Economics Today, 19e (Miller)
Chapter 2 Scarcity and the World of Trade-Offs
2.1 Scarcity
1) Scarcity arises because
A) resources are limited and are inadequate to meet all human wants.
B) shortages occur in some markets.
C) natural resources are abundant.
D) some people do not behave in a rational manner.
2) Scarcity refers to
A) a shortage in a good or service.
B) the ability of society to consume all that it produces.
C) the inability of society to satisfy all human wants because of limited resources.
D) the inability of an individual to purchase a good or service due to her limited income.
3) Which of the following statements is TRUE about scarcity?
A) Both rich and poor people face the problem of scarcity.
B) Scarcity exists only when supply is insufficient to meet demand.
C) Scarcity exists only when a shortage exists.
D) Scarcity can be eliminated when a country becomes richer.
4) The problem of economic scarcity applies
A) only in countries with no markets to meet people’s wants.
B) only in underdeveloped countries, because there are no productive resources in these nations.
C) only to nations with few resources.
D) to the economies of all nations, regardless of their levels of development.
5) In every economic system, choices must be made because resources
A) are unlimited, but human desires and wants are limited.
B) are limited, but human desires and wants are unlimited.
C) are unlimited, and so are human desires and wants.
D) are limited, and so are human desires and wants.
6) In the production of goods and services, trade-offs exist because
A) not all production is efficient.
B) society has only a limited amount of productive resources.
C) we have abundant resources to choose from.
D) human wants and needs are limited at a particular point in time.
7) Which of the following statements about economic scarcity is FALSE?
A) Scarcity occurs among the poor and the rich.
B) Scarcity only occurs if there are shortages and people wait in line to buy things.
C) Scarcity results from not having enough resources to produce all the things we want.
D) Scarcity results in the necessity to make choices.
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8) Which of the following statements is FALSE?
A) Economic goods are available in desired quantities at a zero price.
B) A good is anything that gives satisfaction or happiness to individuals.
C) Services are intangible goods such as dry cleaning, hospital care, and restaurant meal
preparation.
D) Wants are unlimited and include all material and nonmaterial desires.
9) Which of the following statements about scarcity is TRUE?
A) Scarcity is no longer a problem for industrialized countries.
B) Scarcity exists in all societies.
C) Scarcity is a problem only for greedy people.
D) Scarcity is a problem only in countries that do not use markets to organize economic activity.
10) In 2016, tornadoes damaged many parts of the U.S. Midwest, destroying homes, businesses,
schools, and infrastructure. In strictly economic terminology, these tornadoes are said to have
caused
A) scarcity, because the damages made food and shelter scarce.
B) scarcity, because some goods were difficult to get.
C) shortages, because supplies were cut off and goods were destroyed.
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11) Scarcity implies that people must
A) be irrational.
B) be selfish.
C) make choices.
D) not be selfish.
12) Scarcity
A) does not exist in the United States.
B) applies only to developing countries.
C) can be eliminated with more efficient production methods.
D) is not a shortage.
13) The difference between scarcity and a shortage is that
A) scarcity is caused by poverty and shortages are caused by natural disasters.
B) shortages are a type of scarcity caused by natural disasters while scarcity is caused by human
errors.
C) scarcity always is a part of human life while shortages usually are temporary.
D) shortages are always part of human life while scarcity is usually temporary.
14) Which of the following is the best example of scarcity?
A) The Talking Teddy is a surprise holiday hit, resulting in long lines of consumers trying to
purchase the limited number of available Teddies.
B) Fred only gets a 10-hour lunch break and each day must decide between working out at the
gym or socializing with his colleagues.
C) The local market’s buy-one-get-one-free sale on strawberries results in more people wanting
the berries than producers are able and willing to supply.
D) Pokemon Go is the most popular cell-phone app that can be downloaded free from an app
store.
15) Scarcity is caused by
A) unlimited wants running up against limited economic resources.
B) a company’s slow production speed.
C) an individual’s budget that is insufficient to cover the expenses of certain goods or services.
D) shortages.
16) Human resources that perform the functions of organizing, managing, and assembling the
other factors of production are called
A) physical capital.
B) venture capital.
C) entrepreneurs.
D) productive capital.
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17) In economic terminology, when a resource is used to produce output it is referred to as
A) an intangible.
B) a factor of production.
C) a service.
D) a fifth element.
18) All of the following are examples of physical capital EXCEPT
A) buildings.
B) machinery.
C) company stocks and bonds.
D) computer equipment.
19) Entrepreneurs are important to market economies because
A) they engage in risk taking and innovation.
B) they make up a large portion of low-skilled labor.
C) they take few risks and thereby, suffer fewer bankruptcies.
D) they represent the bulk of employment at large corporations.
20) Which of the following are considered factors of production?
I. Land
II. Labor
III. Physical capital
IV. Entrepreneurship
A) I and II only
B) I and III only
C) I, II and III only
D) I, II, III and IV
21) All of the following are economic resources, or factors of production EXCEPT
A) land.
B) physical capital.
C) money.
D) entrepreneurship.
22) In economic terminology, the accumulated training and education that workers receive to
increase their productivity is referred to as
A) entrepreneurship.
B) human capital.
C) labor.
D) physical capital.
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23) Physical capital is distinguished from human capital because
A) physical capital refers to trained people.
B) physical capital refers to equipment and machinery, whereas human capital refers to trained
people.
C) human capital refers only to day laborers.
D) physical capital refers to trained people, whereas human capital refers to equipment and
machinery.
24) In economics, the term physical capital
A) refers to funds used by businesses to acquire goods and services.
B) refers to all manufactured resources used for production.
C) refers to the process of raising funds through the stock market.
D) refers to the stock of merchandise already produced.
25) Human capital is
A) what people get from physical capital.
B) the accumulation of skills, training and education of workers.
C) the value of funds that entrepreneurs obtained from other people.
D) the human resources that perform the function of raising capital.
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26) The conversion of resources into consumer goods or services is called
A) human capital.
B) production.
C) opportunity cost.
D) consumption.
27) Services can be thought of as
A) unvalued goods.
B) unwanted goods.
C) free goods.
D) intangible goods.
28) Economic goods are defined as
A) tangible items only.
B) services only.
C) anything from which an individual derives satisfaction.
D) any item which is available in sufficient quantity at zero price.
29) If the quantity desired of something exceeds the amount available at zero price, that item is
called
A) capital.
B) an economic good.
C) an intangible good.
D) a bad.
30) Which is the best example of an intangible good?
A) the car you dream of owning but cannot afford
B) the suit you hope will make a good impression when you go on job interviews
C) the textbook study guide you hope will prepare you to perform well on examinations
D) the advice and expertise provided by the music store clerk who sold you that CD
31) At a zero price, which of the following conditions is TRUE for an economic good?
A) Its quantity supplied exceeds its quantity demanded.
B) Its quantity demanded exceeds its quantity supplied.
C) Its quantity demanded equals its quantity supplied.
D) Scarcity disappears.
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32) The most basic concept in economics is
A) wealth.
B) income.
C) scarcity.
D) human need.
33) Scarcity
A) exists in all human societies.
B) is a problem for less-developed nations only.
C) used to be a problem, but is not an issue for modern industrial nations.
D) afflicts greedy people only.
34) Scarcity affects
A) only rich people.
B) only poor people.
C) only middle income people.
D) all people.
35) Scarcity is
A) a shortage of goods and services.
B) poverty and misery.
C) a situation in which the resources for producing the goods and services that people desire are
sufficient to satisfy people’s desires.
D) a situation in which the resources required to produce the goods and services that people
desire are insufficient to satisfy all wants.
36) Scarcity implies that
A) people should limit their wants, since shortages exist.
B) firms should be more efficient when producing goods.
C) people must make choices.
D) nonrenewable resources should never be used.
37) Economic goods are
A) abundant goods, about which we must constantly make decisions about their best use.
B) all imaginable items from which individuals derive satisfaction or happiness.
C) goods that are scarce, for which the quantity demanded exceeds the quantity supplied at a
zero price.
D) goods that are scarce, for which the quantity demanded exceeds the quantity supplied at any
price.
38) Scarcity exists because
A) the majority of people in the world are poor.
B) people are too greedy and refuse to share what they have with others.
C) human wants exceed what can be produced with the limited resources available.
D) not enough new technology is being used to eliminate scarcity.
39) A drought has destroyed orange crops in California. The drought has caused
A) scarcity because there are less oranges now than people want.
B) scarcity because people have to switch to oranges grown in Florida.
C) a shortage because people cannot obtain as many oranges as they wish to buy at the pre-freeze
price.
D) a shortage because orange growers will have less income.
40) The existence of scarcity means that
A) there are not enough resources to satisfy unlimited human wants.
B) firms will increase their production to eliminate the scarcity.
C) the government will step in to eliminate the scarcity.
D) firms working with the government will allocate resources to eliminate the scarcity.
41) David has just ordered a smartphone only to be told that she will have to wait one month for
it to be delivered. Which of the following statements is TRUE?
A) The smartphone is not a scarce good.
B) The smartphone is an economic good.
C) The smartphone is human capital.
D) The smartphone is an intangible good.
42) Scarcity and shortages differ in that
A) scarcity is caused by natural disasters and shortages are caused by mistakes people make.
B) scarcity is a condition of human life while shortages are usually temporary phenomena related
to an imbalance between the amount desired and the amount produced.
C) scarcity is a type of shortage but shortage is a broader concept.
D) shortages apply to resource markets while scarcity applies to product markets.
43) There are not enough of four goods to satisfy the wants of people. For good A, this is true
when the price is $100. This is true for good B at a price of $10, for good C at a price of $1, and
for good D at a price of zero. Which situation reflects scarcity rather than shortage?
A) A
B) B
C) C
D) D
44) Production refers to
A) physically producing material goods only.
B) any activity of a firm, whether a corporation, partnership, or sole proprietorship.
C) any activity that results in the conversion of resources into goods or services that can be
consumed.
D) any activity that causes a material conversion of manufactured goods.
45) Which of the following activities are production?
A) combining flour, milk, and eggs to make cookies
B) moving crude oil from one part of Texas to an oil refinery near the Texas coast
C) taking ice cubes from a tray to put in a drink
D) All of the above are production.
46) In economics, resources are also known as
A) minerals.
B) factories.
C) factors of production.
D) human capital.
47) Which type of resource will improve through more education and training by workers?
A) money
B) physical capital
C) natural resources
D) human capital
48) A tractor used to prepare land for planting is called
A) land.
B) labor.
C) physical capital.
D) human capital.
49) Naturally occurring diamonds are an example of
A) land.
B) labor.
C) physical capital.
D) human capital.
50) A man-made resource such as a building or a machine is an example of which resource?
A) entrepreneurial ability
B) labor
C) physical capital
D) human capital
51) Which of the following is NOT an economic resource?
A) company stock share
B) low-skilled labor
C) coal
D) an economist
52) Bonnie volunteers to help make floral arrangements at a flower shop. She is an example of
A) entrepreneurial ability.
B) labor.
C) physical capital.
D) human capital.
53) Bonnie is a self employed. She makes floral arrangements in a building she rents. She owns
the delivery vehicle and has hired a delivery driver. She is an example of
A) entrepreneurial ability.
B) labor.
C) physical capital.
D) human capital.
54) Amy goes to college to become a nurse. This is an example of an
A) investment in physical capital.
B) investment in human capital.
C) increase in entrepreneurship.
D) increase in labor.
55) An irrigation system is installed on a farm in Kansas. This is an example of which factor of
production?
A) labor
B) land
C) human capital
D) physical capital
56) Which of the following is NOT an example of investment in human capital?
A) a business student’s internship
B) a laptop computer for work
C) A mechanic attends a training workshop on a new type of engine.
D) Johnny learns how to read.
57) Juanita has just opened a new business selling pet supplies through the Internet.
A) Juanita is an entrepreneur.
B) Juanita is not providing economic goods since people purchase the goods.
C) Juanita is not providing economic goods since pet supplies are not being sold in a store.
D) Juanita is not an entrepreneur since there are other businesses that sell pet supplies.
58) Which of the following is a TRUE statement?
A) All goods are economic goods.
B) All economic goods are goods, but not all goods are economic goods.
C) Economic goods and goods mean the same thing.
D) Economic goods do not include services while goods do include services.
59) Which of the following is NOT an economic good?
A) a haircut
B) broccoli
C) garbage
D) a textbook
60) John has decided to watch the sunrise tomorrow morning. The sunrise is an example of
A) a good.
B) an economic good.
C) a service.
D) an economic bad.
61) A typical economic good has which one of the following characteristics?
A) The desired quantity exceeds the quantity available at a zero price.
B) The quantity available exceeds the desired quantity at a zero price.
C) It uses no resources to produce.
D) It is never scarce.
62) A waitress brings a free glass of water when you sit down in a restaurant. This glass of water
is
A) a service because the waitress carried it instead of making it.
B) a good, but not an economic good because there is no price charged for the water.
C) a bad because there is no price charged for the water.
D) an economic good because the water is a scarce resource, even if it is free to you.
63) Which of the following is NOT a service?
A) physical labor purchased by a producer
B) things purchased by a consumer that do not have physical characteristics
C) a diamond used in an engagement ring
D) tasks performed by someone else