Chapter 1—The Art and Science of Economic Analysis
MULTIPLE CHOICE
1. Economics is best defined as the study of how individuals decide to use limited resources in an
attempt to satisfy unlimited wants.
a. True
b. False
ANS: A PTS: 1 DIF: Easy NAT: Analytic
LOC: The study and definitions of economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
2. Economics studies how decision makers use scarce resources to satisfy unlimited wants.
a. True
b. False
ANS: A PTS: 1 DIF: Easy NAT: Analytic
LOC: The study and definitions of economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
3. In economics, money is an example of capital.
a. True
b. False
ANS: B PTS: 1 DIF: Hard NAT: Analytic
LOC: The study and definitions of economics
, TOP: The Economic Problem: Scarce Resources, Unlimited Wants
4. Profit is the payment received by resource owners for the use of their capital.
a. True
b. False
ANS: B PTS: 1 DIF: Moderate NAT: Analytic
LOC: The study and definitions of economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
5. Which of the following are the four categories of resources?
a. human effort, human capital, money, and natural resources
b. labor, physical capital, money, and entrepreneurial ability
c. labor, entrepreneurial ability, capital, and money
d. labor, entrepreneurial ability, capital, and natural resources
e. human effort, money, entrepreneurial ability, and natural resources
ANS: D PTS: 1 DIF: Easy NAT: Reflective Thinking
LOC: The study and definitions of economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
6. Which of the following is an example of human capital?
a. a pizza oven
b. college education
c. labor
d. bulldozer
, e. stocks and bonds
ANS: B PTS: 1 DIF: Moderate NAT: Reflective Thinking
LOC: Scarcity, tradeoffs, and opportunity cost TOP: Resources
7. Rent is the payment received by resource owners for the use of their natural resources.
a. True
b. False
ANS: A PTS: 1 DIF: Moderate NAT: Analytic
LOC: The study and definitions of economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
8. The fact that people have unlimited wants means that
a. they always want more of at least one good
b. each person has an unlimited desire for every good
c. labor unions demand wage increases
d. selfish people are not concerned about others
e. people buy goods without regard to what they can afford
ANS: A PTS: 1 DIF: Easy NAT: Reflective Thinking
LOC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
9. The problem of scarce resources
a. means that in some cities there are not enough jobs
b. could be solved if the unemployment rate fell
, c. is that there are not enough resources to satisfy people's unlimited wants
d. is that resources are used inefficiently
e. can be solved by lowering taxes
ANS: C PTS: 1 DIF: Easy NAT: Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
10. Scarcity is best defined as
a. unlimited resources
b. a shortage -- when buyers cannot obtain the goods they want
c. a surplus -- when sellers cannot sell the goods they produce
d. insufficient resources to satisfy unlimited wants
e. the private ownership of society's resources
ANS: D PTS: 1 DIF: Easy NAT: Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
11. Scarcity
a. exists because people have wants that are unlimited relative to the availability of resources
to satisfy those wants
b. applies when a resource is not freely available
c. means that each society and each individual must make choices
d. exists in all societies
e. all of the above are true
MULTIPLE CHOICE
1. Economics is best defined as the study of how individuals decide to use limited resources in an
attempt to satisfy unlimited wants.
a. True
b. False
ANS: A PTS: 1 DIF: Easy NAT: Analytic
LOC: The study and definitions of economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
2. Economics studies how decision makers use scarce resources to satisfy unlimited wants.
a. True
b. False
ANS: A PTS: 1 DIF: Easy NAT: Analytic
LOC: The study and definitions of economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
3. In economics, money is an example of capital.
a. True
b. False
ANS: B PTS: 1 DIF: Hard NAT: Analytic
LOC: The study and definitions of economics
, TOP: The Economic Problem: Scarce Resources, Unlimited Wants
4. Profit is the payment received by resource owners for the use of their capital.
a. True
b. False
ANS: B PTS: 1 DIF: Moderate NAT: Analytic
LOC: The study and definitions of economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
5. Which of the following are the four categories of resources?
a. human effort, human capital, money, and natural resources
b. labor, physical capital, money, and entrepreneurial ability
c. labor, entrepreneurial ability, capital, and money
d. labor, entrepreneurial ability, capital, and natural resources
e. human effort, money, entrepreneurial ability, and natural resources
ANS: D PTS: 1 DIF: Easy NAT: Reflective Thinking
LOC: The study and definitions of economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
6. Which of the following is an example of human capital?
a. a pizza oven
b. college education
c. labor
d. bulldozer
, e. stocks and bonds
ANS: B PTS: 1 DIF: Moderate NAT: Reflective Thinking
LOC: Scarcity, tradeoffs, and opportunity cost TOP: Resources
7. Rent is the payment received by resource owners for the use of their natural resources.
a. True
b. False
ANS: A PTS: 1 DIF: Moderate NAT: Analytic
LOC: The study and definitions of economics
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
8. The fact that people have unlimited wants means that
a. they always want more of at least one good
b. each person has an unlimited desire for every good
c. labor unions demand wage increases
d. selfish people are not concerned about others
e. people buy goods without regard to what they can afford
ANS: A PTS: 1 DIF: Easy NAT: Reflective Thinking
LOC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
9. The problem of scarce resources
a. means that in some cities there are not enough jobs
b. could be solved if the unemployment rate fell
, c. is that there are not enough resources to satisfy people's unlimited wants
d. is that resources are used inefficiently
e. can be solved by lowering taxes
ANS: C PTS: 1 DIF: Easy NAT: Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
10. Scarcity is best defined as
a. unlimited resources
b. a shortage -- when buyers cannot obtain the goods they want
c. a surplus -- when sellers cannot sell the goods they produce
d. insufficient resources to satisfy unlimited wants
e. the private ownership of society's resources
ANS: D PTS: 1 DIF: Easy NAT: Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
TOP: The Economic Problem: Scarce Resources, Unlimited Wants
11. Scarcity
a. exists because people have wants that are unlimited relative to the availability of resources
to satisfy those wants
b. applies when a resource is not freely available
c. means that each society and each individual must make choices
d. exists in all societies
e. all of the above are true
