,Principles of Microeconomics, 9e - Test Item File 2 (Case/Fair/Oster)
Chapter 1 The Scope and Method of Economics
1.1 Why Study Economics?
1 Multiple Choice
1) The reasons to study economics include which of the following?
A) to be an informed voter
B) to understand society and global affairs
C) to learn a way of thinking
D) all of the above
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Fact
2) Marginalism is
A) the best alternative that we forego when making a decision.
B) the study of how societies choose to use scarce resources.
C) a market situation in which profit opportunities are eliminated almost instantaneously.
D) the process of analyzing the additional costs or benefits arising from a decision.
Answer: D
Diff: 1
Topic: Why Study Economics?
Skill: Definition
3) Economics is best defined as the study of
A) financial decision-making.
B) how consumers make purchasing decisions.
C) choices made by people faced with scarcity.
D) inflation, unemployment, and economic growth.
Answer: C
Diff: 2
Topic: Why Study Economics?
Skill: Definition
4) The Industrial Revolution refers to the rise of the modern factory system in during
the late eighteenth and early nineteenth centuries.
A) the United States
B) England
C) France
D) Germany
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
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,5) Which of the following statements is correct?
A) Economics is a natural science.
B) In large measure, economics is the study of how people make choices.
C) If poverty was eliminated there would be no reason to study economics.
D) Economic analysis can be used to explain how societies, but not individuals, make
decisions.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
6) Economics is the study of
A) how to invest in the stock market.
B) how society uses limited resources.
C) the role of money in markets.
D) how government officials decide which goods and services are produced.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Definition
7) Costs that cannot be avoided, because they have already been incurred are known as
A) differential costs.
B) marginal costs.
C) opportunity costs.
D) sunk costs.
Answer: D
Diff: 2
Topic: Why Study Economics?
Skill: Definition
8) Suppose that two weeks ago you purchased a ticket to the symphony for $40. Last week
someone invited you to go camping on the same night as the symphony concert. You would
much rather go camping than go to the symphony. You have tried unsuccessfully to sell the
symphony concert ticket. Which of the following statements regarding this situation is
correct?
A) The $40 symphony ticket should be irrelevant in your decision making, because it
represents the marginal cost of going camping.
B) The $40 you paid for the symphony ticket should be irrelevant in your decision
making, because it is a sunk cost.
C) The $40 you paid for the symphony ticket is relevant to the decision, as this represents
the opportunity cost of going camping.
D) You should base your decision on whether or not going camping will provide you with
more than $40 in satisfaction.
Answer: B
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
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, 9) You have decided that you want to attend a renaissance fair as King Henry VIII. You
estimate that it will cost $80 to assemble your costume. After spending $80 on the costume,
you realize that the additional pieces you need will cost you $20 more. The marginal cost of
completing the costume is
A) $20.
B) $60.
C) $80.
D) $100.
Answer: A
Diff: 2
Topic: Why Study Economics?
Skill: Analytic
AACSB: Analytic Skills
10) The concept of opportunity cost can be applied to the analysis of decision-making
processes.
A) only economy-wide
B) only global
C) only-small-scale
D) any
Answer: D
Diff: 2
Topic: Why Study Economics?
Skill: Conceptual
AACSB: Reflective Thinking
11) That which we forgo, or give up, when we make a choice or a decision is known as
A) equity.
B) causation.
C) correlation.
D) opportunity cost.
Answer: D
Diff: 2
Topic: Why Study Economics?
Skill: Definition
12) Scarce resources give rise to the concept of
A) efficient markets.
B) opportunity costs.
C) laissez-faire.
D) positive economics.
Answer: B
Diff: 1
Topic: Why Study Economics?
Skill: Fact
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