Chapter 1—Economics and the World Around You
MULTIPLE CHOICE
1. Which of the following is a reason to study economics?
a. Economic analysis explains daily events.
b. It helps us understand why people, firms and government behave in a certain way.
c. We need to understand relevant economic applications and policy issues.
d. It provides useful logic for solving complex problems.
e. All of these
ANS: E PTS: 1 DIF: Easy REF: Ch 1, Section 1:
Preface
OBJ: 1.1 TOP: Economics TYP: Factual
2. According to the text, why are some countries rich and others very poor?
a. Some countries have no oil.
b. People have no property rights.
c. Access to education is very limited.
d. High tariffs prevent international trade.
e. All of these.
ANS: B PTS: 1 DIF: Medium REF: Ch 1, Whole chapter
OBJ: 1.1 TOP: Wealth TYP: Factual
3. The primary reason to explain why some nations are rich and others poor is
, a. A democratic government
b. A strong judicial system
c. Access to education
d. Private ownership
e. A stable currency
ANS: D PTS: 1 DIF: Medium REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Wealth TYP: Factual
4. It can be said that ____ laid the foundation for the Industrial Revolution.
a. the discovery of the Americas
b. private property rights
c. the invention of the cotton gin
d. the discovery of gold
e. the development of a strong judicial system
ANS: B PTS: 1 DIF: Medium REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Private property rights TYP: Factual
5. Private property rights are important because
a. they create incentives for people to improve their standard of living.
b. the Constitution says so.
c. they allow students to choose their major field of study in college.
d. an economy cannot grow without them.
e. all of these
, ANS: A PTS: 1 DIF: Medium REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Private property rights TYP: Factual
6. GDP per capita is one way to measure an economy's growth. China and India began to progress
when they allowed private ownership, in about ____. Since then there has been steady, strong
growth in these economies.
a. 1960
b. 1970
c. 1980
d. 1990
e. 2000
ANS: D PTS: 1 DIF: Easy REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Economic Growth TYP: Factual
7. Overfishing, and in some cases extinction of species result from:
a. scarcity
b. greedy fishermen who cheat and take more than their fair share
c. no one has an incentive to take care of it
d. lack of laws to control the amount of fish taken
e. all of these
ANS: C PTS: 1 DIF: Medium REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Private property TYP: Applied
, 8. Sonia works at a restaurant where tips are pooled and divided equally. Anna works at a different
restaurant where she keeps the tips her customers leave for her. Which of the following is true?
a. Both work equally hard because their hourly wage from the employer is low, and they can
make up for this with tips
b. Sonia works harder, because she receives the same amount of tips as other workers.
c. Anna works harder, because she works at an expensive restaurant.
d. Anna works harder because her tips are her private property.
e. It's impossible to say without more information.
ANS: D PTS: 1 DIF: Hard REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Private property TYP: Applied
9. The main reason villagers in Xiaogang produced more rice than those in surrounding villages was
a. they had better farmland.
b. they were given better seeds.
c. they were able to keep the output they produced individually.
d. they made each family responsible for a certain, higher quota
ANS: C PTS: 1 DIF: Medium REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Private property TYP: Factual
10. In 1981, in San Francisco Solano, Argentina, about 1,800 families took over a piece of wasteland.
The resulting houses varied greatly, based on whether the residents received title. Those who
received title also behaved differently, having fewer children, and the children experienced more
education and better health. This is an example of (the results from)
a. Scarcity
b. Economic growth
MULTIPLE CHOICE
1. Which of the following is a reason to study economics?
a. Economic analysis explains daily events.
b. It helps us understand why people, firms and government behave in a certain way.
c. We need to understand relevant economic applications and policy issues.
d. It provides useful logic for solving complex problems.
e. All of these
ANS: E PTS: 1 DIF: Easy REF: Ch 1, Section 1:
Preface
OBJ: 1.1 TOP: Economics TYP: Factual
2. According to the text, why are some countries rich and others very poor?
a. Some countries have no oil.
b. People have no property rights.
c. Access to education is very limited.
d. High tariffs prevent international trade.
e. All of these.
ANS: B PTS: 1 DIF: Medium REF: Ch 1, Whole chapter
OBJ: 1.1 TOP: Wealth TYP: Factual
3. The primary reason to explain why some nations are rich and others poor is
, a. A democratic government
b. A strong judicial system
c. Access to education
d. Private ownership
e. A stable currency
ANS: D PTS: 1 DIF: Medium REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Wealth TYP: Factual
4. It can be said that ____ laid the foundation for the Industrial Revolution.
a. the discovery of the Americas
b. private property rights
c. the invention of the cotton gin
d. the discovery of gold
e. the development of a strong judicial system
ANS: B PTS: 1 DIF: Medium REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Private property rights TYP: Factual
5. Private property rights are important because
a. they create incentives for people to improve their standard of living.
b. the Constitution says so.
c. they allow students to choose their major field of study in college.
d. an economy cannot grow without them.
e. all of these
, ANS: A PTS: 1 DIF: Medium REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Private property rights TYP: Factual
6. GDP per capita is one way to measure an economy's growth. China and India began to progress
when they allowed private ownership, in about ____. Since then there has been steady, strong
growth in these economies.
a. 1960
b. 1970
c. 1980
d. 1990
e. 2000
ANS: D PTS: 1 DIF: Easy REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Economic Growth TYP: Factual
7. Overfishing, and in some cases extinction of species result from:
a. scarcity
b. greedy fishermen who cheat and take more than their fair share
c. no one has an incentive to take care of it
d. lack of laws to control the amount of fish taken
e. all of these
ANS: C PTS: 1 DIF: Medium REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Private property TYP: Applied
, 8. Sonia works at a restaurant where tips are pooled and divided equally. Anna works at a different
restaurant where she keeps the tips her customers leave for her. Which of the following is true?
a. Both work equally hard because their hourly wage from the employer is low, and they can
make up for this with tips
b. Sonia works harder, because she receives the same amount of tips as other workers.
c. Anna works harder, because she works at an expensive restaurant.
d. Anna works harder because her tips are her private property.
e. It's impossible to say without more information.
ANS: D PTS: 1 DIF: Hard REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Private property TYP: Applied
9. The main reason villagers in Xiaogang produced more rice than those in surrounding villages was
a. they had better farmland.
b. they were given better seeds.
c. they were able to keep the output they produced individually.
d. they made each family responsible for a certain, higher quota
ANS: C PTS: 1 DIF: Medium REF: Ch 1, Section 1:
Ownership
OBJ: 1.1 TOP: Private property TYP: Factual
10. In 1981, in San Francisco Solano, Argentina, about 1,800 families took over a piece of wasteland.
The resulting houses varied greatly, based on whether the residents received title. Those who
received title also behaved differently, having fewer children, and the children experienced more
education and better health. This is an example of (the results from)
a. Scarcity
b. Economic growth
