Chapter 1—The Role and Method of Economics MULTIPLE CHOICE 1. Economics is most importantly concerned with: a. how to profit from trading in the stock market. b. government taxation and spending. c. studying how we allocate scarce resources to satisfy unlimited wants. d. how to reduce inflation. e. how to successfully launch a business. ANS: C
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2. The central question in economics is how to: a. regulate the supply of money. b. make the best use of scarce resources to satisfy our unlimited wants. c. reduce the wants of individuals, businesses and government. d. find more resources to satisfy everyone's wants. ANS: B
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3. The problem of scarcity: a. exists because resources are limited relative to wants. b. exists because resources are unlimited relative to wants. c. is solved by economists using abstract models. d. can be eliminated through appropriate government intervention into markets. e. does not exist in communist societies. ANS: A
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4. Which of the following forces us to choose among alternatives? a. Value b. Scarcity c. Rarity d. Market mechanism ANS: B
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5. Scarcity is the result of: a. government decision making. b. inappropriate normative judgments. c. positive economics. d. wants that exceed the resources necessary to provide them. ANS: D
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6. Scarcity exists because of:
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