Introduction to Economics (ECS1500) | Complete Study Guide with Exam Questions & Answers

Introduction to Economics (ECS1500) | Complete Study Guide with Exam Questions & Answers 1. Economics is best defined as the study of: A) How to make money in business B) How societies allocate scarce resources among competing wants C) How governments collect taxes D) How technology improves production Answer: B) How societies allocate scarce resources among competing wants Explanation: Economics focuses on decision-making in conditions of scarcity. It examines how individuals, firms, and governments allocate limited resources to satisfy unlimited human wants. It is not just about money or business but about choices and trade-offs. 2. Which economist defined economics as the “science of wealth”? A) Alfred Marshall B) Adam Smith C) Lionel Robbins D) John Maynard Keynes Answer: B) Adam Smith Explanation: Adam Smith, known as the “Father of Economics,” defined economics as the science of wealth in his book The Wealth of Nations (1776). Later definitions by Marshall and Robbins expanded the scope to include human welfare and scarcity. 3. Alfred Marshall emphasized that economics is primarily concerned with: A) The production of capital goods B) The welfare of mankind C) The accumulation of wealth D) The distribution of technology Answer: B) The welfare of mankind Explanation: Alfred Marshall, in his book Principles of Economics (1890), argued that economics is a study of mankind in the ordinary business of life, focusing on how people achieve and distribute material welfare. 4. According to Lionel Robbins, economics is the science of: A) Unlimited wants with limited resources B) Managing money and investments C) Producing goods for trade D) Maximizing government revenue Answer: A) Unlimited wants with limited resources Explanation: Lionel Robbins defined economics as the science that studies human behavior as a relationship between ends (unlimited wants) and scarce means (limited resources) which have alternative uses. This definition highlights scarcity and choice. 5. Which of the following is NOT a characteristic of economics? A) It deals with scarcity B) It involves choice-making C) It studies unlimited wants D) It ignores human welfare Answer: D) It ignores human welfare Explanation: Economics cannot ignore human welfare since the allocation of resources affects living standards. While early definitions focused only on wealth, modern economics emphasizes both scarcity and welfare in decision-making. 6. The two main branches of economics are: A) Classical and Modern Economics B) Positive and Normative Economics C) Microeconomics and Macroeconomics D) Social and Political Economics Answer: C) Microeconomics and Macroeconomics Explanation: Microeconomics studies individual units such as households, firms, and markets, while macroeconomics focuses on the economy as a whole, including inflation, unemployment, and national income. Together, they form the main branches of economics. 7. Economics is considered a social science because: A) It deals only with business and finance B) It studies human behavior in relation to scarce resources C) It involves laboratory experiments D) It predicts natural events like weather Answer: B) It studies human behavior in relation to scarce resources Explanation: Economics is classified as a social science since it examines human behavior, choices, and interactions in society when faced with scarcity. Unlike natural sciences, it focuses on people and institutions.