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- 1. Multiple Choice
Which statement best defines the term economics?
Economics is the study of the production and distribution of goods and services.
Economics is the study of government programs supporting peace treaties.
Economics is the study of money.
Economics is the study of relationships among society.
- 2. Multiple Choice
What would an economist say motivates a man who builds chairs and sells them to the public?
greed
self-interest
law of diminishing returns
laissez faire
- 3. Multiple Choice
Which theory did Adam Smith develop that led him to be known as the father of economics?
He promotes the idea that people care too much about the needs of society.
He helps economists to study the effects of pollution on economic systems.
He explains population growth and its impact on deteriorating resources.
He states that when people act in their own self-interests, it results in an efficient use of resources in a free market.
- 4. Multiple Choice
While shopping you discover that your favorite department store has lowered the price on a hot, new MP3 player that you wanted to buy. You rush into the store, only to find that they are sold out.
Which concept this scenario illustrate?
laissez faire
law of diminishing returns
shortage
scarcity
- 5. Multiple Choice
Which example of factors of production will cause a decrease in the production of wheat?
poor soil nutrition
an increase in irrigation
a more efficient tractor
the addition of more farm employees
- 6. Multiple Choice
A new Japanese restaurant opens two blocks from your home. The owner, Reiko, is a personal friend of yours. You don't particularly like Japanese food, but you decide to go anyway; however, there is nothing on the menu that sounds appealing. Unfortunately, it turns out that most of the people in your town don't like Japanese cuisine either. Reiko confides that business is not good, but she isn't sure what to do from an economic standpoint.
What would most likely describe Adam Smith's perspective on this problem?
Reiko should close the restaurant and find a different career.
Reiko should lay off workers and do everything herself to save money.
Reiko should add other ethnic foods to the menu and offer discounts to attract more people to her restaurant.
Reiko should ask the government for assistance.
- 7. Multiple Choice
What about the amounts of resources causes people to make choices?
They are unlimited.
They are limited.
They remain unchanged.
They are undetermined.
- 8. Multiple Choice
What is not an economic right or responsibility?
deciding where to live
choosing an occupation
paying taxes
being happy
- 9. Multiple Choice
When someone makes a choice, what are all the other alternatives that are given up by making that choice called?
opportunity costs
cast-offs
diminishing costs
trade-offs
- 10. Multiple Choice
What is the most attractive trade-off as the result of a decision called?
opportunity cost
ultimate trade-off
diminishing cost
cast-off
- 11. Multiple Choice
Is this statement true or false?
Scarcity is not usually a problem in economics.
True
False
- 12. Multiple Choice
Scarcity and shortage mean the same thing.
True
False
- 13. Multiple Choice
Physical capital is defined as human-made objects such as the sewing machine.
True
False
- 14. Multiple Choice
Land, labor, and entrepreneurship are the three factors of production.
True
False
- 15. Multiple Choice
Production possibilities graphs can only show how an economy efficiently uses its resources.
True
False
- 16. Multiple Choice
Using the factors of production to produce one item means there are fewer resources to use in the production of another.
True
False
- 17. Multiple Choice
Any intersection of points inside the line (to the left of the line) on a production possibilities graph would show that the economy is underutilizing its resources.
True
False
- 18. Multiple Choice
The law of diminishing returns states that as countries produce less of one product and more of another, there is an increase in the resources needed to expand production of the second product.
True
False
- 19. Multiple Choice
Any intersection of points on a production possibilities graph that is outside the frontier (to the right of the line) shows that the economy is growing due to an increase of resources.
True
False
- 20. Multiple Choice
Production possibilities graphs are a good way to show trade-offs.
True
False
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