Chapter 1: Economics

The problem of scarcity
1. arises only in poor countries.
2. exists because the price of goods is too high.
3. exists because of limited resources.
4. will eventually be solved by better planning.
If society is producing a combination of goods on its production possibilities frontier
1. it must be employing all available resources.
2. it must be growing.
3. it is using all the available natural resources but may not be using all available labor resources.
4. Both a and b.
The slope of the production possibility frontier shows
1. how inputs must be changed to keep them fully employed.
2. the technically efficient combinations of the two goods.
3. how demanders are willing to trade one good for another.
4. the opportunity cost of one good in terms of the other.
If the prevailing price of shirts is €10 and at this price demanders demand 100 shirts while suppliers are willing to supply 110 shirts, there is a(n)
1. shortage at the €10 price.
2. surplus at the €10 price.
3. equilibrium in this market.
4. shortage if price were to rise above €10.
Positive economic analysis
1. involves the study of firms with positive profits.
2. involves how resources are actually used in an economy.
3. involves judgments on how resources should be used in an economy.
4. is usually thought to be a waste of time.
Normative economic analysis
1. involves the study of what comprises a normal firm.
2. involves how resources are actually used in an economy.
3. involves judgments on how resources should be used in an economy.
4. is usually thought to be a waste of time.
A major problem that may occur with models that predict the values of economic variables in the future is that
1. researchers are pessimistic about the future.
2. the model may fail to acknowledge that economic actors will change their behavior in response to changing situations.
3. the model may make predictions that conflict with widely held opinions.
4. no one cares about these predictions.
In the equation Y = 13X + 38 where Y is a function of X
1. Y is the independent variable.
2. 38 is a variable.
3. the slope of the line is 38.
4. None of the above.
The Y-intercept of Y = 3X + 8 is
1. 3/8.
2. 3.
3. 8.
4. –8/3.
The X-intercept of Y = 4X + 12 is
1. –3.
2. 3.
3. –1/3.
4. 12.

Chapter 1: Economics

Multiple Choice Questions