Chapter 1
Economics: The
World Around You
Boyes/Melvin Economics
Chapter 1
Which of the following statements is true?
a) One definition of economics provided in the text is that
economics is the study of intended consequences.
b) While there is wide agreement concerning the logic of
economics, economists often disagree about the
results of that logic.
c) In studying the world, economists recognize that every
action has costs.
d) If the United States spends more on war, it must give
up some domestic spending.
e) All of the above.
Copyright © Houghton Mifflin Company. All rights reserved.
1|2
Boyes/Melvin Economics
Chapter 1
Which of the following statements is true?
a) One definition of economics provided in the text is that
economics is the study of intended consequences.
b) While there is wide agreement concerning the logic of
economics, economists often disagree about the
results of that logic.
c) In studying the world, economists recognize that every
action has costs.
d) If the United States spends more on war, it must give
up some domestic spending.
e) All of the above. (correct)
Copyright © Houghton Mifflin Company. All rights reserved.
1|3
Boyes/Melvin Economics
Chapter 1
An economic bad is
a) an item that cannot command a price.
b) a faulty product.
c) an item that people would pay to have less of.
d) an item that commands a very high price.
e) high unemployment.
Copyright © Houghton Mifflin Company. All rights reserved.
1|4
Boyes/Melvin Economics
Chapter 1
An economic bad is
a) an item that cannot command a price.
b) a faulty product.
c) an item that people would pay to have less of. (correct)
d) an item that commands a very high price.
e) high unemployment.
Copyright © Houghton Mifflin Company. All rights reserved.
1|5
Boyes/Melvin Economics
Chapter 1
Economics is the study of
a) the allocation of scarce resources and the ways in
which human decision-makers utilize those
resources.
b) the methods that human decision-makers use to
transform a scarce good into a noneconomic good.
c) how to operate a business successfully.
d) a utopian society.
e) how to make money in the stock market.
Copyright © Houghton Mifflin Company. All rights reserved.
1|6
Boyes/Melvin Economics
Chapter 1
Economics is the study of
a) the allocation of scarce resources and the ways in
which human decision-makers utilize those
resources. (correct)
b) the methods that human decision-makers use to
transform a scarce good into a noneconomic good.
c) how to operate a business successfully.
d) a utopian society.
e) how to make money in the stock market.
Copyright © Houghton Mifflin Company. All rights reserved.
1|7
Boyes/Melvin Economics
Chapter 1
To say that “there is a scarcity of gold”
means that
a) gold prices will rise.
b) there is not enough gold to satisfy people’s
demand for it at zero price.
c) there are very few substitutes for gold.
d) gold is very expensive.
e) the demand for gold is changing.
Copyright © Houghton Mifflin Company. All rights reserved.
1|8
Boyes/Melvin Economics
Chapter 1
To say that “there is a scarcity of gold”
means that
a) gold prices will rise.
b) there is not enough gold to satisfy people’s
demand for it at zero price. (correct)
c) there are very few substitutes for gold.
d) gold is very expensive.
e) the demand for gold is changing.
Copyright © Houghton Mifflin Company. All rights reserved.
1|9
Boyes/Melvin Economics
Chapter 1
Economists refer to financial capital and
physical capital. Examples of these include
all of the following except
a) offices and warehouses.
b) stocks and bonds.
c) machinery.
d) land.
e) equipment.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 10
Boyes/Melvin Economics
Chapter 1
Economists refer to financial capital and
physical capital. Examples of these include
all of the following except
a) offices and warehouses.
b) stocks and bonds.
c) machinery.
d) land. (correct)
e) equipment.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 11
Boyes/Melvin Economics
Chapter 1
Labor resources (input) include
a) skilled workers, but not unskilled workers.
b) unskilled workers, but not skilled workers.
c) a robot.
d) education and training of workers.
e) coffee breaks.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 12
Boyes/Melvin Economics
Chapter 1
Labor resources (input) include
a) skilled workers, but not unskilled workers.
b) unskilled workers, but not skilled workers.
c) a robot.
d) education and training of workers. (correct)
e) coffee breaks.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 13
Boyes/Melvin Economics
Chapter 1
Rational behavior in economics assumes
that individuals
a) are motivated by self-interest.
b) do not make mistakes.
c) are selfish and will not help others.
d) will always buy the least expensive items when
faced with various choices.
e) do not make value judgments.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 14
Boyes/Melvin Economics
Chapter 1
Rational behavior in economics assumes
that individuals
a) are motivated by self-interest. (correct)
b) do not make mistakes.
c) are selfish and will not help others.
d) will always buy the least expensive items when
faced with various choices.
e) do not make value judgments.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 15
Boyes/Melvin Economics
Chapter 1
When a presidential candidate with a Ph.D.
in economics makes a statement about what
should be done to balance the budget, he or
she is making a
a) normative statement.
b) positive statement.
c) microeconomic statement.
d) statement of fact.
e) statement that is objective.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 16
Boyes/Melvin Economics
Chapter 1
When a presidential candidate with a Ph.D.
in economics makes a statement about what
should be done to balance the budget, he or
she is making a
a) normative statement. (correct)
b) positive statement.
c) microeconomic statement.
d) statement of fact.
e) statement that is objective.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 17
Boyes/Melvin Economics
Chapter 1
What problem is associated with assuming
that what is appropriate for an individual is
appropriate for the economy?
a) Normative analysis.
b) Association as causation.
c) Rational self-interest.
d) The fallacy of composition.
e) Hypothesis testing.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 18
Boyes/Melvin Economics
Chapter 1
What problem is associated with assuming
that what is appropriate for an individual is
appropriate for the economy?
a) Normative analysis.
b) Association as causation.
c) Rational self-interest.
d) The fallacy of composition. (correct)
e) Hypothesis testing.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 19
Boyes/Melvin Economics
Chapter 1
Which of the following is a macroeconomic
concern?
a) Choices made by a particular consumer.
b) The rate of unemployment in the country.
c) The manner in which a certain firm tries to
maximize profits.
d) The price of an apple in a local store.
e) Wage determination for an individual worker.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 20
Boyes/Melvin Economics
Chapter 1
Which of the following is a macroeconomic
concern?
a) Choices made by a particular consumer.
b) The rate of unemployment in the country. (correct)
c) The manner in which a certain firm tries to
maximize profits.
d) The price of an apple in a local store.
e) Wage determination for an individual worker.
Copyright © Houghton Mifflin Company. All rights reserved.
1 | 21