Chapter 3—Supply and Demand: Theory MULTIPLE CHOICE
1. The law of demand states that price and quantity demanded are
a. directly related, ceteris paribus.
b. inversely related, ceteris paribus.
c. independent.
d. positively related, ceteris paribus.
ANS: B PTS: 1 DIF: Easy NAT: Analytic
LO...
1. The author of the text defines economics as the
a. science of efficiency.
b. science of scarcity.
c. study of markets.
d. study of human activity.
ANS: B PTS: 1 DIF: Easy NAT: Analytic
LOC: The study of economics and definitions of economics
2. When economists speak of scarcity, they are referring to the
a. condition in which society is not employing all its resources in an efficient way.
b. condition in which people's wants outstrip the limited resources available to satisfy those
wants.
c. economic condition that exists in only very poor countries of the world.
d. condition in which society produces too many frivolous goods and not enough socially
desirable goods.
ANS: B PTS: 1 DIF: Moderate NAT: Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
3. Which of the following is not one of the four broad categories of resources?
a. labor
b. government
c. capital
d. entrepreneurship
e. land
ANS: B PTS: 1 DIF: Moderate NAT: Analytic
LOC: The study of economics and definitions of economics
4. Produced goods used as inputs for the production of other goods comprise the resource known as
a. natural resources.
b. services.
c. capital.
d. entrepreneurship.
ANS: C PTS: 1 DIF: Easy NAT: Analytic
LOC: The study of economics and definitions of economics
5. Entrepreneurship is
a. the talent for organizing the use of land, labor and capital, among other things.
b. skill in influencing government regulators and legislators.
c. accumulated technical knowledge in using labor and capital.
d. knowledge of the particular natural resources to be found in a given area.
ANS: A PTS: 1 DIF: Easy NAT: Analytic
LOC: The study of economics and definitions of economics
, 6. Some years ago, chemists at 3M Corporation were trying to create a super-strong glue. Somehow they
got their molecules twisted and came up with one of the weakest glues ever made. But, rather than
pouring it down the drain, they tried coating some paper with it, and the "Post-It Note" was born. In
this case, 3M was acting as a(n)
a. utility.
b. rationer.
c. entrepreneur.
d. abstraction.
ANS: C PTS: 1 DIF: Moderate NAT: Analytic
LOC: The study of economics and definitions of economics
7. The physical and mental talents people bring to production processes comprise the resource called
a. entrepreneurship.
b. natural resources.
c. capital.
d. labor.
ANS: D PTS: 1 DIF: Easy NAT: Analytic
LOC: The study of economics and definitions of economics
8. The headline in the newspaper reads "County Supervisors Debate Building New Schools." The
headline relates closest to which economic concept?
a. goods and bads
b. utility
c. choice
d. efficiency
ANS: C PTS: 1 DIF: Moderate NAT: Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
9. The opportunity cost of attending college is
a. the money one spends on college tuition, books, and so forth.
b. the highest valued alternative one forfeits to attend college.
c. the least valued alternative one forfeits to attend college.
d. equal to the salary one will earn when one graduates from college.
ANS: B PTS: 1 DIF: Moderate NAT: Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
10. Here are three things you could do if you do not attend your neighbor's barbecue: watch television with
some friends (you value this at $17), read a good novel (you value this at $14), or go in to work (you
could earn $16 during the barbecue). The opportunity cost of going to your neighbor's barbecue is
a. $16, because this is the only alternative of the three where you actually receive a monetary
payment.
b. $14, because this is the lowest valued alternative forfeited.
c. $17, because this is the highest valued alternative forfeited.
d. $47, because this is the total dollar sum of the alternatives forfeited.
ANS: C PTS: 1 DIF: Moderate NAT: Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
, a. a person with high opportunity cost of time
b. a person with low opportunity cost of time
c. a person who is out of work
d. There is not enough information to answer the question.
ANS: A PTS: 1 DIF: Easy NAT: Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
12. Minerals, animals, water and forests are all considered to be the resource known as
a. capital
b. entrepreneurship
c. labor
d. land
e. none of the above
ANS: D PTS: 1 DIF: Easy NAT: Analytic
LOC: The study of economics and definitions of economics
13. The higher the opportunity cost of attending college,
a. the more likely an individual will go to college.
b. the more economics classes an individual will take at college.
c. the fewer economics classes an individual will take at college.
d. the less likely an individual will go to college.
ANS: D PTS: 1 DIF: Easy NAT: Analytic
LOC: Scarcity, tradeoffs, and opportunity cost MSC: Economics 24/7
14. Which of the following is an example of a positive statement?
a. The U.S. public should devote more resources to education.
b. The poor should pay lower taxes and the rich should pay higher taxes.
c. Soap operas should be taken off television.
d. If you drop a ball from the top of a building, it will fall to the ground.
ANS: D PTS: 1 DIF: Moderate NAT: Analytic
LOC: The study of economics and definitions of economics
15. Attempts to determine "what is" are part of __________ economics.
a. positive
b. normative
c. positive and normative
d. neither positive nor normative
ANS: A PTS: 1 DIF: Easy NAT: Analytic
LOC: The study of economics and definitions of economics
16. Microeconomics is the branch of economics that deals with
a. highly aggregated markets or the entire economy.
b. the production side of the economy, exclusively.
c. the buying side of the economy, exclusively.
d. human behavior and choices as they relate to relatively small units --- an individual, a
firm, an industry.
ANS: D PTS: 1 DIF: Easy NAT: Analytic
LOC: The study of economics and definitions of economics
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