1. Resources are
a. scarce for households but plentiful for economies.
b. plentiful for households but scarce for economies.
c. scarce for households and scarce for economies.
d. plentiful for households and plentiful for economies.
ANSWER: c
2. Fundamentally, economics deals with
a. scarcity.
b. money.
c. poverty.
d. banking.
ANSWER: a
3. The overriding reason why households and societies face many decisions is that
a. resources are scarce.
b. goods and services are not scarce.
c. incomes fluctuate with business cycles.
d. people, by nature, tend to disagree.
ANSWER: a
4. The phenomenon of scarcity stems from the fact that
a. most economies' production methods are not very good.
b. in most economies, wealthy people consume disproportionate quantities of goods and services.
c. governments restrict production of too many goods and services.
d. resources are limited.
ANSWER: d
5. In most societies, resources are allocated by
a. a single central planner.
b. a small number of central planners.
c. those firms that use resources to provide goods and services.
d. the combined actions of millions of households and firms.
ANSWER: d
6. Economics is the study of how society manages its
a. limited wants and unlimited resources.
b. unlimited wants and unlimited resources.
c. limited wants and limited resources.
d. unlimited wants and limited resources.
ANSWER: d
7. Fossil fuels are considered to be nonrenewable energy sources. Which of the following statements is correct?
a. Fossil fuels are unlimited resources.
b. Fossil fuels are scarce resources.
c. Fossil fuels are nonscarce resources.
d. Fossil fuels are not resources.
ANSWER: b
8. What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have?
a. inefficiency
b. inequality
c. scarcity
d. market failure
ANSWER: c
9. The adage, "There ain't no such thing as a free lunch," means
a. even people on welfare have to pay for food.
b. the cost of living is always increasing.
c. people face tradeoffs.
d. all costs are included in the price of a product.
ANSWER: c
10. Which of the following statements best represents the principle represented by the adage, "There ain't no such thing as a free lunch"?
a. Bo can go swimming only if he takes his brother with him.
b. Jada is starving and homeless.
c. Alivia must put gas in her truck before she can drive it to school.
d. Benjamin must decide between going to Florida or Brazil for summer vacation.
ANSWER: d
11. Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that
a. people respond to incentives.
b. rational people think at the margin.
c. people face tradeoffs.
d. improvements in efficiency sometimes come at the expense of equality.
ANSWER: c
12. While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that
a. trade can make everyone better off.
b. rational people think at the margin.
c. people face tradeoffs.
d. people respond to incentives.
ANSWER: c
13. When society requires that firms reduce pollution, there is
a. scarce for households but plentiful for economies.
b. plentiful for households but scarce for economies.
c. scarce for households and scarce for economies.
d. plentiful for households and plentiful for economies.
ANSWER: c
2. Fundamentally, economics deals with
a. scarcity.
b. money.
c. poverty.
d. banking.
ANSWER: a
3. The overriding reason why households and societies face many decisions is that
a. resources are scarce.
b. goods and services are not scarce.
c. incomes fluctuate with business cycles.
d. people, by nature, tend to disagree.
ANSWER: a
4. The phenomenon of scarcity stems from the fact that
a. most economies' production methods are not very good.
b. in most economies, wealthy people consume disproportionate quantities of goods and services.
c. governments restrict production of too many goods and services.
d. resources are limited.
ANSWER: d
5. In most societies, resources are allocated by
a. a single central planner.
b. a small number of central planners.
c. those firms that use resources to provide goods and services.
d. the combined actions of millions of households and firms.
ANSWER: d
6. Economics is the study of how society manages its
a. limited wants and unlimited resources.
b. unlimited wants and unlimited resources.
c. limited wants and limited resources.
d. unlimited wants and limited resources.
ANSWER: d
7. Fossil fuels are considered to be nonrenewable energy sources. Which of the following statements is correct?
a. Fossil fuels are unlimited resources.
b. Fossil fuels are scarce resources.
c. Fossil fuels are nonscarce resources.
d. Fossil fuels are not resources.
ANSWER: b
8. What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have?
a. inefficiency
b. inequality
c. scarcity
d. market failure
ANSWER: c
9. The adage, "There ain't no such thing as a free lunch," means
a. even people on welfare have to pay for food.
b. the cost of living is always increasing.
c. people face tradeoffs.
d. all costs are included in the price of a product.
ANSWER: c
10. Which of the following statements best represents the principle represented by the adage, "There ain't no such thing as a free lunch"?
a. Bo can go swimming only if he takes his brother with him.
b. Jada is starving and homeless.
c. Alivia must put gas in her truck before she can drive it to school.
d. Benjamin must decide between going to Florida or Brazil for summer vacation.
ANSWER: d
11. Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that
a. people respond to incentives.
b. rational people think at the margin.
c. people face tradeoffs.
d. improvements in efficiency sometimes come at the expense of equality.
ANSWER: c
12. While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that
a. trade can make everyone better off.
b. rational people think at the margin.
c. people face tradeoffs.
d. people respond to incentives.
ANSWER: c
13. When society requires that firms reduce pollution, there is