PE 1 Flashcards
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 household and plentiful for economies
c. Scarce for households and scarce for economies
In considering how to allocate its scarce resources among its various members, a household considers
a. Each member’s abilities
b. Each member’s efforts
c. Each member’s desires
d. All of the above are correct
d. All of the above are correct
Economics deals primarily with the concept of
a. Scarcity
b. Money
c. Poverty
d. Banking
a. Scarcity
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
d. Resources are limited
Approxmately what percentage of the world’s economies experience scarcity?
a. 10%
b. 40%
c. 85%
d. 100%
d. 100%
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
d. Unlimited wants and limited resources
The adage “There is 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
c. People face tradeoffs
Which of the following statements best represents the principle represented by the adage “There is no such thing as a free lunch”?
a. Michelle can attend the concert only if she takes her sister with her
b. Michael is hungry and homeless
c. Andrea must repair the tire on her bike before she can ride it to class
d. Dani must decide between going to Florida or Brazil for spring break
d. Dani must decide between going to Florida or Brazil for spring break
Guns and butter are used to represent the classic societal tradeoff between spending on
a. Durable and nondurable goods
b. Imports and exports
c. National defense and consumer goods
d. Law enforcement and agriculture
c. National defense and consumer goods
A tradeoff exists between a clean environment and a higher level of income is that
a. Studies show that individuals with higher levels of income pollute less than low-income individuals
b. Efforts to reduce pollution typically are not completely successful
c. Laws that reduce pollution raise costs of production and reduce incomes
d. Employing individuals to clean up pollution causes increases in employment and income
c. Laws that reduce pollution raise costs of production and reduce incomes
Economists use the word “equality” to describe a situation in which
a. Each member of society has the same income
b. Each member of society has access to abundant quantities of goods and services, regardless his or her income
c. Society is getting the maximum benefits from its scarce resources
d. Society’s resources are used efficiently
a. Each member of society has the same income
Efficiency means that
a. Society is conserving resources in order to save them for the future
b. Society’s goods and services are distributed equally among society’s members
c. Society’s goods and services are distributed fairly, though not necessarily equally, among society’s members
d. Society is getting the maximum benefits from its scarce resources
d. Society is getting the maximum benefits from its scarce resources
Which of the following phrases best captures the notion of “efficiency”
a. Absolute fairness
b. Equal distribution
c. Minimum waste
d. Equitable outcome
c. Minimum waste
Which of the following words and phrases best captures the notion of “equality”?
a. Minimum waste
b. Maximum benefit
c. Sameness
d. Efficiency
c. Sameness
As a result of a successful attempt by government to cut the economic pie into more equal
a. The pie gets larger, and there will be more pie overall
b. The pie gets smaller, and there will be less pie overall
c. It increases the reward for working hard, resulting in people producing more goods and services
d. Those who earn more income pay less in taxes
b. The pie gets smaller, and there will be less pie overall
Maureen’s college raises the cost of room and board per semester. This increase raises Maureen’s opportunity cost of attending college
a. Even if the amount she would have to pay for room and board if she didn’t attend college rose by the same amount. An increase in opportunity cost reduces Maureen’s incentive to attend college
b. Even if the amount she would have to pay for room and board if she didn’t attend college rose by the same amount. An increase in opportunity cost increases Maureen’s incentive to attend college
c. Only if the amount she would have to pay for room and board if she didn’t attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost reduces Maureen’s incentive to attend college.
d. Only if the amount she would have to pay for room and board if she didn’t attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost increases Maureen’s incentive to attend college
c. Only if the amount she would have to pay for room and board if she didn’t attend college rose by less than the increase in the amount her college charges. An increase in opportunity cost reduces Maureen’s incentive to attend college.
Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot
a. The cost of the parking permit is not part of the opportunity cost of attending college if you would not have to pay for parking otherwise
b. The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise
c. Only half of the cost of the parking permit is part of the opportunity cost of attending college
d. The cost of the parking permit is not part of the opportunity cost of attending college under any circumstances
b. The cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise
A marginal change is a
a. Change that involves little, if anything, that is important
b. Large, significant adjustment
c. Change for the worse, and so it is usually a short-term change
d. Small, incremental adjustment
d. Small, incremental adjustment
The marginal benefit Kyra gets from eating a second sandwich is
a. The total benefit Kyra gets from eating two sandwiches minus the total benefit she gets from eating one sandwich
b. The same as the total benefit she gets from eating two sandwiches
c. Less than the marginal cost of eating the second sandwich since the chose to eat the second sandwich
d. The total benefit Kyra gets from eating three sandwiches minus the total benefit she gets from eating two sandwiches
a. The total benefit Kyra gets from eating two sandwiches minus the total benefit she gets from eating one sandwich
Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda
a. Can be thought of as the total benefit Bridget enjoys by drinking three sodas minus the total benefit she would have enjoyed by drinking just two sodas
b. Determines Bridget’s willingness to pay for the third soda
c. Is likely different from the marginal benefit provided to Bridget by the second soda
d. All of the above are correct
d. All of the above are correct
The government enforces property rights by
a. Requiring property owners to pay property taxes
b. Providing police and courts
c. Forcing people to own property
d. Providing public parks and recreation facilities
b. Providing police and courts
To say that government intervenes in the economy to promote efficiency is to say that government is attempting to
a. Create a more fair distribution of income
b. Change the way in which the economic pie is divided
c. Enlarge the economic pie
d. All of the above are correct
c. Enlarge the economic pie
To say that government intervenes in the economy to promote equality is to say that government is attempting to
a. Create a more fair distribution of income
b. Change the way in which economic pie is divided
c. Enlarge the economic pie
d. All of the above are correct
a. Create a more fair distribution of income
A rationale for government involvement in a market economy is
a. Markets sometimes fail to produce a fair distribution of economic well-being
b. Markets sometimes fail to produce an efficient allocation of resources
c. Property rights have to be enforced
d. All of the above are correct
d. All of the above are correct
An example of an externality is the impact of
a, Bad weather on the income of farmers.
b. The personal income tax on a person’s ability to purchase goods and services.
c. Pollution from a factory on the health of people in the vicinity of the factory.
d. Increases in health care costs on the health of individuals in society.
c. Pollution from a factory on the health of people in the vicinity of the factory.
An externality is a side effect or consequence of an economic activity that affects third parties who are not directly involved in the activity. Externalities can be positive (beneficial) or negative (harmful).
Which of these activities will most likely impose an external cost
a. An athlete works out at a gym.
b. A secretary smokes a cigarette in a crowded break room.
c. A young mother pushes her baby in a stroller.
d. A construction worker eats a hotdog during his lunch break.
b. A secretary smokes a cigarette in a crowded break room.
An external cost (negative externality) occurs when an activity imposes a cost on third parties who are not directly involved in the activity.
A direct or positive relationship exists between a country’s
a. Productivity and its standard of living.
b. Amount of government spending and its productivity.
c. Total population and its average citizen’s income.
d. Rate of population growth and the extent of its trade with other countries.
a. Productivity and its standard of living.
The historical rise in living standards of American workers is primarily a result of
a. The influence of labor unions in America.
b. Tariff protection imposed by the American government.
c. The enactment of minimum-wage laws in America.
d The rise in American productivity.
d The rise in American productivity.
The irregular and largely unpredictable fluctuations in economic activity are called
a. Market failure
b. Business cycle
c. Inflation
d. Unemployment
b. Business cycle
The business cycle is measured by the
a. Production of goods and services
b. Number of people employed
c. The interest rate
d. Both a and b are correct
d. Both a and b are correct
The “broken window fallacy”
a. Explains why inflation is so high
b. Is a justification for the government to print more money
c. Is illustrated when a government program is justified not on its merits but on the number of jobs it will create
d. Has nothing to do with public policy
c. Is illustrated when a government program is justified not on its merits but on the number of jobs it will create
In the long run the primary effect of increasing the quantity of money is higher prices
True
