Exam (elaborations) TEST BANK MICROECONOMICS 10TH EDITION by Michael Parkin (CHAPTER ONE) UPDATED!!!!

1 Definition of Economics 1) All economic questions are about A) how to make money. B) what to produce. C) how to cope with scarcity. D) how to satisfy all our wants. Answer: C Topic: Scarcity Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 2) All economic questions arise because we A) want more than we can get. B) want more than we need. C) have an abundance of resources. D) have limited wants that need to be satisfied. Answer: A Topic: Scarcity Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 3) Economics is best defined as the study of how people, businesses, governments, and societies A) choose abundance over scarcity. B) make choices to cope with scarcity. C) use their infinite resources. D) attain wealth. Answer: B Topic: Scarcity Skill: Conceptual Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 2 Copyright © 2012 Pearson Education, Inc. 4) Scarcity is a situation in which A) people cannot satisfy all their wants. B) most people can get only bare necessities. C) people can satisfy all their wants. D) some people can get all they want and some cannot. Answer: A Topic: Scarcity Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 5) Economists point out that scarcity confronts A) neither the poor nor the rich. B) the poor but not the rich. C) the rich but not the poor. D) both the poor and the rich. Answer: D Topic: Scarcity Skill: Conceptual Question history: Previous edition, Chapter 1 AACSB: Ethical Reasoning 6) Scarcity is A) our inability to satisfy all our wants. B) a situation that exists during economic recessions but not during economic booms. C) eliminated by choices. D) an economic problem only for poor people. Answer: A Topic: Scarcity Skill: Recognition Question history: Modified 10th edition AACSB: Reflective Thinking 7) When an economist talks of scarcity, the economist is referring to the A) ability of society to employ all of its resources. B) ability of society to consume all that it produces. C) inability of society to satisfy all human wants because of limited resources. D) ability of society to continually make technological breakthroughs and increase production. Answer: C Topic: Scarcity Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 3 Copyright © 2012 Pearson Education, Inc. 8) Fundamental economic problems basically arise from A) the fact that society has more than it needs. B) turmoil in the stock market. C) the unequal distribution of income. D) our wants exceeding our scarce resources. Answer: D Topic: Scarcity Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 9) Scarcity exists because A) society and people are greedy and wasteful. B) our wants exceed the resources available to satisfy them. C) of the inefficient choices we make. D) poor people need more food and other goods. Answer: B Topic: Scarcity Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 10) Scarcity can be eliminated through A) the use of market mechanisms. B) exploration that helps us find new resources. C) wise use of our resources. D) None of the above because scarcity cannot be eliminated. Answer: D Topic: Scarcity Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 11) As an economic concept, scarcity applies to A) both money and time. B) money but not time. C) time but not money. D) neither time nor money. Answer: A Topic: Scarcity Skill: Conceptual Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 4 Copyright © 2012 Pearson Education, Inc. 12) In every economic system, choices must be made because resources are ________ and our wants are ________. A) unlimited; limited B) limited; unlimited C) unlimited; unlimited D) limited; limited Answer: B Topic: Scarcity Skill: Conceptual Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 13) The problem of "scarcity" applies A) only in industrially developed countries because resources are scarce in these countries. B) only in underdeveloped countries because there are few productive resources in these countries. C) only in economic systems that are just beginning to develop because specialized resources are scarce. D) to all economic systems, regardless of their level of development. Answer: D Topic: Scarcity Skill: Conceptual Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 14) Scarcity requires that people must A) cooperate. B) compete. C) trade. D) make choices. Answer: D Topic: Scarcity Skill: Conceptual Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 15) People must make choices because A) most people enjoy shopping. B) of scarcity. C) there are many goods available. D) None of the above answers is correct. Answer: B Topic: Scarcity Skill: Conceptual Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 5 Copyright © 2012 Pearson Education, Inc. 16) An incentive A) could be a reward but could not be a penalty. B) could be a penalty but could not be a reward. C) could be either a reward or a penalty. D) is the opposite of a tradeoff. Answer: C Topic: Incentive Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 17) An inducement to take a particular action is called A) the marginal benefit. B) the marginal cost. C) opportunity cost. D) an incentive. Answer: D Topic: Incentive Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 18) Economics is best defined as A) how people make money and profits in the stock market. B) making choices from an unlimited supply of goods and services. C) making choices with unlimited wants but facing a scarcity of resources. D) controlling a budget for a household. Answer: C Topic: Definition of Economics Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 19) The study of economics A) focuses mainly on individual consumers. B) arises from the fact that our wants exceed available resources. C) recognizes that scarcity does not affect rich nations. D) deals mainly with microeconomics. Answer: B Topic: Definition of Economics Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 6 Copyright © 2012 Pearson Education, Inc. 20) Economics is best defined as the science of choice and how people cope with A) differences in wants. B) differences in needs. C) scarcity. D) different economic systems. Answer: C Topic: Definition of Economics Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 21) Economics is the study of A) the distribution of surplus goods to those in need. B) affluence in a morally bankrupt world. C) the choices we make because of scarcity. D) ways to reduce wants to eliminate the problem of scarcity. Answer: C Topic: Definition of Economics Skill: Conceptual Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 22) The study of the choices made by individuals is part of the definition of A) microeconomics. B) positive economics. C) macroeconomics. D) normative economics. Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 23) In part, microeconomics is concerned with A) how a business firm decides upon the amount it produces and the price it sets. B) changes in the economy's total output of goods and services over long periods of time. C) factors that explain changes in the unemployment rate over time. D) the Federal Reserve's policy decisions. Answer: A Topic: Microeconomics and Macroeconomics Skill: Recognition Question history: Previous edition, Chapter 1 AACSB: Reflective Thinking 7 Copyright © 2012 Pearson Education, Inc. 24)