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1.The production possibilities frontier can be used to demonstrate which of the following?(i) The best tradeoffs that individuals and societies should make(ii) The tradeoffs forced on individuals and societies because of scarcity(iii) The wealth maximizing output combination that an individual or society should choose
a. (ii) only
b. (i), (ii) and (ii)
c. (i) only
d. (iii) only
2. Unlimited wants and limited resources:
a. Can be overcome through innovation
b. Are not problems faced by wealthy industrialized nations
c. Necessitate choices about the goods to services to consume
d. Can be overcome by increasing wealth
3. What are the two sub-fields of economics?
a. For-profit economics and not-for-profit economics
b. Private markets and the public sector
c. Microeconomics and macroeconomics
d. Market and non-market economics
4. What do economists mean by "self-interested behavior"?
a. It means undertaking activities that benefit yourself and a small group of others who are important to you
b. It means undertaking activities motivated by greed
c. It means undertaking activities that maximize one's own welfare
d. It means wanting to pursue a life of leisure
5. When economists say that people act rationally, they mean that:
a. People do not make incorrect choices
b. People are governed by what others think about them and act accordingly
c. People consider the significant consequences of their actions and make decisions that further their self-interests
d. There are certain common codes of conduct that everyone adheres to
6. Which of the following actions reflect self-interested behavior?(i) Warren Buffett, one of the world's wealthiest individuals, donated more than $30 billion to humanitarian causes such as AIDS and tuberculosis initiatives.(ii) Pfizer Inc., a private pharmaceutical company, sponsored a disease-management program for Florida's Medicaid patients with chronic illnesses such as asthma, diabetes and heart disease.(iii) You agree to babysit your 8-year-old brother instead of going to a kick-boxing class.(iv) You agree to babysit your 8-year-old brother instead of going to a kick-boxing class only if your mother pays you $8 an hour.
a. All of the above actions except (iii)
b. All of the above actions
c. (ii) and (iii) only
d. (iv) only
7. Which of the following does not qualify as a market?
a. Bloomingdales Department Store
b. The underground drug trade
d. The French Immigration Department
8. Which of the following is not a key assumption of economics?
a. People do not undertake activities that make others better off
b. People are self-interested
c. People have limited resources to acquire their wants
d. People are rational
9. Which of the following is not likely to cause the production possibility frontier to shift out?
a. An increase in the quantity of innovations
b. An increase in specialization which allows people to develop higher levels of skill at their chosen profession
c. Developing markets where self-interested individuals can interact
d. Relying only on governments to allocate resources
10. Which of the following statements is false?
a. Scarcity affects everyone, including very wealthy people
b. Rational people never make mistakes
c. Economists assume people are rational
d. Economists assume people have unlimited desires
11. Which of the following statements is false?
a. When you volunteer to help at a soup kitchen, you face an opportunity cost of your time
b. Mother Teresa faced trade-offs when deciding to help lepers in India rather than some other needy group
c. Economics brings tradeoffs to light but does not inform us of which trade-offs society should make
d. When the government funds research into cancer, it is able to avoid trade-offs because public funds are used rather than private funds
12. Which of the following topics does economics study: (i) the study of human behavior; (ii) the market for organ transplants; (iii) cost and benefits of building a suicide barrier in the Golden Gate Bridge; (iv) the functioning of political institutions.
a. (i) and (iii) only
b. (ii) and (iii) only
c. All of the topics listed
d. All of the topics except (iv)
13. Which the following would be likely to raise your opportunity cost of going to college full-time?(i) You have been offered a full-time job as wardrobe assistant to Paris Hilton that pays $60,000 per year.(ii) You have been offered a merit scholarship that pays for two years of tuition.(iii) Your landlord increases the rent on the apartment you are currently living in and will continue to live in even if you choose to attend college full-time.(iv) An increase in the value of your college trust fund set up by your grandfather.
a. All of the above
b. (i) and (iii) only
c. All of the above except (ii)
d. (i) only
14. While microeconomics is concerned with the behavior of individuals and firms, macroeconomics:
a. Does not make use of "micro" ideas such as opportunity cost or self-interest
b. Is concerned with the performance of entire economies
c. Is concerned with normative matters such as fairness, equality and ethics
d. Is only concerned with government activity
15. You own a Ford car that has lousy gas mileage. You finally trade it for a Hyundai, which is equal in virtually every aspect except that the Hyundai gets much better mileage. What is likely to happen to your gas consumption?
a. I get better gas mileage and since the cost of driving has gone down, I will drive more so my gas consumption will remain the same
b. It will fall since I will now use less gas
c. I get better gas mileage and since the cost of driving has gone down, I will drive more so the effect on my gas consumption is indeterminate
d. It will go up since I will now drive more