Name _________________________________
Chapter 1 What is Economics? Test B
Class Hour __
Part 1 True or False Directions: Please write “TRUE” in the blank if the statement is true and “FALSE” if it is false.
_____________________1. Most people know almost nothing about economics. (p. 6)
_____________________2. Productive resources, or factors of production, are the inputs used to produce the goods and services that people want. (p. 6)
_____________________3. The problem of scarce resources but unlimited wants exists for each of the six billion people on the planet. (p. 7)
_____________________4. An exhaustible resource can be drawn on indefinitely if used wisely. (p. 8)
_____________________5. Because goods and services are produced using scarce resources, they are themselves scarce. (p. 8)
_____________________6. Although the world is complex, there is no need to simplify economic relationships to make sense of things. (p. 11)
_____________________7. Rational self-interest necessarily involves some selfishness and greed. (p. 12)
_____________________8. Everyone uses theories. (p. 12)
_____________________9. Marginal refers to a change in an economic variable, a change in the status quo. (p. 13)
_____________________10. Goods and services are bought and sold in resource markets. (p. 15)
Part 2—Multiple Choice Directions: Write the CAPITAL letter of the most correct answer in the blank.
__ 11. Making choices in a world of scarcity means that you must (p. 6)
__ 12. Which of the following is a natural resource? (p. 7)
A. spend your money carefully to get everything you want
C. pass up some alternatives
A. copper ore that is still in the ground
C. copper wire that is installed in a new house
__ 13. A theory (p. 12) A. allows people to know what will happen in the future
C. takes all available information into account
B. work very hard to earn the money you need
D. save some of your income for the future.
B. copper that has been refined and made into electric wires
D. electricity that flows over copper wire.
B. captures the important elements of the problem under study
D. has no value if it leads to mistaken decisions.
__ 14. Which of the following is a positive statement? (p. 13) A. More people were unemployed in 2003 than in 2000.
C. It costs too much to purchase a new home.
B. Elderly people should not have to pay property taxes.
D. There is no need to study French as a foreign language.
__ 15. Each of the following situations requires marginal analysis except you are trying to decide (p. 13) A. whether to buy another piece of pizza B. what to do with your $50 birthday gift
C. how you can save $500 by next June D. who to ask to a Prom this year.
__ 16. Market economics focuses on (p. 14)
A. your economic behavior and the economic behavior of others
C. how interest rates affect the way the economy works
__ 17. Markets are the means by which buyers and sellers (p. 15)
A. become aware of each other
C. earn wages and profits
B. the way the government imposes taxes and spends money
D. the influence advertising has on consumer spending.
B. carry out exchange
D. produce goods and services.
__ 18. In a simple circular-flow model, households supply each of the following to firms through resource markets except (pp. 15–16)
__ 19. Enjoying your favorite television program could be an opportunity cost of (p. 20)
A. spending $35 to buy a new shirt
C. staying after school to study for a history test with your friends
A. human resources
C. capital goods
B. natural resources
D. consumer goods.
B. deciding to save more of your income for your college fund
D. loaning your best friend $20 for a week.
__ 20. The money you spend to take the SAT is an example of a(n)_ cost of attending college once you have paid it. (p. 22)
A. avoidable
B. sunk
C. required
D. recoverable
Part 3—Fill in the Blank Directions: In the Answers column, write the word or phrase that best completes each statement.
21. A(n) __________________________________________ resource—such as oil, coal, or copper ore—does not renew itself and so is available in a limited amount. (p. 7)
22. A(n) ____________________________________________ is an item you can see, feel, and touch that requires scarce resources to produce and satisfies human wants. (p. 8)
23. The assumption of ____________________________________________________________ means that you try to maximize the expected benefit achieved with a given cost or to
minimize the expected cost of achieving a given benefit. (p. 12)
24. _________________________________________ is the ultimate limitation on your ability to enjoy the goods and services you are able to obtain. (pp. 21–22)
Part 4—Short Answer Directions: Read the following scenario, and write several sentences in response to the question.
25. Americorps is a national youth-service organization sponsored by the federal government. Describe the opportunity costs you might pay if you choose to join Americorps after you
graduate from high school or college. (p. 20)