Revision Material for Principles of
Microeco- nomics Mankiw 6th
Edition
Chapter 1 Ten Principles of Economics
MULTIPLE CHOICE
1. The English word that comes from the Greek word for "one who manages a household" is
a. market.
b. consumer.
c. producer.
d. economy.
ANS: D PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economy MSC: Definitional
2. The word “economy” comes from the Greek word oikonomos, which means
a. “environment.”
b. “production.”
c. “one who manages a household.”
d. “one who makes decisions.”
ANS: C PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economy MSC: Definitional
3. Resources are
a. scarce for households but plentiful for economies.
b. plentiful for households but scarce for economies.
c. scarce for households and scarce for economies.
d. plentiful for households and plentiful for economies.
ANS: C PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Resources | Scarcity MSC: Interpretive
4. In considering how to allocate its scarce resources among its various members, a household considers
a. each member’s abilities.
b. each member’s efforts.
c. each member’s desires.
d. all of the above
ANS: D PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
5. Economics deals primarily with the concept of
a. scarcity.
b. money.
c. poverty.
d. banking.
ANS: A PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Scarcity MSC: Definitional
1
,2 ❖ Chapter 1/Ten Principles Of Economics
6. Which of the following is correct?
a. The word economy comes from the Greek word for “rational thinker.”
b. Economists study the management of scarce resources.
c. Because economists believe that people pursue their best interests, they are not interested in how
people interact.
d. All of the above are correct.
ANS: B PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economics MSC: Definitional
7. The overriding reason why households and societies face many decisions is that
a. resources are scarce.
b. goods and services are not scarce.
c. incomes fluctuate with business cycles.
d. people, by nature, tend to disagree.
ANS: A PTS: 1 DIF: 2 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
8. The phenomenon of scarcity stems from the fact that
a. most economies’ production methods are not very good.
b. in most economies, wealthy people consume disproportionate quantities of goods and services.
c. governments restrict production of too many goods and services.
d. resources are limited.
ANS: D PTS: 1 DIF: 2 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
9. Approximately what percentage of the world's economies experience scarcity?
a. 10%
b. 40%
c. 85%
d. 100%
ANS: D PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
10. When a society cannot produce all the goods and services people wish to have, it is said that the economy is expe-
riencing
a. scarcity.
b. surpluses.
c. inefficiencies.
d. inequalities.
ANS: A PTS: 1 DIF: 2 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
11. Which of the following products would be considered scarce?
a. automobiles
b. baseballs autographed by Babe Ruth
c. pickles
d. All of the above are correct.
ANS: D PTS: 1 DIF: 2 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
, Chapter 1/Ten Principles of Economics ❖ 3
12. Economics is the study of
a. production methods.
b. how society manages its scarce resources.
c. how households decide who performs which tasks.
d. the interaction of business and government.
ANS: B PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economies | Scarcity MSC: Definitional
13. In most societies, resources are allocated by
a. a single central planner.
b. a small number of central planners.
c. those firms that use resources to provide goods and services.
d. the combined actions of millions of households and firms.
ANS: D PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Resource allocation MSC: Interpretive
14. Oil is considered to be a non-renewable energy source. Oil
a. is an unlimited resource.
b. is a scarce resource.
c. is not a productive resource.
d. has no opportunity cost.
ANS: B PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Applicative
15. Which of the following is not an example of scarcity?
a. Only some people can afford to buy a Ferrari.
b. Every individual in society cannot attain the highest standard of living to which he or she might
aspire.
c. Doug has an unlimited supply of apples in his orchard.
d. Each member of a household cannot get everything he or she wants.
ANS: C PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Applicative
16. Which of the following is a decision that economists study?
a. how much people work
b. what people buy
c. how much money people save
d. All of the above are correct.
ANS: D PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economics MSC: Interpretive
17. Which of the following is an example of something economists study?
a. Kate chooses to work overtime to earn extra income for her family.
b. Ryan sells his economics textbook from last semester to his roommate for half the price of a new
textbook.
c. The unemployment rate in the United States is at its highest level in over fifty years.
d. All of the above are correct.
ANS: D PTS: 1 DIF: 2 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economics MSC: Interpretive
, 4 ❖ Chapter 1/Ten Principles Of Economics
HOW PEOPLE MAKE DECISIONS
1. The adage, "There is no such thing as a free lunch," means
a. even people on welfare have to pay for food.
b. the cost of living is always increasing.
c. people face tradeoffs.
d. all costs are included in the price of a product.
ANS: C PTS: 1 DIF: 1 REF: 1-1
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Tradeoffs MSC: Definitional
2. The adage, "There is no such thing as a free lunch," is used to illustrate the principle that
a. goods are scarce.
b. people face tradeoffs.
c. income must be earned.
d. households face many decisions.
ANS: B PTS: 1 DIF: 2 REF: 1-1
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Tradeoffs MSC: Interpretive
3. The phrase “no such thing as a free lunch” means
a. people must face tradeoffs.
b. rational people think at the margin.
c. people respond to incentives.
d. trade can make everyone better off.
ANS: A PTS: 1 DIF: 1 REF: 1-1
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Tradeoffs MSC: Interpretive
4. Which of the following statements best represents the principle represented by the adage, "There is no such thing
as a free lunch"?
a. Melissa can attend the concert only if she takes her sister with her.
b. Greg is hungry and homeless.
c. Brian must repair the tire on his bike before he can ride it to class.
d. Kendra must decide between going to Colorado or Cancun for spring break.
ANS: D PTS: 1 DIF: 3 REF: 1-1
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Tradeoffs MSC: Applicative
5. Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing
as a free lunch"?
a. Joe needs to pay his rent and his electric bill.
b. Pete must choose between buying a new flat screen television and buying his textbooks for this
semester.
c. Kevin must decide between studying for his economics exam and working at his part-time job.
d. Lisa can spend her money on a new sweater or a pair of jeans.
ANS: A PTS: 1 DIF: 3 REF: 1-1
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Tradeoffs MSC: Applicative
Microeco- nomics Mankiw 6th
Edition
Chapter 1 Ten Principles of Economics
MULTIPLE CHOICE
1. The English word that comes from the Greek word for "one who manages a household" is
a. market.
b. consumer.
c. producer.
d. economy.
ANS: D PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economy MSC: Definitional
2. The word “economy” comes from the Greek word oikonomos, which means
a. “environment.”
b. “production.”
c. “one who manages a household.”
d. “one who makes decisions.”
ANS: C PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economy MSC: Definitional
3. Resources are
a. scarce for households but plentiful for economies.
b. plentiful for households but scarce for economies.
c. scarce for households and scarce for economies.
d. plentiful for households and plentiful for economies.
ANS: C PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Resources | Scarcity MSC: Interpretive
4. In considering how to allocate its scarce resources among its various members, a household considers
a. each member’s abilities.
b. each member’s efforts.
c. each member’s desires.
d. all of the above
ANS: D PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
5. Economics deals primarily with the concept of
a. scarcity.
b. money.
c. poverty.
d. banking.
ANS: A PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Scarcity MSC: Definitional
1
,2 ❖ Chapter 1/Ten Principles Of Economics
6. Which of the following is correct?
a. The word economy comes from the Greek word for “rational thinker.”
b. Economists study the management of scarce resources.
c. Because economists believe that people pursue their best interests, they are not interested in how
people interact.
d. All of the above are correct.
ANS: B PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economics MSC: Definitional
7. The overriding reason why households and societies face many decisions is that
a. resources are scarce.
b. goods and services are not scarce.
c. incomes fluctuate with business cycles.
d. people, by nature, tend to disagree.
ANS: A PTS: 1 DIF: 2 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
8. The phenomenon of scarcity stems from the fact that
a. most economies’ production methods are not very good.
b. in most economies, wealthy people consume disproportionate quantities of goods and services.
c. governments restrict production of too many goods and services.
d. resources are limited.
ANS: D PTS: 1 DIF: 2 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
9. Approximately what percentage of the world's economies experience scarcity?
a. 10%
b. 40%
c. 85%
d. 100%
ANS: D PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
10. When a society cannot produce all the goods and services people wish to have, it is said that the economy is expe-
riencing
a. scarcity.
b. surpluses.
c. inefficiencies.
d. inequalities.
ANS: A PTS: 1 DIF: 2 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
11. Which of the following products would be considered scarce?
a. automobiles
b. baseballs autographed by Babe Ruth
c. pickles
d. All of the above are correct.
ANS: D PTS: 1 DIF: 2 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Interpretive
, Chapter 1/Ten Principles of Economics ❖ 3
12. Economics is the study of
a. production methods.
b. how society manages its scarce resources.
c. how households decide who performs which tasks.
d. the interaction of business and government.
ANS: B PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economies | Scarcity MSC: Definitional
13. In most societies, resources are allocated by
a. a single central planner.
b. a small number of central planners.
c. those firms that use resources to provide goods and services.
d. the combined actions of millions of households and firms.
ANS: D PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Resource allocation MSC: Interpretive
14. Oil is considered to be a non-renewable energy source. Oil
a. is an unlimited resource.
b. is a scarce resource.
c. is not a productive resource.
d. has no opportunity cost.
ANS: B PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Applicative
15. Which of the following is not an example of scarcity?
a. Only some people can afford to buy a Ferrari.
b. Every individual in society cannot attain the highest standard of living to which he or she might
aspire.
c. Doug has an unlimited supply of apples in his orchard.
d. Each member of a household cannot get everything he or she wants.
ANS: C PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Scarcity MSC: Applicative
16. Which of the following is a decision that economists study?
a. how much people work
b. what people buy
c. how much money people save
d. All of the above are correct.
ANS: D PTS: 1 DIF: 1 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economics MSC: Interpretive
17. Which of the following is an example of something economists study?
a. Kate chooses to work overtime to earn extra income for her family.
b. Ryan sells his economics textbook from last semester to his roommate for half the price of a new
textbook.
c. The unemployment rate in the United States is at its highest level in over fifty years.
d. All of the above are correct.
ANS: D PTS: 1 DIF: 2 REF: 1-0
NAT: Analytic LOC: The study of economics and definitions in economics
TOP: Economics MSC: Interpretive
, 4 ❖ Chapter 1/Ten Principles Of Economics
HOW PEOPLE MAKE DECISIONS
1. The adage, "There is no such thing as a free lunch," means
a. even people on welfare have to pay for food.
b. the cost of living is always increasing.
c. people face tradeoffs.
d. all costs are included in the price of a product.
ANS: C PTS: 1 DIF: 1 REF: 1-1
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Tradeoffs MSC: Definitional
2. The adage, "There is no such thing as a free lunch," is used to illustrate the principle that
a. goods are scarce.
b. people face tradeoffs.
c. income must be earned.
d. households face many decisions.
ANS: B PTS: 1 DIF: 2 REF: 1-1
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Tradeoffs MSC: Interpretive
3. The phrase “no such thing as a free lunch” means
a. people must face tradeoffs.
b. rational people think at the margin.
c. people respond to incentives.
d. trade can make everyone better off.
ANS: A PTS: 1 DIF: 1 REF: 1-1
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Tradeoffs MSC: Interpretive
4. Which of the following statements best represents the principle represented by the adage, "There is no such thing
as a free lunch"?
a. Melissa can attend the concert only if she takes her sister with her.
b. Greg is hungry and homeless.
c. Brian must repair the tire on his bike before he can ride it to class.
d. Kendra must decide between going to Colorado or Cancun for spring break.
ANS: D PTS: 1 DIF: 3 REF: 1-1
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Tradeoffs MSC: Applicative
5. Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing
as a free lunch"?
a. Joe needs to pay his rent and his electric bill.
b. Pete must choose between buying a new flat screen television and buying his textbooks for this
semester.
c. Kevin must decide between studying for his economics exam and working at his part-time job.
d. Lisa can spend her money on a new sweater or a pair of jeans.
ANS: A PTS: 1 DIF: 3 REF: 1-1
NAT: Analytic LOC: Scarcity, tradeoffs, and opportunity cost
TOP: Tradeoffs MSC: Applicative
