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| 1 | |
Economics is the study of: |
| | A) | how government policies solve the three coordination problems. |
| | B) | how human beings develop institutions to distribute limited resources. |
| | C) | how human beings coordinate their wants and desires given a society's decision-making mechanisms, social customs, and political realities. |
| | D) | the factors that produce perceived scarcity and how such scarcity can be reduced. |
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| 2 | |
The three central coordination problems of the economy are: |
| | A) | what, how, and for whom. |
| | B) | whether, what, and why. |
| | C) | for whom, why, and what. |
| | D) | how, why, and whether. |
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| 3 | |
Economic reasoning is: |
| | A) | based on the social and moral implications of economic actions. |
| | B) | based on the premise that everything has a cost. |
| | C) | superior to other types of reasoning because it recognizes that everything has a cost. |
| | D) | inferior to other types of reasoning because it ignores important moral considerations. |
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| 4 | |
The extra cost associated with undertaking some action is its: |
| | A) | marginal benefit. |
| | B) | marginal cost. |
| | C) | total net loss. |
| | D) | total cost. |
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| 5 | |
The marginal benefit to Bob of a taxi ride to work today is $3. The marginal cost of such a ride is $4. Assuming Bob uses economic reasoning, it follows that Bob will: |
| | A) | enjoy a net gain by riding to work in a taxi. |
| | B) | not choose to ride to work in a taxi. |
| | C) | be indifferent about riding in a taxi. |
| | D) | choose to ride to work in a taxi. |
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| 6 | |
The opportunity cost of undertaking an activity is best defined as: |
| | A) | the cost foregone by not undertaking another activity. |
| | B) | the monetary cost of undertaking that activity. |
| | C) | the benefit forgone by not undertaking the next-best activity. |
| | D) | the monetary benefit of undertaking that activity. |
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| 7 | |
If you choose to play tennis on Monday morning and the next best use for your time is studying that morning, then: |
| | A) | the opportunity cost of studying is less than the benefit of studying. |
| | B) | the opportunity cost of playing tennis will be zero. |
| | C) | you do not have enough information to say anything about the opportunity cost of playing tennis in the morning. |
| | D) | the opportunity cost of playing tennis is the morning of study sacrificed. |
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| 8 | |
The fact that the U.S. Postal Service has the exclusive right to deliver regular mail is an example of: |
| | A) | social forces. |
| | B) | political forces. |
| | C) | the invisible hand. |
| | D) | the price mechanism. |
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| 9 | |
Microeconomics is: |
| | A) | the study of individual choice and how that choice is influenced by economic forces. |
| | B) | the study of unemployment, business cycles, and growth. |
| | C) | the study of aggregate economic relationships. |
| | D) | an analysis of economic reality that proceeds from the whole to the parts. |
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| 10 | |
An economic study concludes that an increase in the corporate tax rate would reduce business investment next year. This conclusion is an example of: |
| | A) | normative analysis. |
| | B) | a value judgment. |
| | C) | the art of economics. |
| | D) | positive analysis. |
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