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.   True
B.   False
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.   scarcity
B.   efficiency in distribution
C.   comparative advantage
D.   opportunity cost
Question #4
The reason that opportunity costs arise is that
A.   an economy relies on money to facilitate exchange of goods and services.
B.   there are never alternative decisions that could be made.
C.   resources are scarce.
D.   people never have wants.
Question #5
The focus on the human dimension of scarcity and choice is part of what makes economics a social science.
A.   False
B.   True
Question #6
In economics, investment refers to which of the following?
A.   Increasing the stock of capital
B.   Buying stock on the stock market
C.   Buying goods, such as video game systems and clothing for the winter
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 shift to the right.
B.   It will shift to the left.
C.   It will disappear
D.   It will remain constant.
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.   elastic
B.   inelastic
C.   perfectly inelastic
D.   unit elastic
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.   All scarce resources are being used efficiently.
C.   The economy has a steady rate of growth.
D.   Consumption preferences are known and fixed.
Question #12
That which we forgo, or give up, when we make a choice or decision is called
A.   out-of-pocket cost.
B.   real cost.
C.   opportunity cost.
D.   marginal 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 a focus of positive economics.
B.   are a focus of microeconomics.
C.   are a focus of macroeconomics.
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.   be more efficient.
B.   increase its factors of production
C.   reduce inputs.
D.   waste less.
Question #16
What does demand mean?
A.   The willingness and ability to purchase goods
B.   The ability to purchase goods
C.   Willingness 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.   the only cost relevant to this decision is the taxes paid to the local government.
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.   there is never an opportunity cost of using this building for a book store.
Question #20
Someone has a comparative advantage in producing a good if they can produce that good
A.   in greater quantities.
B.   at a lower opportunity cost.
C.   using more labor and less capital.
D.   using more capital and less labor.
Question #21
Elastic demand means the price has little or no effect on quantity demanded.
A.   False
B.   True
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 post office employee
B.   a $50 bill
C.   a bull dozer used by a construction company
D.   a corporate bond
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.   True
B.   False
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.   the fallacy of composition.
B.   comparative advantage.
C.   opportunity costs.
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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