,Chapter 1—The Art and Science of Economic Analysis
MULTIPLE CHOICE
1. Economics is best defined as the study of how individuals decide to use limited resources in an attempt
to satisfy unlimited wants.
a. True
b. False
ANS: A PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Analytic
STA: DISC: The study of economics, and definitions in economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Knowledge
2. Economics studies how decision makers use scarce resources to satisfy unlimited wants.
a. True
b. False
ANS: A PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Analytic
STA: DISC: The study of economics, and definitions in economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Knowledge
3. In economics, money is an example of capital.
a. True
b. False
ANS: B PTS: 1 DIF: Difficulty: Challenging
NAT: BUSPROG: Analytic
STA: DISC: The study of economics, and definitions in economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Knowledge
4. Profit is the payment received by resource owners for the use of their capital.
a. True
b. False
ANS: B PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Analytic
STA: DISC: The study of economics, and definitions in economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Knowledge
5. Rent is the payment received by resource owners for the use of their natural resources.
a. True
b. False
ANS: A PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Analytic
STA: DISC: The study of economics, and definitions in economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Knowledge
, 6. The fact that people have unlimited wants means that
a. they always want more of at least one good
b. each person has an unlimited desire for every good
c. labor unions demand wage increases
d. selfish people are not concerned about others
e. people buy goods without regard to what they can afford
ANS: A PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Reflective Thinking STA: DISC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Comprehension
7. The problem of scarce resources
a. means that in some cities there are not enough jobs
b. could be solved if the unemployment rate fell
c. is that there are not enough resources to satisfy people's unlimited wants
d. is that resources are used inefficiently
e. can be solved by lowering taxes
ANS: C PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Analytic STA: DISC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Comprehension
8. Scarcity is best defined as
a. unlimited resources
b. a shortage -- when buyers cannot obtain the goods they want
c. a surplus -- when sellers cannot sell the goods they produce
d. insufficient resources to satisfy unlimited wants
e. the private ownership of society's resources
ANS: D PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Analytic STA: DISC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Comprehension
9. Scarcity
a. exists because people have wants that are unlimited relative to the availability of resources
to satisfy those wants
b. applies when a resource is not freely available
c. means that each society and each individual must make choices
d. exists in all societies
e. all of the above are true
ANS: E PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Analytic STA: DISC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Comprehension
10. Because people's wants are unlimited but resources are scarce,
a. only the rich get everything they want
b. choices must be made
c. there will be more services produced than goods
d. people search for spiritual fulfillment rather than material fulfillment
, e. poor people never get anything they want
ANS: B PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Analytic STA: DISC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Comprehension
11. Which of the following statements regarding the basic economic problem of scarcity is correct?
a. The problem only exists in countries that are not highly industrialized.
b. The problem is likely to disappear as production increases.
c. The problem is sure to disappear as technology improves.
d. The problem will exist as long as resources are available in limited amounts.
e. The problem will disappear as a person's income falls.
ANS: D PTS: 1 DIF: Difficulty: Easy
NAT: BUSPROG: Analytic STA: DISC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Comprehension
12. Some individuals or families can become completely saturated with a service such as television. This
suggests that
a. wants are limited
b. desires for a single commodity can be satisfied but then the focus will switch to other
goods and services
c. a highly productive economy may someday be able to satisfy all human desires
d. resources are not truly fixed in supply as we generally assume
e. scarcity does not exist
ANS: B PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Reflective Thinking STA: DISC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Comprehension
13. The existence of scarcity as defined by economists means that
a. societies are inefficiently organized
b. people are irrational
c. societies must make choices of how to use their resources
d. resources are non-renewable
e. people are greedy
ANS: C PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Reflective Thinking STA: DISC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
KEY: Bloom's: Comprehension
14. Economics is best defined as the study of how
a. individuals decide to use scarce resources in an attempt to satisfy their unlimited wants
b. to make money
c. the government should deal with unemployment and inflation
d. to eliminate the problem of scarce resources
e. to run a business
ANS: A PTS: 1 DIF: Difficulty: Moderate
NAT: BUSPROG: Analytic
STA: DISC: The study of economics, and definitions in economics
