Test Bank for Economics, 9th edition by Glenn Hubbard
q q q q q q q q
Economics qDigital qUpdate, q9e q(Hubbard)
Chapter q1 Economics: qFoundations qand
qModels
1.1 Three qKey qEconomic qIdeas
1) Apple qassembles qmost qiPhones qin qChina qand qIndia qbecause qthe qlower qwages qearned qby qChinese
qand qIndian qworkers qand qtheir qexperience qin qelectronics qmanufacturing qreduce qthe qcosts qof
qassembling qiPhones. qThis qis qan qexample qof qApple qreacting qto qwhich qof qthe qthree qkey qeconomic
qideas?
A) People qare qrational.
B) People qrespond qto qeconomic qincentives.
C) Optimal qdecisions qare qmade qat qthe qmargin.
D) Firms qattempt qto qmaximize
qrevenues. qAnswer: q B
Diff: q2
Topic: q q Scarcity
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
Special qFeature: q q Chapter qOpener: qShould qApple qManufacture qthe qiPhone qin qthe qUnited qStates?
2) In qeconomics, qchoices qmust qbe qmade qbecause qwe qlive qin qa qworld qof
A) unemployment.
B) scarcity.
C) greed.
D) unlimited
qresources. qAnswer:
q B
Diff: q1
Topic: q q Scarcity
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
3) Which qof qthe qfollowing qstatements qabout qscarcity qis qtrue?
A) Scarcity qrefers qto qthe qsituation qin qwhich qunlimited qwants qexceed qlimited qresources.
B) Scarcity qis qnot qa qproblem qfor qthe qwealthy.
C) Scarcity qis qonly qa qproblem qwhen qa qcountry qhas qtoo qlarge qa qpopulation.
D) Scarcity qonly qarises qwhen qthere qis qa qwide qdisparity qin qincome
qdistribution. qAnswer: q A
Diff: q1
Topic: q q Scarcity
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
1
,4) The qbasic qeconomic qproblem qof q qhas qalways qexisted qand qwill qcontinue qto qexist.
A) scarcity
B) efficiency
C) inflation
D) recession
qAnswer: qA
qDiff: q1
Topic: q q Scarcity
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
5) By qdefinition, qeconomics qis qthe qstudy qof
A) how qto qmake qmoney qin qthe qstock qmarket.
B) how qto qmake qmoney qin qa qmarket qeconomy.
C) the qchoices qpeople qmake qto qattain qtheir qgoals, qgiven qtheir qscarce qresources.
D) supply qand
qdemand. qAnswer: q C
Diff: q1
Topic: q q Scarcity
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
6) An qeconomic q qis qa qsimplified qversion qof qsome qaspect qof qeconomic qlife qused qto
qanalyze qan qeconomic qissue.
A) market
B) trade-off
C) variable
D) model
qAnswer:
q D qDiff: q1
Topic: q q Economic qModels
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
2
,7) Where qdo qeconomic qagents qsuch qas qindividuals, qfirms, qand qnations qinteract qwith qeach qother?
A) in qpublic qlocations qmonitored qby qthe qgovernment
B) in qany qarena qthat qbrings qtogether qbuyers qand qsellers
C) in qany qphysical qlocation qwhere qpeople qcan qphysically qget qtogether qfor qselling qgoods, qsuch qas
qshopping qmalls
D) in qany qlocation qwhere qtransactions qcan qbe qmonitored qby qconsumer qgroups qand qtaxed
qby qthe qgovernment
Answer: q B
qDiff: q1
Topic: q q Markets
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
8) In qeconomics, qthe qterm q qrefers qto qa qgroup qof qbuyers qand qsellers qof qa qproduct
qand qthe qarrangement qby qwhich qthey qcome qtogether qto qtrade.
A) collective
B) cooperative
C) market
D) trade-off
qAnswer: qC
qDiff: q1
Topic: q q Markets
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
9) Economists qassume qthat qindividuals
A) behave qin qunpredictable qways.
B) will qnever qtake qactions qto qhelp qothers.
C) prefer qto qlive qin qa qsociety qthat qvalues qfairness qabove qall qelse.
D) are qrational qand qrespond qto
qincentives. qAnswer: q D
Diff: q1
Topic: q q People qAre qRational
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
3
, 10) Economists qassume qthat qrational qbehavior qis quseful qin qexplaining qchoices qpeople qmake
A) because qirrational qpeople qdo qnot qmake qeconomic qchoices.
B) even qthough qpeople qmay qnot qbehave qrationally qall qthe qtime.
C) because qindividuals qact qrationally qall qthe qtime qin qall qcircumstances.
D) even qthough qpeople qrarely, qif qever, qbehave qin qa qrational
qmanner. qAnswer: q B
Diff: q2
Topic: q q People qAre qRational
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
11) Economists qassume qthat qrational qpeople qdo qall qof qthe qfollowing qexcept
A) use qall qavailable qinformation qas qthey qact qto qachieve qtheir qgoals.
B) undertake qactivities qthat qbenefit qothers qand qhurt qthemselves.
C) weigh qthe qbenefits qand qcosts qof qall qpossible qalternative qactions.
D) respond qto qeconomic
qincentives. qAnswer: q B
Diff: q2
Topic: q q People qAre qRational
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
12) Economics qdoes qnot qstudy qcorrect qor qincorrect qbehaviors qbut qrather qit qassumes qthat qeconomic
qagents qbehave q , qmeaning qthey qmake qthe qbest qdecisions qgiven qtheir qknowledge qof qthe qcosts qand
qbenefits.
A) equitably
B) rationally
C) emotionally
D) selfishly
qAnswer: qB
qDiff: q2
Topic: q q People qAre qRational
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
4
q q q q q q q q
Economics qDigital qUpdate, q9e q(Hubbard)
Chapter q1 Economics: qFoundations qand
qModels
1.1 Three qKey qEconomic qIdeas
1) Apple qassembles qmost qiPhones qin qChina qand qIndia qbecause qthe qlower qwages qearned qby qChinese
qand qIndian qworkers qand qtheir qexperience qin qelectronics qmanufacturing qreduce qthe qcosts qof
qassembling qiPhones. qThis qis qan qexample qof qApple qreacting qto qwhich qof qthe qthree qkey qeconomic
qideas?
A) People qare qrational.
B) People qrespond qto qeconomic qincentives.
C) Optimal qdecisions qare qmade qat qthe qmargin.
D) Firms qattempt qto qmaximize
qrevenues. qAnswer: q B
Diff: q2
Topic: q q Scarcity
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
Special qFeature: q q Chapter qOpener: qShould qApple qManufacture qthe qiPhone qin qthe qUnited qStates?
2) In qeconomics, qchoices qmust qbe qmade qbecause qwe qlive qin qa qworld qof
A) unemployment.
B) scarcity.
C) greed.
D) unlimited
qresources. qAnswer:
q B
Diff: q1
Topic: q q Scarcity
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
3) Which qof qthe qfollowing qstatements qabout qscarcity qis qtrue?
A) Scarcity qrefers qto qthe qsituation qin qwhich qunlimited qwants qexceed qlimited qresources.
B) Scarcity qis qnot qa qproblem qfor qthe qwealthy.
C) Scarcity qis qonly qa qproblem qwhen qa qcountry qhas qtoo qlarge qa qpopulation.
D) Scarcity qonly qarises qwhen qthere qis qa qwide qdisparity qin qincome
qdistribution. qAnswer: q A
Diff: q1
Topic: q q Scarcity
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
1
,4) The qbasic qeconomic qproblem qof q qhas qalways qexisted qand qwill qcontinue qto qexist.
A) scarcity
B) efficiency
C) inflation
D) recession
qAnswer: qA
qDiff: q1
Topic: q q Scarcity
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
5) By qdefinition, qeconomics qis qthe qstudy qof
A) how qto qmake qmoney qin qthe qstock qmarket.
B) how qto qmake qmoney qin qa qmarket qeconomy.
C) the qchoices qpeople qmake qto qattain qtheir qgoals, qgiven qtheir qscarce qresources.
D) supply qand
qdemand. qAnswer: q C
Diff: q1
Topic: q q Scarcity
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
6) An qeconomic q qis qa qsimplified qversion qof qsome qaspect qof qeconomic qlife qused qto
qanalyze qan qeconomic qissue.
A) market
B) trade-off
C) variable
D) model
qAnswer:
q D qDiff: q1
Topic: q q Economic qModels
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
2
,7) Where qdo qeconomic qagents qsuch qas qindividuals, qfirms, qand qnations qinteract qwith qeach qother?
A) in qpublic qlocations qmonitored qby qthe qgovernment
B) in qany qarena qthat qbrings qtogether qbuyers qand qsellers
C) in qany qphysical qlocation qwhere qpeople qcan qphysically qget qtogether qfor qselling qgoods, qsuch qas
qshopping qmalls
D) in qany qlocation qwhere qtransactions qcan qbe qmonitored qby qconsumer qgroups qand qtaxed
qby qthe qgovernment
Answer: q B
qDiff: q1
Topic: q q Markets
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
8) In qeconomics, qthe qterm q qrefers qto qa qgroup qof qbuyers qand qsellers qof qa qproduct
qand qthe qarrangement qby qwhich qthey qcome qtogether qto qtrade.
A) collective
B) cooperative
C) market
D) trade-off
qAnswer: qC
qDiff: q1
Topic: q q Markets
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
9) Economists qassume qthat qindividuals
A) behave qin qunpredictable qways.
B) will qnever qtake qactions qto qhelp qothers.
C) prefer qto qlive qin qa qsociety qthat qvalues qfairness qabove qall qelse.
D) are qrational qand qrespond qto
qincentives. qAnswer: q D
Diff: q1
Topic: q q People qAre qRational
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
3
, 10) Economists qassume qthat qrational qbehavior qis quseful qin qexplaining qchoices qpeople qmake
A) because qirrational qpeople qdo qnot qmake qeconomic qchoices.
B) even qthough qpeople qmay qnot qbehave qrationally qall qthe qtime.
C) because qindividuals qact qrationally qall qthe qtime qin qall qcircumstances.
D) even qthough qpeople qrarely, qif qever, qbehave qin qa qrational
qmanner. qAnswer: q B
Diff: q2
Topic: q q People qAre qRational
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
11) Economists qassume qthat qrational qpeople qdo qall qof qthe qfollowing qexcept
A) use qall qavailable qinformation qas qthey qact qto qachieve qtheir qgoals.
B) undertake qactivities qthat qbenefit qothers qand qhurt qthemselves.
C) weigh qthe qbenefits qand qcosts qof qall qpossible qalternative qactions.
D) respond qto qeconomic
qincentives. qAnswer: q B
Diff: q2
Topic: q q People qAre qRational
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
12) Economics qdoes qnot qstudy qcorrect qor qincorrect qbehaviors qbut qrather qit qassumes qthat qeconomic
qagents qbehave q , qmeaning qthey qmake qthe qbest qdecisions qgiven qtheir qknowledge qof qthe qcosts qand
qbenefits.
A) equitably
B) rationally
C) emotionally
D) selfishly
qAnswer: qB
qDiff: q2
Topic: q q People qAre qRational
*: q q Recurring
Learning qOutcome: q Micro-1: qIdentify qthe qbasic qprinciples qof qeconomics qand qexplain qhow qto qthink
qlike qan qeconomist
AACSB: q q Analytical qthinking
4
