,TESTBANK for Economics , 14th Edition Roger A.
Arnold
Notes
1- The file is chapter after chapter.
2- We have shown you 10 pages.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many
new editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Chapter 01 What Economics Is About
True / False
1. The branch of economics that studies the decisions made by individuals and firms is called
macroeconomics.
a. True
b. False
ANSWER: False
2. Macroeconomics deals with issues involving large corporations, while microeconomics exclusively
deals with issues involving small businesses.
a. True
b. False
ANSWER: False
3. The effect of a decrease in interest rates upon economic growth is an example of positive economics.
a. True
b. False
ANSWER: True
4. Economists use the word utility to describe the satisfaction one receives from a good.
a. True
b. False
ANSWER: True
5. If variable X rises as a result of variable Y falling, then X and Y have an inverse relationship.
a. True
b. False
ANSWER: True
6. In the textbook, economics is defined as the "science of scarcity."
a. True
b. False
ANSWER: True
7. In economics, capital is defined as a financial asset such as stocks and bonds.
a. True
b. False
ANSWER: False
8. A rationing device is a method used to resolve who gets what of available goods and resources.
a. True
b. False
ANSWER: True
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Chapter 01 What Economics Is About
9. When a person is making a decision at the margin he or she is comparing the total benefits from that
activity to the total costs of the proposed action.
a. True
b. False
ANSWER: False
10. Economists use the terms resource and input as synonyms.
a. True
b. False
ANSWER: True
11. To an economist, the terms factor and output are synonyms.
a. True
b. False
ANSWER: False
12. According to economists, one of the four broad categories of resources is money.
a. True
b. False
ANSWER: False
13. The higher the opportunity cost of doing something, the more likely it will be done.
a. True
b. False
ANSWER: False
14. Price is the only rationing device that can be used in a modern economy.
a. True
b. False
ANSWER: False
15. The resource termed labor consists of the physical, but not the mental, talents that people contribute
to the production process.
a. True
b. False
ANSWER: False
16. The slope of a straight line is always equal to either 1.0 or -1.0.
a. True
b. False
ANSWER: False
17. Economists sometimes refer to the resource category land as natural resources.
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Chapter 01 What Economics Is About
a. True
b. False
ANSWER: True
18. Scarcity affects everyone, even billionaires.
a. True
b. False
ANSWER: True
19. If someone gives you a free ticket to the movies, then there is no opportunity cost involved with going
to the movies.
a. True
b. False
ANSWER: False
20. Some economic studies have shown that mandatory seat belt laws do not lead to a reduction in traffic
fatalities.
a. True
b. False
ANSWER: True
21. The slope of a horizontal line is always equal to zero.
a. True
b. False
ANSWER: True
22. The slope of a (nonlinear) curve varies from one point to another.
a. True
b. False
ANSWER: True
23. Scarcity occurs in both wealthy societies and poor societies.
a. True
b. False
ANSWER: True
24. The higher the opportunity cost of making a new friend, the more likely one is to make a new
friend, ceteris paribus.
a. True
b. False
ANSWER: False
25. Economists use the terms resource and input as synonyms.
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,Name: Class: Date:
Chapter 01 What Economics Is About
a. True
b. False
ANSWER: True
Multiple Choice
26. The author of the textbook defines economics as the
a. science of efficiency.
b. science of scarcity.
c. study of markets.
d. study of human activity.
ANSWER: b
27. When economists speak of scarcity, they are referring to the
a. condition in which society is not employing all its resources in an efficient way.
b. condition in which people's wants outstrip the limited resources available to satisfy those
wants.
c. economic condition that exists in only very poor countries of the world.
d. condition in which society produces too many frivolous goods and not enough socially
desirable goods.
ANSWER: b
28. Which of the following is not one of the four broad categories of resources?
a. labor
b. government
c. capital
d. entrepreneurship
ANSWER: b
29. Produced goods used as inputs for the production of other goods comprise the resource known as
a. natural resources.
b. services.
c. capital.
d. entrepreneurship.
ANSWER: c
30. Entrepreneurship is
a. the talent for organizing the use of land, labor and capital, among other things.
b. skill in influencing government regulators and legislators.
c. accumulated technical knowledge in using labor and capital.
d. knowledge of the particular natural resources to be found in a given area.
ANSWER: a
31. Many years ago, chemists at 3M Corporation were trying to create a super-strong glue. Somehow they
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,Name: Class: Date:
Chapter 01 What Economics Is About
got their molecules twisted and came up with one of the weakest glues ever made. But, rather than
pouring it down the drain, they tried coating some paper with it, and the "Post-It Note" was born. In this
case, 3M was acting as a(n)
a. utility.
b. rationer.
c. entrepreneur.
d. abstraction.
ANSWER: c
32. The physical and mental talents people bring to production processes comprise the resource called
a. entrepreneurship.
b. natural resources.
c. capital.
d. labor.
ANSWER: d
33. The headline in the newspaper reads "County Supervisors Debate Building New Schools." The
headline relates closest to which economic concept?
a. goods and bads
b. utility
c. choice
d. efficiency
ANSWER: c
34. The opportunity cost of attending college is
a. the money one spends on college tuition, books, and so forth.
b. the highest valued alternative one forfeits to attend college.
c. the least valued alternative one forfeits to attend college.
d. equal to the salary one will earn when one graduates from college.
ANSWER: b
35. Here are three things you could do if you do not attend your economics class: watch television with
some friends (you value this at $25), read a good book (you value this at $17), or go to work (you could
earn $20 during the economics class). The opportunity cost of going to your economics class is
a. $20, because this is the only alternative of the three where you would actually receive a
monetary payment.
b. $17, because this is the lowest valued alternative forfeited.
c. $25, because this is the highest valued alternative forfeited.
d. $62, because this is the total dollar sum of the three forfeited alternatives.
ANSWER: c
36. It usually takes less time to buy a six-pack of Pepsi, a loaf of bread, and a bag of potato chips at a
small convenience store (such as 7-Eleven) than at a large, full-service grocery store. Which of the
following persons is most likely to buy these items at a convenience store?
a. a person with a high opportunity cost of time
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,Name: Class: Date:
Chapter 01 What Economics Is About
b. a person with a low opportunity cost of time
c. a person who is out of work
d. a person who works at a full-service grocery store
ANSWER: a
37. Minerals, water, and forests are all considered to be part of the broad resource category known as
a. capital.
b. entrepreneurship.
c. labor.
d. land.
ANSWER: d
38. The higher the opportunity cost of attending college,
a. the more likely an individual will go to college.
b. the more economics classes an individual will take at college.
c. the fewer economics classes an individual will take at college.
d. the less likely an individual will go to college.
ANSWER: d
39. Which of the following is an example of a positive economic statement?
a. The U.S. public should devote more resources to education.
b. The poor should pay lower taxes and the rich should pay higher taxes.
c. Soap operas should be taken off television.
d. If you drop a ball from the top of a building, it will fall to the ground.
ANSWER: d
40. Attempts to determine "what is" are part of __________ economics.
a. positive
b. normative
c. positive and normative
d. neither positive nor normative
ANSWER: a
41. Microeconomics is the branch of economics that deals with
a. highly aggregated markets or the entire economy.
b. the production side of the economy, exclusively.
c. the buying side of the economy, exclusively.
d. human behavior and choices as they relate to relatively small units: an individual, a firm, an
industry.
ANSWER: d
42. Which of the following is the best example of a microeconomics topic?
a. the study of how prices are determined in the computer industry
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,Name: Class: Date:
Chapter 01 What Economics Is About
b. the study of unemployment in the economy
c. the study of how changes in the nation's money supply affect the nation's output
d. the study of inflation in the economy
ANSWER: a
43. Which of the following is a positive macroeconomics statement?
a. The central bank should increase the nation's money supply.
b. The increase in the nation's money supply helped push the nation's unemployment rate down
in the short run.
c. Ford Motor Company's new advertising campaign ended up hurting General Motors' sales.
d. The local government ought to spend more on recreational facilities.
ANSWER: b
44. Which of the following is a normative macroeconomics statement?
a. The central bank should increase the nation's money supply.
b. The increase in the nation's money supply helped push the nation's unemployment rate down
in the short run.
c. Ford Motor Company's new advertising campaign ended up hurting General Motors' sales.
d. The local government ought to spend more on recreational facilities.
ANSWER: a
45. The condition in an economy that makes a "rationing device" a necessity is:
a. the economy is organized around free markets.
b. the economy is centrally planned by the government.
c. scarcity exists.
d. there are fewer types of goods than there are people in the economy.
ANSWER: c
46. The latest Taylor Swift album is available to be downloaded for $13.99. Is this price a rationing
device?
a. No, the album will be sold to anyone having the required number of dollars.
b. Yes, because the album will only be purchased by people who are willing and able to pay
$13.99.
c. No, for price to be a rationing device, it must be so high that only one unit of the item is sold.
d. Yes, since that is a reasonable price.
ANSWER: b
47. What is the most prominent rationing device you will likely find at your campus bookstore?
a. dollar price
b. brute force
c. anti-theft tags on the high-priced items
d. rationing coupons
ANSWER: a
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Chapter 01 What Economics Is About
48. Economists believe that people's wants are
a. finite.
b. infinite.
c. irrational.
d. unimportant because needs are more important than wants.
ANSWER: b
49. In every economy people vie for the economy's rationing device, a process called
a. competition.
b. entrepreneurship.
c. marginal benefit.
d. positive economics.
ANSWER: a
50. Scarcity means
a. wants are greater than the limited resources available to satisfy these wants.
b. wants are less than the limited resources available to satisfy these wants.
c. resources are infinite.
d. wants are limited.
ANSWER: a
51. The need to make choices is most closely related to the economic concept of
a. opportunity cost.
b. efficiency.
c. inefficiency.
d. utility.
ANSWER: a
52. Opportunity cost is the value of __________________ when a choice is made.
a. the most highly valued forfeited alternative
b. the alternative chosen
c. a free good
d. the sum of all forfeited alternatives
ANSWER: a
53. In all cases, positive economics deals with
a. what is.
b. what should be.
c. relatively small units in the economy.
d. aggregates or the entire economy.
ANSWER: a
54. In all cases, normative economics deals with
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Arnold
Notes
1- The file is chapter after chapter.
2- We have shown you 10 pages.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many
new editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Chapter 01 What Economics Is About
True / False
1. The branch of economics that studies the decisions made by individuals and firms is called
macroeconomics.
a. True
b. False
ANSWER: False
2. Macroeconomics deals with issues involving large corporations, while microeconomics exclusively
deals with issues involving small businesses.
a. True
b. False
ANSWER: False
3. The effect of a decrease in interest rates upon economic growth is an example of positive economics.
a. True
b. False
ANSWER: True
4. Economists use the word utility to describe the satisfaction one receives from a good.
a. True
b. False
ANSWER: True
5. If variable X rises as a result of variable Y falling, then X and Y have an inverse relationship.
a. True
b. False
ANSWER: True
6. In the textbook, economics is defined as the "science of scarcity."
a. True
b. False
ANSWER: True
7. In economics, capital is defined as a financial asset such as stocks and bonds.
a. True
b. False
ANSWER: False
8. A rationing device is a method used to resolve who gets what of available goods and resources.
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
Chapter 01 What Economics Is About
9. When a person is making a decision at the margin he or she is comparing the total benefits from that
activity to the total costs of the proposed action.
a. True
b. False
ANSWER: False
10. Economists use the terms resource and input as synonyms.
a. True
b. False
ANSWER: True
11. To an economist, the terms factor and output are synonyms.
a. True
b. False
ANSWER: False
12. According to economists, one of the four broad categories of resources is money.
a. True
b. False
ANSWER: False
13. The higher the opportunity cost of doing something, the more likely it will be done.
a. True
b. False
ANSWER: False
14. Price is the only rationing device that can be used in a modern economy.
a. True
b. False
ANSWER: False
15. The resource termed labor consists of the physical, but not the mental, talents that people contribute
to the production process.
a. True
b. False
ANSWER: False
16. The slope of a straight line is always equal to either 1.0 or -1.0.
a. True
b. False
ANSWER: False
17. Economists sometimes refer to the resource category land as natural resources.
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,Name: Class: Date:
Chapter 01 What Economics Is About
a. True
b. False
ANSWER: True
18. Scarcity affects everyone, even billionaires.
a. True
b. False
ANSWER: True
19. If someone gives you a free ticket to the movies, then there is no opportunity cost involved with going
to the movies.
a. True
b. False
ANSWER: False
20. Some economic studies have shown that mandatory seat belt laws do not lead to a reduction in traffic
fatalities.
a. True
b. False
ANSWER: True
21. The slope of a horizontal line is always equal to zero.
a. True
b. False
ANSWER: True
22. The slope of a (nonlinear) curve varies from one point to another.
a. True
b. False
ANSWER: True
23. Scarcity occurs in both wealthy societies and poor societies.
a. True
b. False
ANSWER: True
24. The higher the opportunity cost of making a new friend, the more likely one is to make a new
friend, ceteris paribus.
a. True
b. False
ANSWER: False
25. Economists use the terms resource and input as synonyms.
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,Name: Class: Date:
Chapter 01 What Economics Is About
a. True
b. False
ANSWER: True
Multiple Choice
26. The author of the textbook defines economics as the
a. science of efficiency.
b. science of scarcity.
c. study of markets.
d. study of human activity.
ANSWER: b
27. When economists speak of scarcity, they are referring to the
a. condition in which society is not employing all its resources in an efficient way.
b. condition in which people's wants outstrip the limited resources available to satisfy those
wants.
c. economic condition that exists in only very poor countries of the world.
d. condition in which society produces too many frivolous goods and not enough socially
desirable goods.
ANSWER: b
28. Which of the following is not one of the four broad categories of resources?
a. labor
b. government
c. capital
d. entrepreneurship
ANSWER: b
29. Produced goods used as inputs for the production of other goods comprise the resource known as
a. natural resources.
b. services.
c. capital.
d. entrepreneurship.
ANSWER: c
30. Entrepreneurship is
a. the talent for organizing the use of land, labor and capital, among other things.
b. skill in influencing government regulators and legislators.
c. accumulated technical knowledge in using labor and capital.
d. knowledge of the particular natural resources to be found in a given area.
ANSWER: a
31. Many years ago, chemists at 3M Corporation were trying to create a super-strong glue. Somehow they
Copyright Cengage Learning. Powered by Cognero. Page 4
,Name: Class: Date:
Chapter 01 What Economics Is About
got their molecules twisted and came up with one of the weakest glues ever made. But, rather than
pouring it down the drain, they tried coating some paper with it, and the "Post-It Note" was born. In this
case, 3M was acting as a(n)
a. utility.
b. rationer.
c. entrepreneur.
d. abstraction.
ANSWER: c
32. The physical and mental talents people bring to production processes comprise the resource called
a. entrepreneurship.
b. natural resources.
c. capital.
d. labor.
ANSWER: d
33. The headline in the newspaper reads "County Supervisors Debate Building New Schools." The
headline relates closest to which economic concept?
a. goods and bads
b. utility
c. choice
d. efficiency
ANSWER: c
34. The opportunity cost of attending college is
a. the money one spends on college tuition, books, and so forth.
b. the highest valued alternative one forfeits to attend college.
c. the least valued alternative one forfeits to attend college.
d. equal to the salary one will earn when one graduates from college.
ANSWER: b
35. Here are three things you could do if you do not attend your economics class: watch television with
some friends (you value this at $25), read a good book (you value this at $17), or go to work (you could
earn $20 during the economics class). The opportunity cost of going to your economics class is
a. $20, because this is the only alternative of the three where you would actually receive a
monetary payment.
b. $17, because this is the lowest valued alternative forfeited.
c. $25, because this is the highest valued alternative forfeited.
d. $62, because this is the total dollar sum of the three forfeited alternatives.
ANSWER: c
36. It usually takes less time to buy a six-pack of Pepsi, a loaf of bread, and a bag of potato chips at a
small convenience store (such as 7-Eleven) than at a large, full-service grocery store. Which of the
following persons is most likely to buy these items at a convenience store?
a. a person with a high opportunity cost of time
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,Name: Class: Date:
Chapter 01 What Economics Is About
b. a person with a low opportunity cost of time
c. a person who is out of work
d. a person who works at a full-service grocery store
ANSWER: a
37. Minerals, water, and forests are all considered to be part of the broad resource category known as
a. capital.
b. entrepreneurship.
c. labor.
d. land.
ANSWER: d
38. The higher the opportunity cost of attending college,
a. the more likely an individual will go to college.
b. the more economics classes an individual will take at college.
c. the fewer economics classes an individual will take at college.
d. the less likely an individual will go to college.
ANSWER: d
39. Which of the following is an example of a positive economic statement?
a. The U.S. public should devote more resources to education.
b. The poor should pay lower taxes and the rich should pay higher taxes.
c. Soap operas should be taken off television.
d. If you drop a ball from the top of a building, it will fall to the ground.
ANSWER: d
40. Attempts to determine "what is" are part of __________ economics.
a. positive
b. normative
c. positive and normative
d. neither positive nor normative
ANSWER: a
41. Microeconomics is the branch of economics that deals with
a. highly aggregated markets or the entire economy.
b. the production side of the economy, exclusively.
c. the buying side of the economy, exclusively.
d. human behavior and choices as they relate to relatively small units: an individual, a firm, an
industry.
ANSWER: d
42. Which of the following is the best example of a microeconomics topic?
a. the study of how prices are determined in the computer industry
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,Name: Class: Date:
Chapter 01 What Economics Is About
b. the study of unemployment in the economy
c. the study of how changes in the nation's money supply affect the nation's output
d. the study of inflation in the economy
ANSWER: a
43. Which of the following is a positive macroeconomics statement?
a. The central bank should increase the nation's money supply.
b. The increase in the nation's money supply helped push the nation's unemployment rate down
in the short run.
c. Ford Motor Company's new advertising campaign ended up hurting General Motors' sales.
d. The local government ought to spend more on recreational facilities.
ANSWER: b
44. Which of the following is a normative macroeconomics statement?
a. The central bank should increase the nation's money supply.
b. The increase in the nation's money supply helped push the nation's unemployment rate down
in the short run.
c. Ford Motor Company's new advertising campaign ended up hurting General Motors' sales.
d. The local government ought to spend more on recreational facilities.
ANSWER: a
45. The condition in an economy that makes a "rationing device" a necessity is:
a. the economy is organized around free markets.
b. the economy is centrally planned by the government.
c. scarcity exists.
d. there are fewer types of goods than there are people in the economy.
ANSWER: c
46. The latest Taylor Swift album is available to be downloaded for $13.99. Is this price a rationing
device?
a. No, the album will be sold to anyone having the required number of dollars.
b. Yes, because the album will only be purchased by people who are willing and able to pay
$13.99.
c. No, for price to be a rationing device, it must be so high that only one unit of the item is sold.
d. Yes, since that is a reasonable price.
ANSWER: b
47. What is the most prominent rationing device you will likely find at your campus bookstore?
a. dollar price
b. brute force
c. anti-theft tags on the high-priced items
d. rationing coupons
ANSWER: a
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, Name: Class: Date:
Chapter 01 What Economics Is About
48. Economists believe that people's wants are
a. finite.
b. infinite.
c. irrational.
d. unimportant because needs are more important than wants.
ANSWER: b
49. In every economy people vie for the economy's rationing device, a process called
a. competition.
b. entrepreneurship.
c. marginal benefit.
d. positive economics.
ANSWER: a
50. Scarcity means
a. wants are greater than the limited resources available to satisfy these wants.
b. wants are less than the limited resources available to satisfy these wants.
c. resources are infinite.
d. wants are limited.
ANSWER: a
51. The need to make choices is most closely related to the economic concept of
a. opportunity cost.
b. efficiency.
c. inefficiency.
d. utility.
ANSWER: a
52. Opportunity cost is the value of __________________ when a choice is made.
a. the most highly valued forfeited alternative
b. the alternative chosen
c. a free good
d. the sum of all forfeited alternatives
ANSWER: a
53. In all cases, positive economics deals with
a. what is.
b. what should be.
c. relatively small units in the economy.
d. aggregates or the entire economy.
ANSWER: a
54. In all cases, normative economics deals with
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