SECTION 1
True or False:
1. Scarcity is a problem only for the poor.
2. Macroeconomics studies the factors that change National employment and
income.
3. “For whom are goods and services produced?” is one of the big macroeconomic
questions.
4. An example of the “how” question is: “How does the nation decide who gets
the goods and services that are produced?”
5. Answering the question “What goods and services are produced?”
automatically answers the question, “How are goods and services produced?”
6. The opportunity cost of buying a slice of pizza for$3 rather than a burrito for $3
is the burrito.
7. A positive statement is about what is; a normative statement is about what will
be.
Multiple Choice Questions:
1. Economics is a social science that studies the choices that individuals,
businesses, governments, and entire societies make in the presence of
a. Poverty.
b. Scarcity.
c. Necessity.
d. Efficiency
2. Economics is best defined as the study of
a. financial decision-making.
b. how consumers make purchasing decisions.
c. choices made by people faced with scarcity.
d. inflation, unemployment, and economic growth.
3. The central problem of an economy is
a. Assigning limited resources in a way that unlimited desires and needs of
the society are satisfied.
b. Ensuring a minimum income for each citizen.
c. Assuring that production happens in the most effective way.
d. Analyzing the demand with market economies.
4. Which of the following is an opportunity cost of attending college?
a. the cost of your apartment or dorm
b. the income you could have earned if you didn’t attend college
c. the cost of the food that you consume while you are attending college
d. the education you gain from attending college.
5. Production points on the PPF itself are
a. efficient but not attainable.
b. efficient and attainable
c. inefficient but not attainable.
d. inefficient and attainable.
6. The existence of the tradeoff along the PPF means that the PPF is
a. linear.
b. negatively sloped.
c. positively sloped.
7. Macroeconomics deals with:
a. The behavior of firms.
b. Economic aggregates.
c. The behavior of the electronics industry.
d. The activities of individual units
8. Microeconomics is not concerned with the behavior of:
a. Consumers.
b. Aggregate demand.
c. Firms.
d. Industries.
8. The highest-valued alternative that we give up to get something is the
a. Marginal cost.
b. Opportunity cost.
c. Marginal benefit.
d. Incentive.
9. The question, “Should personal computers or mainframe computers be
produced?” is an example of the
a. “What” question.
b. “How” question.
c. “Where” question.
d. “who” question
9. An approach to economics that applies statistical techniques and data to
economic problems is called
a. Ockhamʹs razor.
b. laissez-faire economics.
c. positive economics.
e. normative economics.
9. The Latin phrase ceteris paribus means that when a relationship between
two variables is being studied
a. both are treated as unpredictable.
b. neither of those two variables is allowed to change.
c. all other variables are held fixed.
d. we recognize that some factors are unknown.
Refer to the information provided in the figure below to answer the questions
that follow:
True or False:
1. In Figure1; point a is NOT attainable.
2. In Figure1; the opportunity cost of moving from point b to point c is 10
computers.
3. From a point on the PPF, rearranging production and producing more of all goods
is possible.
4. From a point within the PPF, rearranging production and producing more of all
goods is possible.
5. Production efficiency requires producing at a point on the PPF.
