Econ 001 - Principles of Economics » Fall 2022 » Test 1 Ch 1-3

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Question #1
The demand curve is always upward sloping.
A.   False
B.   True
Question #2
The three factors of production include natural resources, capital, and freedom.
A.   True
B.   False
Question #3
Society’s wants cannot fully be satisfied with our existing resources. This issue is the problem of _____.
A.   opportunity cost
B.   scarcity
C.   efficiency in distribution
D.   comparative advantage
Question #4
The reason that opportunity costs arise is that
A.   people never have wants.
B.   an economy relies on money to facilitate exchange of goods and services.
C.   resources are scarce.
D.   there are never alternative decisions that could be made.
Question #5
The focus on the human dimension of scarcity and choice is part of what makes economics a social science.
A.   True
B.   False
Question #6
In economics, investment refers to which of the following?
A.   Printing more money
B.   Buying goods, such as video game systems and clothing for the winter
C.   Buying stock on the stock market
D.   Increasing the stock of capital
Question #7
If more people become interested in reading an economics book, what will happen to the demand curve?
A.   It will remain constant.
B.   It will shift to the right.
C.   It will shift to the left.
D.   It will disappear
Question #8
If an increase in the price of gasoline causes a movement upward along the gasoline demand curve, it is anticipated that it will also cause a shift for the demand of SUVs.
A.   False
B.   True
Question #9
The value of the best alternative foregone is the opportunity cost of making a decision.
A.   True
B.   False
Question #10
If the elasticity of demand for electricity is 0.13, the demand for electricity is:
A.   unit elastic
B.   inelastic
C.   elastic
D.   perfectly inelastic
Question #11
The production possibility frontier is drawn on which of the following the assumptions?
A.   Resources can be increased or decreased as needed.
B.   Consumption preferences are known and fixed.
C.   All scarce resources are being used efficiently.
D.   The economy has a steady rate of growth.
Question #12
That which we forgo, or give up, when we make a choice or decision is called
A.   marginal cost.
B.   real cost.
C.   opportunity cost.
D.   out-of-pocket cost.
Question #13
The "law of supply" states that as prices decrease, the quantity supplied increases.
A.   True
B.   False
Question #14
Inflation and unemployment
A.   are a focus of positive economics.
B.   are a focus of macroeconomics.
C.   are a focus of microeconomics.
D.   are the focus of normative economics.
Question #15
For the company to produce at a point beyond its current Production Possibility Frontier, the firm must
A.   reduce inputs.
B.   increase its factors of production
C.   waste less.
D.   be more efficient.
Question #16
What does demand mean?
A.   The ability to purchase goods
B.   The numerical utility
C.   Willingness to purchase goods
D.   The willingness and ability to purchase goods
Question #17
Investments never require a trade-off of present consumption for future consumption.
A.   True
B.   False
Question #18
The rate of economic growth or the level of poverty in a country are topics related to microeconomics.
A.   False
B.   True
Question #19
If you own a building and you decide to use that building to open a book store,
A.   there is never an opportunity cost of using this building for a book store.
B.   there is an opportunity cost of using this building for a book store because it could have been used in other ways.
C.   the opportunity costs always equal $100.
D.   the only cost relevant to this decision is the taxes paid to the local government.
Question #20
Someone has a comparative advantage in producing a good if they can produce that good
A.   using more capital and less labor.
B.   using more labor and less capital.
C.   in greater quantities.
D.   at a lower opportunity cost.
Question #21
Elastic demand means the price has little or no effect on quantity demanded.
A.   True
B.   False
Question #22
Spontaneous order and hierarchy coordinate economic activity similarly.
A.   True
B.   False
Question #23
Which of the following would an economist classify as capital?
A.   a $50 bill
B.   a post office employee
C.   a corporate bond
D.   a bull dozer used by a construction company
Question #24
A change in the quantity demanded of pizza is the same as a change in demand for pizza.
A.   True
B.   False
Question #25
Efficiency in production refers to a situation in which it is possible, given available productive resources and existing knowledge, to produce more of one good without forgoing the opportunity to produce other goods.
A.   False
B.   True
Question #26
The "law of demand" implies that as prices decrease, the quantity demanded increases.
A.   True
B.   False
Question #27
Suppose you are deciding whether to spend your tax rebate check on a new iPod player or a new digital camera. You are dealing with the concept of
A.   the fallacy of composition.
B.   opportunity costs.
C.   comparative advantage.
D.   equity.
Question #28
In economics, capital refers to physical objects, not money.
A.   True
B.   False
Question #29
The "law of demand" implies that as prices fall, the demand shifts.
A.   True
B.   False

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