Type:
Test Bank
Stock Introduction to Economics Resource: Social Issues and Economic Thinking Edition:
1st Edition
Author(s):
Wendy A. Stock
Introduction to Economics: Social Issues and Economic Thinking
Test Bank
Chapter 1: An Introduction to the Economic Way of Thinking
Learning Objective Guide (LO-1) Define economics (LO-2) Explain how scarce resources influence choices (LO-3) Describe the influence of benefits and costs on deciding among alternatives (LO-4) Identify the decision rules individuals and firms use to make choices (LO-5) Explain why decisions are made “at the margin” (LO-6) Assess the general conditions that generate maximum utility or profits
1. a. b. c. d.
Economics is the study of production the study of unemployment and inflation the study of choices the study of Gross Domestic Product
Answer: C LO-1 Level: Easy
2. a. b. c. d.
Because of the concept of scarcity choices need to be made marginal benefits increases marginal costs decrease total returns of benefit remains unchanged
Answer: A LO-2 Level: Easy
3. a. b. c. d.
Which of the following statements is most correct? Scarcity forces us to allocate our scarce resources among the many uses for them. Marginal benefits require greater costs for decisions to be made. Choices arise from trade-offs. Scarcity is not common to all societies.
Answer: A LO-2 Page 1 of 10
Introduction to Economics: Social Issues and Economic Thinking
Test Bank
Level: Easy
4. a. b. c. d.
________________ is a synonym for satisfaction or happiness. Marginal cost Opportunity cost Utility Scarcity
Answer: C LO-3 Level: Easy
5. The difference between the earnings that a firm receives from selling its good or service and the costs of production for the good or service is the a. marginal benefit b. opportunity cost c. utility d. profit Answer: D LO-4 Level: Easy
6. a. b. c. d.
The value of the next-best alternative forgone is the opportunity cost profit utility marginal benefit
Answer: A LO-3 Level: Easy
7. a. b. c. d.
The concept of ____________________ is used to isolate important relationships. opportunity cost marginal benefit ceteris paribus diminishing marginal cost Page 2 of 10
Introduction to Economics: Social Issues and Economic Thinking
Test Bank
Answer: C LO-1 Level: Easy
8. a. b. c. d.
The additional or incremental cost associated with a choice is known as the marginal cost the marginal benefit marginal utility utility
Answer: A LO-3 Level: Easy
9. a. b. c. d.
The additional or incremental benefit associated with a choice is known as the marginal cost the marginal benefit opportunity cost ceteris paribus
Answer: B LO-3 Level: Easy
10. Which of the following would be a focus of macroeconomics? a. The study of how individuals make a decision. b. The study of how businesses make a profit. c. The study of how the price for a product is determined. d. The study of changes of price levels in an economy Answer: D LO-1 Level: Easy
11. The study of how prices for a good is determined is an example of a. macroeconomics b. microeconomics Page 3 of 10
Introduction to Economics: Social Issues and Economic Thinking
Test Bank
c. economic growth d. diminishing marginal returns Answer: B LO-1 Level: Easy
12. Each of the following is an economic resource except a. land b. labor c. capital d. rent Answer: D LO-1 Level: Easy
13. Your second glass of water on a hot summer day will a. increase total utility and decrease marginal utility b. decrease total utility and decrease marginal utility c. increase total utility and increase marginal utility d. decrease total utility and increase marginal utility Answer: A LO-5 Level: Easy
14. A _______________ is a cost that, once incurred, cannot be recovered. a. marginal cost b. diminishing cost c. sunk cost d. incremental cost Answer: C LO-5 Level: Easy
15. This type of cost is irrelevant when making decisions at the margin. Page 4 of 10