Exam (elaborations)
Test Bank For ECON MICRO, 7th Edition by William A. McEachern, Veronika Dolar Chapter 1-21
Test Bank For ECON MICRO, 7th Edition by William A. McEachern, Veronika Dolar Chapter 1-21
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
Content preview
Name: Class: Date:Ch01: The Art and Science of Economic Analysis
1. The fact that people have unlimited wants means that _____
a. they always want more of at least one good.
b. people always purchase the goods that cost the least.
c. there is always an excess supply of necessary goods in the market.
d. selfish people are not concerned about others.
e. people do not behave rationally while making a choice.
ANSWER: a
2. The problem of scarce resources _____
a. can be solved in a market economy, but not in a command economy.
b. can be solved if all resources are jointly owned by the public and private sectors.
c. implies that the resources are not freely available.
d. arises because all natural resources are owned by the government in every country.
e. can be solved by lowering taxes in an economy.
ANSWER: c
3. Which of the following sentences is the best example of scarcity of time?
a. Peter buys a hamburger.
b. John-Michael wants to spend his money on a new hoverboard.
c. Alexander is doing homework instead of going to the movies with his friends.
d. Amanda, a geography teacher, is retired and spends her time gardening.
e. Bill is unemployed.
ANSWER: c
4. Scarcity _____
a. applies to a brain surgeon but not to a cab driver.
b. is not a problem for politicians.
c. exists only in rich countries.
d. exists only in poor countries.
e. exists to a greater or lesser extent for everybody.
ANSWER: e
5. Because resources are scarce and wants are unlimited, _____
a. only the rich get everything they want.
b. we must choose from among our many wants.
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.
ANSWER: b
6. Which of the following statements regarding the basic economic problem of scarcity is correct?
a. The problem will exist only in countries that are not highly industrialized.
b. The problem will disappear as production increases.
c. The problem will disappear as technology improves.
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
Ch01: The Art and Science of Economic Analysis
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.
ANSWER: d
7. Economics is best defined as the study of how _____
a. people make decisions in a world of scarcity.
b. governments can influence the social structure.
c. to separate the executive from the legislature and the judiciary.
d. individuals can participate in electing their representatives to the government.
e. to change the class structure of an economy.
ANSWER: a
8. Which of the following is the best definition of economics?
a. An investigation of the evolutionary process of mankind
b. A study of society as a system of interconnected parts
c. A study of how people deal with the problem of scarcity
d. An examination of the structure and the role of the government in an economy
e. A study of how to conduct free and fair elections in a country
ANSWER: c
9. Economics is best described as the _____
a. study of choice when scarcity exists.
b. study of the development of human society.
c. study of the composition and structure of matter.
d. branch of science that uses the principles of sociology.
e. branch of science that is based on value judgments.
ANSWER: a
10. Economics:
a. studies human behavior when scarcity exists and choices must be made.
b. does not provide a reasonable explanation of how people make decisions.
c. does not accurately explain any human behavior since it is based on the assumption of rationality.
d. is better at showing the way things ought to be than other social sciences.
e. is the only social science that can explain the existence and behavior of public institutions.
ANSWER: a
11. Alan is a retired economist who enjoys building toy trains for his grandkids. He uses a workbench and tools from his
garage, lumber he bought from the lumber store for $10, and varnish and paint he had left over from another project last
year. Since a retired economist is always an economist, which of the following statements is he likely to make about
building toy trains?
a. I’m not paying for any resources, so the toy trains I’m building are a good example of free goods.
b. I only paid $10 for the lumber, so the toy trains I’m building are a good example of free goods.
c. I’m using scarce resources to build the toy trains.
d. The resources I’m using to build the toy trains are not scarce.
Copyright Cengage Learning. Powered by Cognero. Page 2
,Name: Class: Date:
Ch01: The Art and Science of Economic Analysis
e. If I had used lumber that I cut from the tree in my backyard instead of buying it from the store, then the toy
trains I’m building would be a good example of free goods.
ANSWER: c
12. Michigan has an abundant supply of fresh water. However, an economist would consider it a scarce resource because
_____
a. water is necessary for human survival.
b. pollution will eventually destroy all life in the Great Lakes.
c. water is limited in supply relative to people's unlimited wants.
d. water commands a very high price.
e. the cost of supplying water is prohibitively high.
ANSWER: c
13. Natural resources are _____
a. not considered scarce because no one pays for them.
b. not used in producing luxury goods.
c. renewable and exhaustible.
d. available in unlimited quantities.
e. not considered scarce because they are not produced by society.
ANSWER: c
14. Which of the following fundamental resources is the basis of labor?
a. Capital
b. Natural resources
c. Time
d. Profit
e. Entrepreneurial ability
ANSWER: c
15. A resource is something that _____
a. is used to produce goods and services.
b. is provided by nature, and not produced by society.
c. exists in unlimited quantities in developed countries.
d. must be produced by a firm.
e. is always available free of cost.
ANSWER: a
16. In economics, capital is defined as _____
a. natural resources, such as water, oil, and iron ore.
b. the number of people in the labor force.
c. all human creations used to produce goods and services.
d. the money exchanged in the underground economy.
e. the willingness of business owners to take risks.
ANSWER: c
Copyright Cengage Learning. Powered by Cognero. Page 3
, Name: Class: Date:
Ch01: The Art and Science of Economic Analysis
17. Which of the following would an economist classify as physical capital?
a. 100 shares of Microsoft
b. a $50 bill
c. a credit card
d. a lawyer's laptop
e. a bauxite mine in Jamaica
ANSWER: d
18. Which of the following is not classified as physical capital by economists?
a. a $20 bill in a firm's petty cash drawer
b. the building where an economics class meets
c. a plumber's wrench
d. a railroad car
e. A factory
ANSWER: a
19. When economists refer to human capital, they refer to _____
a. income earned by capitalists.
b. skills used in production.
c. dividends earned by investors.
d. bonds held by the public.
e. bank loans given to the public.
ANSWER: b
20. Which of the following is an example of physical capital?
a. the owner of a pizza shop
b. bulldozers
c. a college education
d. carpentry skills
e. money
ANSWER: b
21. An entrepreneur _____
a. always makes a profit.
b. is appointed by the board of directors to manage the operations of a firm.
c. is a profit-seeking decision maker.
d. is a parasite that benefits by not paying other resources for their services.
e. is the manager who runs an enterprise and keeps the customers happy.
ANSWER: c
22. The payment in return for the use of capital is _____
a. profit.
b. wages.
Copyright Cengage Learning. Powered by Cognero. Page 4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller solutions. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $18.48. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
72349 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now