Exam (elaborations)

Test Bank For Essentials of Economics 11Th Ed by Bradley Schiller

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Course
Economics - Test Bank

Institution
Economics - Test Bank

Chapter 03 Test Bank KEY 1. The goals of the principal participants in the economy are to maximize A. income for consumers, profits for business, and taxes for government. B. goods and services for consumers, scarce resources for businesses, and money for government. C. happiness for consumers,...

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Uploaded on October 3, 2023
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Type Exam (elaborations)
Contains Questions & answers

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, Chapter 01 Test Bank KEY

1. The central problem of economics is the

A. distribution of goods and services to those in need.
B. fact that human wants exceed the availability of resources.
C. inefficiency of government operations.
D. labor unemployment visible throughout the economy.

There are only a finite amount of resources, so there are not enough to meet all human
desires.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Explain the meaning of scarcity.
Topic: The Central Problem of Scarcity

2. The primary concern of economics is the study of

A. why human wants exist and what motivates them.
B. how to distribute goods and services according to human needs.
C. how best to allocate scarce resources among competing uses.
D. the measurement of political power in an economy.

There are not enough resources for everyone to have all that they desire.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Explain the meaning of scarcity.
Topic: The Central Problem of Scarcity

3. Which of the following explains why economic choices must be made?

A. The factors of production are scarce.
B. The factors of production are expensive.
C. The factors of production are used inefficiently.
D. The factors of production are of inferior quality.

The factors of production and the resources used to make goods and services are finite.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Explain the meaning of scarcity.
Topic: The Central Problem of Scarcity

©2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

,4. The main focus of economic studies concerns

A. the behavior of successful businesses.
B. the role of money in our economy.
C. how best to allocate scarce resources.
D. the elimination of opportunity costs.

The goal of economic theory is to figure out how to use scarce resources in the best possible
way.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Explain the meaning of scarcity.
Topic: The Central Problem of Scarcity

5. Opportunity cost may be defined as the

A. value of the most desired goods or services that are forgone in order to obtain something
else.
B. dollar price paid for a final good or service.
C. dollar cost of producing a particular product.
D. dollar cost of the next best alternative resources for producing a good.

The opportunity cost is the value of the next best alternative that is given up when we make a
choice.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Define "opportunity cost."
Topic: The Central Problem of Scarcity

6. Given that resources are scarce

A. a "free lunch" is possible, but only for a limited number of people.
B. poor countries must make choices, but rich countries do not have to make choices.
C. opportunity costs always exist whenever choices are made.
D. some choices involve opportunity costs while other choices do not.

Resources required in the production of desired goods and services are limited so there is an
opportunity cost for every production decision.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Define "opportunity cost."
Topic: The Central Problem of Scarcity

7. The opportunity cost of playing tennis with your friend is
©2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

, A. negative since it is good exercise.
B. zero since you already own the tennis racket and play on a public court.
C. the next-best alternative use of your time that is forgone.
D. the cost of the tennis lessons you took last year.

In this case, an opportunity cost is an opportunity lost due to scarce time.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Define "opportunity cost."
Topic: The Central Problem of Scarcity

8. There would be no reason for students to study the concept of opportunity costs if

A. the market mechanism functioned to allocate resources.
B. the government allocated resources.
C. the production possibilities curve bowed outward.
D. resources were no longer scarce.

If no resources were scarce, consumers would not have to make choices. This would also
mean that humans would need to live forever, otherwise time is always a scarce resource.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 01-02 Define "opportunity cost."
Topic: The Central Problem of Scarcity

9. If resources are limited

A. people will rush to buy more goods than they would otherwise.
B. businesses will sell more products than they would otherwise.
C. there will be tradeoffs whenever choices are made.
D. all individuals are deprived of basic necessities.

Available resources always fall short of our desires.

AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Define "opportunity cost."
Topic: The Central Problem of Scarcity

10. Which of the following is true about the factors of production?

A. The physical limits of production are determined by all of the factors of production and
technology.
B. Rich countries have an unlimited quantity of factors.
©2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

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