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.   False
B.   True
Question #3
Society’s wants cannot fully be satisfied with our existing resources. This issue is the problem of _____.
A.   efficiency in distribution
B.   comparative advantage
C.   scarcity
D.   opportunity cost
Question #4
The reason that opportunity costs arise is that
A.   resources are scarce.
B.   people never have wants.
C.   there are never alternative decisions that could be made.
D.   an economy relies on money to facilitate exchange of goods and services.
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.   Buying stock on the stock market
B.   Buying goods, such as video game systems and clothing for the winter
C.   Increasing the stock of capital
D.   Printing more money
Question #7
If more people become interested in reading an economics book, what will happen to the demand curve?
A.   It will disappear
B.   It will remain constant.
C.   It will shift to the left.
D.   It will shift to the right.
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.   True
B.   False
Question #9
The value of the best alternative foregone is the opportunity cost of making a decision.
A.   False
B.   True
Question #10
If the elasticity of demand for electricity is 0.13, the demand for electricity is:
A.   perfectly inelastic
B.   inelastic
C.   unit elastic
D.   elastic
Question #11
The production possibility frontier is drawn on which of the following the assumptions?
A.   Consumption preferences are known and fixed.
B.   Resources can be increased or decreased as needed.
C.   The economy has a steady rate of growth.
D.   All scarce resources are being used efficiently.
Question #12
That which we forgo, or give up, when we make a choice or decision is called
A.   out-of-pocket cost.
B.   marginal cost.
C.   real cost.
D.   opportunity cost.
Question #13
The "law of supply" states that as prices decrease, the quantity supplied increases.
A.   False
B.   True
Question #14
Inflation and unemployment
A.   are the focus of normative economics.
B.   are a focus of microeconomics.
C.   are a focus of positive economics.
D.   are a focus of macroeconomics.
Question #15
For the company to produce at a point beyond its current Production Possibility Frontier, the firm must
A.   be more efficient.
B.   waste less.
C.   reduce inputs.
D.   increase its factors of production
Question #16
What does demand mean?
A.   Willingness to purchase goods
B.   The ability to purchase goods
C.   The willingness and ability to purchase goods
D.   The numerical utility
Question #17
Investments never require a trade-off of present consumption for future consumption.
A.   False
B.   True
Question #18
The rate of economic growth or the level of poverty in a country are topics related to microeconomics.
A.   True
B.   False
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.   the only cost relevant to this decision is the taxes paid to the local government.
C.   there is an opportunity cost of using this building for a book store because it could have been used in other ways.
D.   the opportunity costs always equal $100.
Question #20
Someone has a comparative advantage in producing a good if they can produce that good
A.   in greater quantities.
B.   using more capital and less labor.
C.   at a lower opportunity cost.
D.   using more labor and less capital.
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.   False
B.   True
Question #23
Which of the following would an economist classify as capital?
A.   a bull dozer used by a construction company
B.   a post office employee
C.   a corporate bond
D.   a $50 bill
Question #24
A change in the quantity demanded of pizza is the same as a change in demand for pizza.
A.   False
B.   True
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.   False
B.   True
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.   equity.
B.   the fallacy of composition.
C.   comparative advantage.
D.   opportunity costs.
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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