choice whether to do a little more or a little less of
something.
Answer at the front end
74. Multiple Choice: Which of the following is the best ex...
Question Which of the following is the best example of making a choice at the margin?
Answer buying a new car
75. Multiple Choice: You decide whether to eat one more sl...
Question You decide whether to eat one more slice of pizza based on how hungry you feel.
This statement best represents this economic concept:
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Answer resources are scarce.
76. Multiple Choice: The concept of the margin deals with:
Question The concept of the margin deals with:
77. Multiple Choice: A choice made ________ is a choice wh...
Question A choice made ________ is a choice whether to do a little more or a little less of
something.
78. Multiple Choice: The best example of making a choice a...
Question The best example of making a choice at the margin is:
Answer buying a new computer.
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