64) When an employee at a grocery store scans the price of your items, bags the groceries, and
collects your paper, the individual has provided
A) physical capital.
B) entrepreneurship.
C) a service.
D) land.
65) The most basic concept of economics is
A) money.
B) scarcity.
C) bounded rationality.
D) shortage.
66) Scarcity exists because
A) there is a temporary disruption in the market supply.
B) there is a shortage of goods caused by a natural disaster.
C) there are not enough resources available to produce all the goods that people want.
D) there is a shortage of labor throughout the world.
67) Which of the following is the LEAST scarce?
A) college education
B) medicine
C) housing
D) air
68) The fact that our wants are unlimited but our resources are limited implies that
A) we should limit our wants.
B) entrepreneurship has failed as an economic system.
C) we have to make choices.
D) the only way to make someone better off is to make someone else worse off.
69) Which of the following items would be considered scarce?
A) water
B) diamonds
C) potato chips
D) All of the above are scarce.
70) The basic problem in economics is
A) unlimited needs.
B) scarcity.
C) differences in people’s tastes and preferences.
D) limited resources.
71) Scarcity implies that
A) the satisfaction of one person’s want means another person’s want can also be satisfied.
B) the satisfaction of one person’s want means another person will be more than satisfied.
C) the satisfaction of one person’s want means another person’s want cannot be satisfied.
D) no person’s wants can be satisfied.
72) Which of the following is NOT a factor of production?
A) land
B) labor
C) a product
D) entrepreneurship
73) Which of the following would be categorized as “land”?
A) timber
B) human capital
C) buildings
D) entrepreneurship
74) Education and training of workers would best be categorized as
A) land.
B) labor.
C) physical capital.
D) human capital.
75) Which factor of production includes crude oil deposits?
A) physical capital
B) human capital
C) land
D) entrepreneurship
76) Education increases the stock of which factor of production?
A) physical capital
B) human capital
C) land
D) entrepreneurship
77) In economics, physical capital includes
A) money.
B) bank deposits.
C) machinery.
D) shares of company stock.
78) Which of the following is NOT considered to be an economic resource?
A) an engineer
B) a company truck
C) a local gas station
D) a view of the moon on a clear night
79) Natural gas found in Oklahoma is an example of
A) physical capital.
B) land.
C) human capital.
D) labor.
80) An example of an entrepreneur would be
A) the owner of a Mexican restaurant.
B) the cafeteria employee who won the employee of the month award.
C) a local bus driver.
D) the cashier at your local supermarket.
81) Economic goods are items that
A) are used only by economists.
B) provide satisfaction to users.
C) cannot be sold at any price in the market.
D) individuals would pay to get rid off.
82) The term “labor” for an economist includes
A) all skilled workers, but not the unskilled workers.
B) all productive contributions of humankind.
C) only the value of the work done by scientists.
D) all employees who have high school diplomas.
83) Scarcity is
A) a situation of shortage after a hurricane.
B) a permanent human condition relative to the nearly limitless nature of human desires.
C) represented by long lines at stores.
D) the same thing as poverty.
84) The accumulated training and education that you have is
A) physical capital.
B) entrepreneurship.
C) economic goods.
D) human capital.
85) The tasks performed by the chef at your favorite restaurant could be categorized as
A) a good.
B) an economic good.
C) a service or intangible good.
D) All of the above are correct.
86) Economic bads are items
A) for which the produced quantity is less than the amount desired at a positive price.
B) for which the desired quantity is less than what nature provides at a zero price.
C) that individuals desire but which receive social disapproval.
D) that receive social approval but which governments dislike.
87) Activities designed to convert resources into goods and services is known as
A) supply.
B) consumption.
C) production.
D) scarcity.
88) All of the following are resources EXCEPT
A) doctors because they perform services.
B) the land the Statue of Liberty sits on.
C) the computer in the student computer lab.
D) money.
89) A company office can be thought of as
A) a land and labor combination.
B) a trade-off with land.
C) physical capital.
D) a type of entrepreneurship.
90) From the economist’s point of view
A) wants and needs are exactly the same.
B) a want is a lifesaving necessity.
C) needs are objectively undefinable.
D) we all have wants but only very poor people have needs.
91) A friend says, “I really, really need a new car.” As an economist, you’re thinking
A) Right! Everyone needs a new car.
B) This is an example of how objectively undefinable needs are. Many would argue that this
friend could get along just fine with a reliable used car.
C) If this friend says she needs a new car, then we must all agree that a new car is a need and not
just a want.
D) that a new car can only be considered a need if at least 51% of the public agrees.
92) Why is it that all of our wants cannot be satisfied?
A) because of shortages
B) because we cannot seem to decide what we really want
C) because other people try to change your mind about what you want
D) because limited resources mean all the goods we want cannot be obtained
93) Wants
A) is another term for needs.
B) refer to services while needs refer to goods.
C) is the term used by economists instead of needs because needs are not objectively definable.
D) are used by economists and refer to the same thing as needs when used by psychologists.
94) Human beings
A) have unlimited wants.
B) think they have unlimited wants, but really have limited needs.
C) have limited wants, but unlimited needs.
D) know what their needs are, but do not know what their wants are.
95) Economists are concerned with an individual’s
A) needs because needs are most important to an individual’s well being.
B) needs because economists define needs to be the goods people need to survive.
C) wants because wants always lead to shortages in the economy.
D) wants because the existence of wants leads to scarcity.
96) To an economist, the term “needs”
A) refers only to material desires but not nonmaterial desires.
B) is objectively undefinable.
C) identifies the purchases of basic goods and services.
D) refers to the purchase of goods by the poor.
97) “Wants” as an economic concept includes
A) both material and nonmaterial desires.
B) only the purchase of necessary basic goods.
C) only the desire for luxury goods.
D) only goods and services that consumers need but cannot afford to buy.
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98) What is production? What economic factors are involved in production?
99) Briefly explain the difference between the concepts of scarcity and shortage.
100) Briefly explain the factors of production and give an example of each.
101) Explain why even the most affluent people, businesses and counties never solve the
problem of scarcity.
102) Labor, human capital, and entrepreneurship are resources related to human beings.
Distinguish among the three resources.
103) Distinguish between scarcity and shortages.
104) Are all goods economic goods? Are all economic goods also goods? Explain.
105) “Economics is the study of how people eliminate scarcity.” Do you agree or disagree?
Why?
106) What does scarcity have to do with the fact that people must make choices?
107) “Economics deals with human needs.” Do you agree or disagree? Why?
108) Explain the difference between human needs and wants.
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2.2 Opportunity Cost, Trade-Offs, and Choices
1) The opportunity cost of attending college might best be described as
A) the money that must be paid in order to attend college.
B) the lowest-valued alternative use of the student’s time.
C) the highest-valued alternative use of the student’s time.
D) the value that the student attaches to not working.
2) The value of the best alternative sacrificed to obtain something you want is referred to as
A) explicit cost.
B) opportunity cost.
C) accounting cost.
D) tangible cost.
3) Opportunity cost
A) can only be measured as a paid cost.
B) is always the value of the next best forgone opportunity.
C) does not exist since there are no receipts.
D) is always the lowest valued alternative.
4) Opportunity cost is defined as
A) the value of the next-best alternative that must be sacrificed to attain a want.
B) the least-costly means to produce output.
C) the value of the output currently received by an individual or a corporation.
D) the return from a given unit of labor.
5) One opportunity cost associated with going to college is
A) purchasing text books.
B) paying tuition.
C) giving up employment possibilities while in college.
D) paying for room, board, and other living expenses.
6) Bill Bonecrusher graduates from college with a choice of playing professional football at $2
million a year or coaching for $50,000 a year. He decides to play football, but eight years later he
quits football to make movies for $3 million a year. His opportunity cost at graduation was
________ and eight years later was ________.
A) $50,000; $2 million
B) $2 million; $2 million
C) $2 million; $3 million
D) $50,000; $50,000
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7) Matt and Ann both decide to go to a concert with free tickets. We know that
A) both bear an opportunity cost since they could have done other things instead of see the
concert.
B) both bear the same opportunity cost since they are doing the same thing.
C) the cost of going to the concert is greater for the one who had more choices to do other things.
D) neither bears an opportunity cost because the tickets were free.
8) Opportunity cost is
A) the intrinsic value of an economic good.
B) the total value of all the alternatives given up when a choice is made.
C) the value of the opportunity selected when a need is satisfied.
D) the value of the next highest ranked alternative that must be sacrificed to obtain a want.
9) Suppose you have three choices—go to a movie, read a book, or sleep. You choose to go to a
movie. The opportunity cost of the movie is
A) the value of the book not read.
B) the value of sleeping which you enjoy the least.
C) the value of the concert that you didn’t attend.
D) the value of the activity that you would have selected if you hadn’t gone to the movie.
10) For every choice a person makes it can be assumed that
A) the chooser has full knowledge of the situation.
B) some opportunity cost was involved.
C) there is a fifty-fifty chance the choice was the wrong one.
D) a good is involved and satisfaction is gained.
11) The opportunity cost of going to college for a student receiving a scholarship
A) is the income that she would have earned if she did not go to college.
B) is the risk of dropping out.
C) is the expenses for food and clothing that she purchases while in college.
D) is zero because she does not have to pay tuition.
12) The concept of opportunity cost exists because
A) resources are scarce.
B) goods have different prices.
C) shortages occur.
D) the value of services is hard to determine.
13) Opportunity cost is
A) the cost of producing all goods and services in the United States.
B) the value of the next-best alternative that must be sacrificed to satisfy a want.
C) the fixed cost of production.
D) the value of the most useful alternative that must be sacrificed to obtain something or satisfy a
want.
14) Which of the following statements is FALSE about opportunity cost?
A) Cost is always foregone opportunity.
B) Opportunity cost is the next best alternative.
C) When a person buys two items, the concept of opportunity cost applies even though she can
afford to buy both items.
D) Opportunity cost exists only for goods with monetary values.
15) Opportunity cost is
A) the combined value of all the alternatives not selected.
B) the same thing as the money price of a good.
C) the value of the next best alternative which was given up.
D) based on the intrinsic value of the good itself.
16) Steve and Karen decide to watch a movie on Netflix using a promotion code so they do not
need to pay for that movie. We know that
A) both bear the same opportunity cost because they are seeing the same thing.
B) both bear the same opportunity cost because the tickets have the same face value.
C) both bear an opportunity cost that depends on what each person is giving up to watch the
movie.
D) neither bears an opportunity cost since neither needs to pay for the movie.
17) Samia has decided that with the two hours in between classes she can do one of 3 things. She
has ranked her choices, from highest to lowest as, (1) chat with her friends, (2) study economics
or (3) take a nap. The opportunity cost of chatting with her friends is
A) the combined value of studying economics and taking a nap.
B) the value of studying economics, the next best use of time.
C) the value of chatting with her friends.
D) zero since she does not pay her friends to talk to her.
18) Stephanie has decided to eat lunch between classes. She has ranked her choices, from highest
to lowest as, (1) turkey sandwich, (2) tuna sandwich, (3) slice of cheese pizza, (4) cheeseburger.
The opportunity cost of the eating turkey sandwich is
A) the combined value of the tuna sandwich, slice of cheese pizza and cheeseburger.
B) the value of tuna sandwich, the next best choice.
C) the value of the cheeseburger.
D) zero since she has satisfied a want.
19) Which of the following is a TRUE statement?
A) Opportunity cost is always measured in the nation’s currency.
B) Opportunity cost is an objective measure since the cost of an activity is the same for
everyone.
C) The fewer alternatives there are the greater the opportunity cost.
D) Opportunity cost is always a foregone opportunity.
20) Opportunity cost exists because
A) resources in this world are scarce.
B) prices must adjust to eliminate shortages.
C) production could not occur without the opportunity cost of using resources.
D) the value of economic goods is positive while the value of goods is zero.
21) The opportunity cost of a decision is the
A) value of the best alternative not chosen.
B) value of all the alternatives not chosen.
C) cost of making the wrong choice.
D) cost incurred by others who are unhappy with your decision.