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Which of the following statements about economics as a social science correct? Economics is the social science that
1) focuses exclusively on determining how businesses can earn larger profits.
2) studies how people make decisions in the face of scarcity and the resulting impact of such decisions on both society as a whole and on the individual members therein.
3) studies the allocation and transfer of power in decision-making, systems of governance, and the effects of public policy.
4) None of these answers is correct.

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Divya Singh
Divya SinghLv10
10 Oct 2020
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Related questions

Microeconomics Multiple choice questions. Please answer all the questions.

1. Scarcity:
A. exists because resources are limited while human wants are unlimited.
B. means we are unable to have as much as we would like to have.
C. will likely be eliminated as technology continues to expand.
D. is not an issue addressed in economics.

2. People are forced to make choices because of:
A. unlimited wants and unlimited resources.
B. limited wants and unlimited resources.
C. unlimited wants and limited resources.
D. limited wants and limited resources.
E. irrational wants and limited resources.

3. Which of the following is closest to the definition of capital?
A. c and e.
B. c and d.
C. Tools, equipment, means of transportation
D. Factories and machinery.
E. Borrowed money.

4. Which one of the following is the most accurate definition of economics?
A. Economics is the study of stocks and bonds.
B. Economics is the study of how people allocate unlimited resources.
C. Economics is the study of how consumers choose to spend their income.
D. Economics is the study of how society chooses to allocate scarce resources.

5. The basic difference between macroeconomics and microeconomics is:
A. microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade.
B. microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms.
C. microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
D. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.

6. Which of the following is not a resource?
A. Land.
B. Labor.
C. Money.
D. Capital.

7. Which of the following would an economist classify as capital?
A. 100 shares of Microsoft stock.
B. $50 bill.
C. credit card.
D. lawyer's personal computer.

8. Economics, according to its definition, studies how people:
A. earn and spend money.
B. invest in the stock and bond markets.
C. make choices in the face of scarcity.
D. supply goods in response to demand.

9. Which of the following is the best example of a microeconomic topic?
A. The impact that the money supply has on inflation.
B. The reasons for increases in the price of soft drinks.
C. The effect that federal budget deficits have on the interest rate.
D. The tradeoff between inflation and unemployment.

10. Which of the following is a macroeconomics topic?
A. Wages of textile workers in the Northeast.
B. The cost of producing 10,000 bookcases.
C. The economy's annual growth rate.
D. National demand for fish.
E. Effects of farm subsidies on food prices.

11. An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, Ceteris paribus. The phrase "Ceteris paribus" means that:
A. other relevant factors like consumer incomes must be held constant.
B. the gasoline prices must first be adjusted for inflation.
C. the theory is widely accepted but cannot be accurately tested.
D. consumers' need for gasoline remains the same regardless of the price.

12. An economic model is:
A. a plastic scaled version of the economy.
B. a complete depiction of reality.
C. an abstraction from reality.
D. applicable to consumer behavior but not to producer behavior.
E. not an accepted tool of the economics profession.

13. Which of the following sayings best reflects the concept of opportunity cost?
A. "You can't teach an old dog new tricks."
B. "There is no such thing as a free lunch."
C. "I have a baker's dozen."
D. "There's no business like show business."

14. The opportunity cost of watching television is:
A. all of the alternative programs that appear on other stations.
B. zero because there is no money expenditure involved.
C. the alternative use of the time foregone by watching the program.
D. zero if it benefits you.

15. Which of the following does not illustrate opportunity cost?
A. If I study, I must give up going to the football game.
B. If I buy a computer, I must do without a 35" television.
C. More consumer spending now means more spending in the future.
D. If I spend more on clothes, I must spend less on food.

16. When deciding whether to buy a second car, marginal analysis indicates that the purchaser should compare the:
A. benefits expected from two cars with the cost of both.
B. additional benefits expected from a second car with the cost of the two cars.
C. dollar cost of the two cars with the potential income that the cars will generate.
D. additional benefits of the second car with the additional cost of the second car.

17. According to marginal analysis, you should spend more time studying economics if the extra benefit from an additional hour of study:
A. is positive.
B. outweighs the extra cost.
C. exceeds the benefits of the previous hour of study.
D. will raise your exam score.

Public subsidies for new stadiums and arenas are commonly justified on the basis of economic benefits they will confer on the local economy rather than on public consumption externalities or on the value of an enhanced community image. Yet there is virtually no evidence of any perceptible economic development benefits from sports teams or stadiums. How, then, have sports leagues been so successful in persuading government officials and voters to subsidize their industry when they seem to promote the losing argument? Many referendums on using tax revenue to construct sports stadiums and arenas have been closed (Fort, 1997). At the end of the controversy, however, almost all cities have contributed public funds to subsidize private, for-profit teams owned by some of the wealthiest individuals in the world. The close votes suggest that stadium proponents-team owners and players-have been quite sophisticated in their appeals. If the votes had been overwhelmingly in favor of the subsidies, the proponents probably sought too little. If the voters had not generally approved the subsidies, they asked for too much. Part of the explanation for the success of subsidies for sports stadiums relies on the distribution of benefits and costs. Only a small proportion of people in any metropolitan area attend professional team sports contests. But those who do often are intensely interested. Thus substantial benefits accrue to some individuals, motivating them to become politically active in supporting the use of tax revenue to procure or retain a team. Team owners and players are also well organized and have low-cost access to the media in their effort to promote subsidization. In contrast, most voters do not find it in their interest to oppose actively a referendum that may cost them $25 or $50 per year in additional taxes. The issue is complex, the subsidies are indirect, and the proponents have almost all of the information. Those who are motivated to oppose the subsidies frequently are poorly funded, disorganized and politically naive. Misleading "economic impact statements" commissioned by the proponents of subsidization often confuse the public. As we have seen, these studies are fraught with methodological errors that may be easily overlooked for those not trained in economics. Given the close votes, the studies can be enormously effective even if they deceive only 2 or 3 percent of the voters

There are various ways to correct monopoly abuses, including government ownership, "public utility" type regulation, and injecting competition into the industry. Direct regulation has more appeal when there is a clear natural monopoly, which does not appear to be the case for professional sports. No one believes that two baseball teams in Chicago cause problems similar to those that would arise from duplicate water or electricity distribution systems. Direct regulation also risks the usual inefficiencies associated with political rather than economic motives, muting incentives for working, saving, investing and entrepreneurial activity. New entry would introduce competition to the monopoly sports leagues, but it is unlikely. Many have tried, but few have succeeded (Quirk and Fort, 1992, chs. 8-9). The successes came primarily in the 1960s and 1970s, after a long period during which franchise expansion in the major sports leagues failed to keep pace with population growth, and in the midst of rapidly increasing demand for sports entertainment fueled by the coming of sports interest age of the post-World War II baby boomers and the expansion of access to television. Those were days before astronomical broadcast rights contracts and stadium subsidies had driven players' salaries beyond the realm of normal incomes, and before the leagues realized that they could restrict the number of franchises so much as to attract an entirely new league. Today it would be difficult, if not impossible, for a new league to successfully enter any of the four major team sports, and individual teams cannot enter without the cooperation of incumbents because they would have no one to play. Unfortunately, the successful entrants three decades ago-the American Football League, the American Basketball Association and the World Hockey Association-all too quickly recognized their financial interest in joining rather than fighting the established leagues whose monopoly power they had challenged. In the case of football, in 1966 Congress even went so far as to pass special interest legislation that immunized the merger of the American and National Football Leagues from antitrust challenge. One possible road to remedy would be for the U.S. Conference of Mayors and the National Governors' Association to agree not to use publicly collected monies to finance the construction or maintenance of a sports facility for a privately-owned team (Rosentraub, 1997). While initiatives to this effect have been brought before these groups in the past, no action has ever been taken. The problem is that at any one point in time there are just a few cities or states affected by the demand for a new sports facility. Those mayors or governors not facing a threat are not inclined to alienate the professional leagues with whom they have or want a relationship. Moreover, the prospect of attracting a team with a subsidy may be too great a temptation for any one community to resist, and there is virtually no cost to a community for cheating on such a voluntary agreement. A variant of this scheme was proposed by U.S. Senator Daniel Patrick Moynihan, who proposed a bill that would have prohibited the use of the federal tax exemption on municipal bonds for sports facilities where privately-owned teams would play. Like many similar efforts, Moynihan's bill died in committee. Divestiture may be the best remaining option. Each of the professional sports leagues is now approaching 30 teams. Dividing each sport into, say, four separate leagues could instill important elements of competition without destroying the value of a championship playoff. Competition could prevail in the market for players and, more importantly, in the market for team locations. Individual leagues might be exempted from antitrust prosecution for intra-league coordination, but coordination other than to arrange uniform playing rules and a championship playoff among the leagues would be prohibited. The National Collegiate Athletic Association (NCAA) provides an example of such an organization of leagues. Although the NCAA is intimately involved in the regulation of the player labor market, it does not constrain either the size of college sports leagues or team locations. The various leagues participate jointly in many national championship competitions. Divestiture would solve many of the problems plaguing professional sports. The competitive imbalance problem would be ameliorated as teams with large revenue bases found their home territories invaded by entrants from smaller revenue bases in the other leagues. Such invasions would persist until revenue potential per team was approximately equal on the margin. Cities that could financially support new franchises would find entry into one of the leagues easier and (much) cheaper as the leagues competed to add viable new locations. Attractive places for sports teams (like Los Angeles for football or Washington, D.C., for baseball) would find interest from currently struggling franchises and probably would not have to provide a free stadium or arena to procure a team. Television networks could play the competitive leagues off against each other in bidding for broadcasting rights, which would likely fall precipitously. The most serious risk in a sports industry comprised of competing leagues is the possibility that one league will eventually be viewed as "better" than the others, and the weaker leagues will fail or be absorbed by the stronger leagues. Minimally, the legislation would be needed to permit periodic divestiture if this should occur. An alternative approach is to prohibit existing leagues from exercising collective control over team relocations. This approach would reduce the disparity in revenue potential because some teams from markets with lower revenue potential would invade the geographic territories of teams currently monopolizing the largest revenue potential markets. The result, for instance, could easily be more baseball teams in New York City and Los Angeles. Competitive team imbalance would decline because the revenue potential would equalize across teams as the geographic territories of current "haves" were invaded by current "have nots." Subsidies from cities to teams would shrink because leagues would be unable to prevent teams from competing to enter a city offering attractive market potential. Player salaries also would decline because both local television revenues and government subsidies would decline. Some cities would lose teams initially, but this would apply political pressure on the leagues to expand the number of franchises, thereby helping to attenuate the ultimate source of their market power. Franchise mobility may increase in the short run but should stabilize once a balance between demand for and supply of teams is established. Introducing competition into the market for franchise locations could be accomplished by either congressional or judicial action. Even with competitive leagues, existing teams would have some leverage in negotiating for publicly subsidized playing facilities because fans develop emotional ties to particular teams. The collection of such ties constitutes a sunk investment in a particular team for a community and can rationalize subsidies to retain a particular franchise that would not be sensible if the identity of the service provider were of no concern to fans. A common solution to such contracting problems (similar to those which arise between a coal mine and a single purpose railroad spur to the mine) is common ownership-that is, vertical integration. In the context of professional sports, vertical integration would constitute common ownership of the team and the emotional investment in it-in short, team ownership by the municipal government. Unfortunately, at the top level, none of the four major team sports leagues in the United States permit municipal ownership.9 This restriction is also subject to challenge under the Sherman Antitrust Act, but unless or until it is overturned, it is another way in which monopoly power stands in the way of economic efficiency in professional sports. Implementing either divestiture or a competitive market for team relocations would be a substantial challenge. Either reform would make team owners and players worse off. Both groups are well organized and have powerful incentives to maintain any monopoly power that enhances team revenues. Taxpayers, in contrast, would end up better off as a result of either reform. We believe that potential gains to the winners exceed the likely burden on the losers because the reforms, which rely on competitive prices to shape the allocation of resources between the private and public sectors and within the public sector itself, should improve efficiency. However, because the winners are a diffuse group of numerous individuals with but modest individual incentives to press for reform, the prospects for change are grim.

------------------------------------------------Question

According to the article by Siegfried and Zimbalist, what do they recommend as the most effective policy for reducing team bargaining power with state and municipal governments? That is, what policy do they suggest so that local governments will no longer have to subsidize new stadiums? Explain.

Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time. Your opportunity cost of taking the test is the

a.

forgone working or partying, depending on which was your next best choice.
b.

forgone work.
c.

forgone working and partying.
d.

test because you are taking it.

1 points

QUESTION 2

A trend is

a.

a measure of closeness on a scatter diagram.
b.

a general tendency for a variable to rise or fall.
c.

the maximum value of a variable.
d.

the difference between the maximum value of a variable and the minimum value of the variable.

1 points

QUESTION 3

A time-series graph measures

a.

time on the y-axis and the variable or variables in which we are interested on the x-axis.
b.

time on the x-axis and the variable or variables in which we are interested on the y-axis.
c.

the value of one variable against the value of another variable.
d.

the value of an economic variable for different groups in a population at a point in time.

1 points

QUESTION 4

Canada has nationalized health care, so that everyone, regardless of their ability to pay, has some access to health care. Based on this observation, Canada has decided that "everyone, regardless of their ability to pay" is the answer to what microeconomic question?

a.

Why will we offer health care?
b.

How will health care be produced?
c.

For whom will health care be produced?
d.

What type of health care will be produced and in what quantity?

1 points

QUESTION 5

As a shoe factory adds more workers, shoe production grows, reaches a maximum, and then shrinks. In a diagram that has the number of workers on the horizontal axis and the number of shoes on the vertical axis, the relationship between the number of workers and the number of shoes starts as ________ and then, after the maximum point, is ________.

a.

positive; negative
b.

negative; positive
c.

linear; negative
d.

positive; linear

1 points

QUESTION 6

Microeconomics includes the study of the

a.

choices made by individuals and businesses.
b.

recessions and inflation in the global economy.
c.

aggregate effects on the national economy.
d.

reasons why the government changes interest rates.

1 points

QUESTION 7

When Fresh Express Salads decides to mechanically pick all of its lettuce, it directly answers the ________ question.

a.

when
b.

for whom
c.

how
d.

what

1 points

QUESTION 8

Proponents of cuts in income tax rates argue that when income tax rates are cut, workers have an incentive to increase their work hours. This argument is based on the assumption that

a.

the opportunity cost of working is negative.
b.

the marginal cost of each additional work hour is not important to most workers.
c.

workers are irrational.
d.

workers make decisions based on the marginal benefit of each hour worked compared to the marginal cost of work.

1 points

QUESTION 9

A choice made by comparing all relevant alternatives systematically and incrementally is

a.

an opportunity cost.
b.

a benefit.
c.

a sunk cost.
d.

a choice on the margin.

1 points

QUESTION 10

A normative statement

i. can be tested as to whether it is true or false.

ii. is considered negative.

iii. depends on a person's values.

a.

i, ii, and iii
b.

iii only
c.

i and iii
d.

ii and iii

1 points

QUESTION 11

Normative statements

i. describe how the world is.

ii. describe how the world ought to be.

iii. depend on people's values and cannot be tested.

a.

iii only.
b.

i only.
c.

ii and iii.
d.

ii only.

1 points

QUESTION 12

In order to determine whether to major in economics, a rational individual compares the ________ of the decision.

a.

positive benefits and normative costs
b.

normative benefits and positive costs
c.

marginal benefit and marginal cost
d.

opportunity cost and the sunk cost

1 points

QUESTION 13

If x increases whenever y decreases, then x and y are

a.

positively related.
b.

negatively related.
c.

not related.
d.

related but whether positively or negatively related depends on whether the x variable or the y variable is plotted on the vertical axis.

1 points

QUESTION 14

Rational choice

a.

is what you must give up get what you want.
b.

is made by comparing different incentives.
c.

making the choice.
d.

provides the answer to only the "how" question.

1 points

QUESTION 15

Scarcity results from the fact that

a.

choices made in self-interest rare not always in the social interest.
b.

not all goals are desirable.
c.

people's wants exceed the resources available to satisfy them
d.

we cannot answer the major economic questions.

1 points

QUESTION 16

When Delta decides to quit flying to Lithuania, it directly answers the ________ question.

a.

what
b.

why
c.

for whom
d.

how

1 points

QUESTION 17

A normative statement

a.

says what is currently believed about the way the world operates.
b.

depends on someone's values.
c.

cannot use the word "should."
d.

must be tested to determine if it is correct.

1 points

QUESTION 18

Which of the following statements best describes the study of economics? Economics studies how

a.

to organize production so that scarcity does not occur.
b.

to create incentives so that scarcity does not exist.
c.

firms make profits.
d.

we make choices in the face of scarcity.

1 points

QUESTION 19

Which of the following best defines economics?

a.

Economics teaches how to limit our wants.
b.

Economics is concerned with prices and quantities of goods and services, both at the individual level and at the industry level.
c.

Economics helps you earn as much money as possible.
d.

Economics studies how to choose the best alternative when coping with scarcity.

1 points

QUESTION 20

In economics, cost is ________, and benefit is ________.

a.

the amount of money that you pay for something; the amount of money that someone else is willing to pay you
b.

what you are willing to pay on the margin; what the government pays you when you are unemployed or retired
c.

what you must give up to get something; what you are willing to give up to get it
d.

the amount of money that you pay on the margin; the amount of money that you receive on the margin

1 points

QUESTION 21

If Jessie studies economics for two hours instead of going to the movies with her friends, then

a.

the opportunity cost of studying is the missed movie.
b.

Jessie is ignoring a sunk cost
c.

Jessie is not responding to any incentives.
d.

Jesse definitely is making a rational choice.

1 points

QUESTION 22

Going skiing will cost Adam $80 a day. He also loses $40 per day in wages because he has to take time off from work. Adam still decides to go skiing.

a.

The $80 price of skiing is a sunk cost and so did not affect Adam's decision.
b.

He loses a total of $120 per day, so his decision is irrational.
c.

His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost.
d.

Adam's lost $40 per day in wages is a sunk cost and so did not affect his decision.

1 points

QUESTION 23

If a curve falls and then rises, it

a.

has a maximum.
b.

has a linear relationship.
c.

has a minimum.
d.

has a constant slope relationship.

1 points

QUESTION 24

In 2003, Michael Jordan decided to retire from professional basketball. Which of the following was an opportunity cost of his decision?

a.

the avoidance of pain and injury from playing one more year
b.

the time he could spend with his family while retired
c.

the lost salary from playing one more year
d.

the value of new employment opportunities that would await him

1 points

QUESTION 25

Which of the following statements is a normative statement?

a.

Military spending as a percent of government spending decreased by 5 percent in the 1990s.
b.

Every American household should have health care insurance coverage.
c.

Welfare reform has decreased the amount the government spends on welfare.
d.

The price of computers fell last year.

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