Test One Flashcards
Scarcity exists because
A) human wants exceed the resources available to satisfy them.
Answer: A
Which of the following statements best describes the study of economics? Economics studies how
C) we make choices in the face of scarcity.
Answer: C
Scarcity forces people to
A) choose among available alternatives.
Answer: A
What is the reason that all economic issues and problems occur?
D) Human wants exceed the resources available to satisfy them.
Answer: D
The study of economics is best described as a study of
D) coping with scarcity, and choices made as a result of scarcity in a society.
Answer: D
Microeconomics includes the study of
C) choices made by individuals and businesses.
Answer: C
The primary focus of microeconomics is
B) to examine the behavior and operation of the individual units or sectors that make up the economy.
Answer: B
Which of the following is a microeconomic issue?
A) The price of gasoline increases in the United States this year.
Answer: A
Macroeconomics is the study of
B) national or global economies.
Answer: B
Which of the following is a topic studied in macroeconomics?
B) The effect on economic growth if the government raises taxes
Answer: B
When Ford decides to increase production of hybrid cars, it directly answers the ________ question.
A) what
Answer: A
When Delta decides to quit flying to Lithuania, it directly answers the ________ question.
A) what
Answer: A
When a home builder decides to computerize all of its production schedule, it directly answers the ________ question.
D) how
Answer: D
When a third string NFL quarterback earns more than a police officer, society answers the ________ question.
A) for whom
Answer: A
Choices that are best for the individuals that make them are choices in pursuit of
D) self-interest.
Answer: D
Choices that are best for the society as a whole are choices in pursuit of
B) the social interest.
Answer: B
Rational choice
A) is a choice that uses the available resources to best achieve the objective of the person making
Answer: A
Choices that are best for the society as a whole are choices in pursuit of
self-interest
Rational choice
a choice that uses the available resources to best achieve the objective of the person making the choice.
Example sentence: Making a rational choice involves weighing the pros and cons of each option.
An opportunity cost is
the benefits of the highest-valued alternative forgone.
Example sentence: Understanding opportunity cost is essential for making informed decisions.
If Jessie studies economics for two hours instead of going to the movies with her friends, then
the opportunity cost of studying is the missed movie.
Example sentence: Jessie’s decision to study economics instead of going to the movies demonstrates opportunity cost in action.
The value of the best thing that a person must give up when making a decision is known as the ________ cost.
opportunity
Example sentence: Calculating opportunity cost helps individuals make informed choices.
Ali decides to attend the one-hour review session for microeconomics instead of working at his job. His job pays him $10 per hour. Ali’s opportunity cost of attending the review session is
the $10 he could have earned at his job.
Example sentence: Ali’s opportunity cost is calculated based on his next best alternative.
Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time. Your opportunity cost of taking the test is the
forgone working or partying, depending on which was your next best choice.
Example sentence: Understanding opportunity cost involves evaluating the alternatives foregone.
