Test Bank For
Principles of Economics 8e Robert Frank, Ben Bernanke, Kate Antonovics and Ori Heffetz
Chapter 1-28 Answers are at the End of Each Chapter
Chapter 1
Student name:__________
1) Economics is best defined as the study of
A) inflation, interest rates, and the stock market.
B) supply and demand.
C) how people make choices in the face of scarcity and the implications of those choices
for society as a whole.
D) the financial concerns of businesses and individuals.
2) Economics is best defined as the study of
A) the financial concerns of businesses and individuals.
B) the role of government in limiting the choices people make.
C) choice in the face of limited resources.
D) whether we will have enough resources in the future.
3) Economists recognize that because people have limited resources
A) government intervention is necessary.
B) they have to make trade-offs.
C) they will never be happy.
D) our future is bleak.
4) The Scarcity Principle states that
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, A) people don't have enough money to buy what they want.
B) society will eventually run out of resources.
C) with limited resources, having more of one thing means having less of another.
D) some countries have fewer resources than others.
5) An implication of scarcity is that
A) people will never be happy.
B) making trade-offs becomes unnecessary as wealth increases.
C) some people will always be poor.
D) people must make trade-offs.
6) If all the world's resources were to magically increase one hundredfold, then
A) people would still have to make trade-offs.
B) economics would no longer be relevant.
C) scarcity would disappear.
D) trade-offs would become unnecessary.
7) The Scarcity Principle applies to
A) poor people primarily.
B) consumers primarily.
C) firms primarily.
D) everyone.
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,8) Forest lives in complete isolation in Montana. He is self-sufficient and feeds himself
through hunting, fishing, and farming. Which of the following statements about Forest is true?
A) Forest has unlimited resources.
B) Forest is not required to make trade-offs because he is self-sufficient.
C) Forest has to make trade-offs.
D) Forest doesn't have to consider costs and benefits.
9) The Scarcity Principle applies to
A) all decisions.
B) only market decisions, e.g., buying a car.
C) only non-market decisions, e.g., watching a sunset.
D) only the poor.
10) Chris has a one-hour break between classes every Wednesday. Chris can either stay at the
library and study or go to the gym and work out. The decision Chris must make is
A) not an economic problem because neither activity costs money.
B) not an economic problem because it's an hour that Chris has no matter what he does.
C) an economic problem because the tuition Chris pays covers the cost of both the gym
and the library.
D) an economic problem because Chris has only one hour, and engaging in one activity
means giving up the other.
11) Jackie wants to go to the football game this weekend, but she has a paper due on
Monday. It will take her the whole weekend to write the paper. Jackie decides to stay home and
work on the paper. According to the Scarcity Principle, the reason Jackie doesn't go to the game
is that
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, A) Jackie prefers schoolwork to football games.
B) writing the paper is easier than going to the game.
C) Jackie can't go the game and finish the paper.
D) going to the game won't be fun.
12) Whether studying the output of the U.S. economy or how many classes a student will
take, a unifying concept is that
A) wants are limited and resources are unlimited, so trade-offs are unnecessary.
B) wants are unlimited and resources are scarce, so trade-offs have to be made.
C) wants are limited and resources are unlimited, so trade-offs have to be made.
D) both wants and resources are unlimited, so trade-offs are unnecessary.
13) The Cost-Benefit Principle indicates that an action should be taken if
A) its total benefits exceed its total costs.
B) its average benefits exceed its average costs.
C) its net benefit (benefit minus cost) is zero.
D) its extra benefit is greater than or equal to its extra cost.
14) If a person takes an action if, and only if, the extra benefits from taking that action are at
least as great as the extra costs, then that person is
A) not following the Cost-Benefit Principle.
B) following the Scarcity Principle.
C) following the Cost-Benefit Principle.
D) not rational.
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Principles of Economics 8e Robert Frank, Ben Bernanke, Kate Antonovics and Ori Heffetz
Chapter 1-28 Answers are at the End of Each Chapter
Chapter 1
Student name:__________
1) Economics is best defined as the study of
A) inflation, interest rates, and the stock market.
B) supply and demand.
C) how people make choices in the face of scarcity and the implications of those choices
for society as a whole.
D) the financial concerns of businesses and individuals.
2) Economics is best defined as the study of
A) the financial concerns of businesses and individuals.
B) the role of government in limiting the choices people make.
C) choice in the face of limited resources.
D) whether we will have enough resources in the future.
3) Economists recognize that because people have limited resources
A) government intervention is necessary.
B) they have to make trade-offs.
C) they will never be happy.
D) our future is bleak.
4) The Scarcity Principle states that
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, A) people don't have enough money to buy what they want.
B) society will eventually run out of resources.
C) with limited resources, having more of one thing means having less of another.
D) some countries have fewer resources than others.
5) An implication of scarcity is that
A) people will never be happy.
B) making trade-offs becomes unnecessary as wealth increases.
C) some people will always be poor.
D) people must make trade-offs.
6) If all the world's resources were to magically increase one hundredfold, then
A) people would still have to make trade-offs.
B) economics would no longer be relevant.
C) scarcity would disappear.
D) trade-offs would become unnecessary.
7) The Scarcity Principle applies to
A) poor people primarily.
B) consumers primarily.
C) firms primarily.
D) everyone.
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,8) Forest lives in complete isolation in Montana. He is self-sufficient and feeds himself
through hunting, fishing, and farming. Which of the following statements about Forest is true?
A) Forest has unlimited resources.
B) Forest is not required to make trade-offs because he is self-sufficient.
C) Forest has to make trade-offs.
D) Forest doesn't have to consider costs and benefits.
9) The Scarcity Principle applies to
A) all decisions.
B) only market decisions, e.g., buying a car.
C) only non-market decisions, e.g., watching a sunset.
D) only the poor.
10) Chris has a one-hour break between classes every Wednesday. Chris can either stay at the
library and study or go to the gym and work out. The decision Chris must make is
A) not an economic problem because neither activity costs money.
B) not an economic problem because it's an hour that Chris has no matter what he does.
C) an economic problem because the tuition Chris pays covers the cost of both the gym
and the library.
D) an economic problem because Chris has only one hour, and engaging in one activity
means giving up the other.
11) Jackie wants to go to the football game this weekend, but she has a paper due on
Monday. It will take her the whole weekend to write the paper. Jackie decides to stay home and
work on the paper. According to the Scarcity Principle, the reason Jackie doesn't go to the game
is that
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, A) Jackie prefers schoolwork to football games.
B) writing the paper is easier than going to the game.
C) Jackie can't go the game and finish the paper.
D) going to the game won't be fun.
12) Whether studying the output of the U.S. economy or how many classes a student will
take, a unifying concept is that
A) wants are limited and resources are unlimited, so trade-offs are unnecessary.
B) wants are unlimited and resources are scarce, so trade-offs have to be made.
C) wants are limited and resources are unlimited, so trade-offs have to be made.
D) both wants and resources are unlimited, so trade-offs are unnecessary.
13) The Cost-Benefit Principle indicates that an action should be taken if
A) its total benefits exceed its total costs.
B) its average benefits exceed its average costs.
C) its net benefit (benefit minus cost) is zero.
D) its extra benefit is greater than or equal to its extra cost.
14) If a person takes an action if, and only if, the extra benefits from taking that action are at
least as great as the extra costs, then that person is
A) not following the Cost-Benefit Principle.
B) following the Scarcity Principle.
C) following the Cost-Benefit Principle.
D) not rational.
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