Chapter 1 Preliminary Quiz

Chapter 1 Preliminary Quiz

1. Economics is the study of how societies use __________ resources to

produce __________ and distribute them among different people.

a. abundant; tires

b. scarce; commodities

c. scarce; tires

d. abundant; commodities

2. The situation in which there is not enough of something to satisfy all the

desires for that thing is called:

a. abundance.

b. scarcity.

c. demand.

d. plethora.

3. The situation in which limited resources are being used most effectively is

called:

a. efficient.

b. economic.

c. abundant.

d. scarce.

4. The study of the behavior of firms, individual markets, and households is

called:

a. normative economics.

b. positive economics.

c. macroeconomics.

d. microeconomics.

5. The study of the behavior of the overall economy is called:

a. normative economics.

b. positive economics.

c. macroeconomics.

d. microeconomics.

6. Adam Smith wrote _______; John Maynard Keynes wrote _______.

a.

The Wealth of Nations

;

The General Theory of Employment, Interest and

Money.

b.

The General Theory of Employment, Interest and Money

;

The Wealth of

Nations

.

c.

The Wealth of Nations

;

How the Business Cycle Works

.

d.

The Invisible Hand

;

The General Theory of Employment, Interest and

Money.

7. If we believed that event b occurs simply because it follows event a, then

we would be trapped by the:

a. failure to hold other things equal.

b. fallacy of composition.

c. post hoc fallacy.

d. Adam Smith syndrome.

8. The three fundamental questions of economic organization are:

a. when, for whom, and how.

b. how, what, and for whom.

c. who, how, and when.

d. what, who, and why.

9. Economic questions that can be answered by examining data and making

observations are part of:

a. normative economics.

b. positive economics.

c. macroeconomics.

d. microeconomics.

10. Economic questions that can be answered through political debate and

decisions are part of:

a. normative economics.

b. positive economics.

c. macroeconomics.

d. microeconomics.

11. An economy which allows firms and individuals to decide the answers to

the three fundamental questions of economic organization is called a:

a. mixed economy.

b. market economy.

c. normative economy.

d. command economy.

12. The extreme case of a market economy is one in which government does

not intervene in economic decisions. This kind of market economy is called a

_______ market.

a. command

b. mixed

c. weak

d. laissez- faire

13. An economy in which government make all important economic decisions

is called a:

a. mixed economy.

b. market economy.

c. normative economy.

d. command economy.

14. Most economies are in fact:

a. mixed economies.

b. market economies.

c. normative economies.

d. command economies.

15. The three broad categories of inputs to production are:

a. earth, wind, and fire.

b. earth, water, and fire.

c. land, labor, and capital.

d. land, labor, and money.

16. The production-possibility frontier (PPF) shows the _______ of

production that can be obtained by an economy, given _______.

a. minimum amounts; technology and inputs to production

b. minimum amounts; efficiency

c. maximum amounts; a command economy

d. maximum amounts; technology and inputs to production

17. Points _______ the PPF are attainable, but inefficient. Points _______ the

PPF are attainable and efficient. Points _______ the PPF are unattainable

given available technology and resources.

a. outside; on; inside

b. inside; on; outside

c. inside; outside; on

d. on; inside; outside

18. To show general economic growth on the PPF, one would:

a. shift the PPF inward.

b. shift the PPF outward.

c. leave the PPF alone, but draw a circle around the origin.

d. draw a line from the origin to the previous PPF.

19. The _______ of a decision is the value of the good or service forgone.

a. opportunity cost

b. efficiency

c. economics

d. scarcity

20. Productive _______ exists when an economy cannot produce more of one

good without producing less of another good.

a. scarcity

b. economics

c. efficiency

d. opportunity cost

Chapter 2 Preliminary Quiz

Markets and Government in a Modern Economy

1. An economic system in which markets are the governing force in day-to-day

economic life while government regulates social conditions and provides

health care and social programs.

a. democratic state

b. communist state

c. welfare state

d. steady state

2. As economists, we refer to the doctrine that holds that government should

leave economic affairs primarily to the market as:

a. capitalism

b. laissez-faire

c. dormez-vous

d. communism

3. A market is:

a. a mechanism through which buyers and sellers interact to set prices and

exchange goods and services.

b. a place where goods are traded.

c. both a and b

d. neither a nor b

4. _______ coordinate the decisions of producers and consumers in the

market.

a. Ushers