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| 1.
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Economics is conventionally divided into two subjects called |
| | A) | marginal benefit and marginal cost. |
| | B) | reservation price and opportunity cost. |
| | C) | microeconomics and macroeconomics. |
| | D) | rational economics and irrational economics. |
| | E) | economic surplus and economic deficit. |
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| 2.
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Macroeconomics differs from microeconomics in that |
| | A) | the concept of scarcity applies to the microeconomics but does not apply to macroeconomics. |
| | B) | microeconomics studies individual markets while macroeconomics studies groups of markets, including the whole economy. |
| | C) | rational decisions are relevant to macroeconomics but not the microeconomics. |
| | D) | macroeconomics is the study of how people make choices under conditions of scarcity while microeconomics is concerned with the results of those choices for society. |
| | E) | macroeconomics explains such concepts as how prices are determined in markets while microeconomics explains the overall price level. |
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| 3.
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When economists say there is no such thing as a free lunch, they mean that |
| | A) | we must pay money for everything we get. |
| | B) | it is against the law to accept goods or services without paying for them. |
| | C) | the more lunch a person eats the more weight the person will gain. |
| | D) | each day we decide to eat lunch is another day we must pay out money. |
| | E) | every choice we make involves a tradeoff. |
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| 4.
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The concept of scarcity applies equally to Bill Gates and a homeless person because |
| | A) | both have the same legal rights protected by the U.S. constitution. |
| | B) | they have the same access to the markets for goods and services. |
| | C) | there are only 24 hours in the day for both of them. |
| | D) | they are both consumers. |
| | E) | both must breathe air in order to live. |
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| 5.
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Which of the following is a synonym for "marginal" in economics? |
| | A) | extra |
| | B) | additional |
| | C) | one more |
| | D) | change |
| | E) | all of the above |
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| 6.
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The statement "The government should prevent price gouging after a natural disaster" is an example of which type of statement? |
| | A) | Macroeconomic |
| | B) | Microeconomic |
| | C) | Positive |
| | D) | Normative |
| | E) | Irrational |
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| 7.
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People who have well-defined goals and try to fulfill those goals as best they can are known as |
| | A) | rational. |
| | B) | macroeconomists. |
| | C) | microeconomists. |
| | D) | maximizers. |
| | E) | opportunists. |
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| 8.
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If you loan a friend $1,000 for a year when you could have invested it and earned 15% interest for the year, what is the opportunity cost of making the loan? |
| | A) | $15 |
| | B) | $150 |
| | C) | $850 |
| | D) | $1000 |
| | E) | $1150 |
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| 9.
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You have paid $10 to eat dinner at an all-you-can-eat buffet. You should continue eating until |
| | A) | you have finished eating "seconds". |
| | B) | the benefit you receive from additional food equals $10. |
| | C) | you have eaten all that you can. |
| | D) | you minimize the average cost of food. |
| | E) | the benefit from additional food equals 0. |
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| 10.
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Sonja is the sole owner of Words.com, providing translation services via the internet, where she earns an annul salary of $50,000 plus the potential for future profits. She is considering an offer for a top management position with another internet firm at a salary of $75,000 per year, but without profit sharing. |
| | A) | She should accept the management position because she would earn more income with other firm. |
| | B) | She should refuse the management position because, despite the higher salary, the future profits from her current business will be greater. |
| | C) | A cost-benefit analysis of her decision to retain her current position should include an opportunity cost of $75,000. |
| | D) | A cost-benefit analysis of her decision to retain her current position should not include an opportunity cost of $75,000 because her current salary plus future profits could be greater than the salary offered by the other firm. |
| | E) | A cost-benefit analysis of her decision to retain her current position should include an average cost of $75,000. |
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