Chapter 1: Ten Principles of Economics
Q1001.
The households and societies face many decisions because ……
a. resources are scarce.
b. goods and services are not scarce.
c. incomes fluctuate with business cycles.
d. people, by nature, tend to disagree.
Q1002.
The study of how society manages its scarce resources is known as:
a. production methods.
b. Economics.
c. how households decide who performs which tasks.
d. the interaction of business and government.
Q1003.
The word “equality” is used to describe a situation in which
a. each member of society has the same income.
b. each member of society has access to abundant quantities of goods and services,
regardless of his or her income.
c. society is getting the maximum benefits from its scarce resources.
d. society's resources are used efficiently.
Q1004.
The property of society getting the most it can from its scarce resources is called
a. equity.
b. efficiency.
c. equality.
d. efficacy.
Q1005.
People say that "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.
Q1006.
The term opportunity cost is known as:
a. the number of hours needed to earn money to buy the item.
b. what you give up to get that item.
c. usually less than the dollar value of the item.
d. the dollar value of the item.
Q1007.
A rational decision maker takes an action only if the
a. marginal benefit is less than the marginal cost.
b. marginal benefit is greater than the marginal cost.
c. average benefit is greater than the average cost.
d. marginal benefit is greater than both the average cost and the marginal cost.
Q1008.
“When the price of an apple rises, people decide to eat fewer apples” mean people
respond to
a. laws.
b. incentives.
c. punishments more than rewards.
d. rewards more than punishments.
Q1009.
Which of the following statements about trade is true EXCEPT?
a. Trade increases competition.
b. With trade, one country wins and one country loses.
c. Bulgaria can benefit, potentially, from trade with any other country.
d. Trade allows people to buy a greater variety of goods and services at lower cost.
Q1010.
The invisible hand is found by
a. Isaac Newton.
b. Adam Smith.
c. Philip Kotler.
d. Karl Marx.
Q1011.
Market failure causes
a. externalities and market power.
b. market power and incorrect forecasts of consumer demand.
c. externalities and foreign competition.
d. incorrect forecasts of consumer demand and foreign competition.
Q1012.
Increasing the amount of money in the economy results in:
a. the income effect.
b. inflation.
c. deflation.
d. the substitution effect.
Q1013.
Which following factor explains differences in living standards across countries?
a. the quantity of money
b. the level of unemployment
c. productivity
d. equality
Q1014.
What is the most correct statement about the relationship between inflation and
unemployment?
a. In the short run, falling inflation is associated with falling unemployment.
b. In the short run, falling inflation is associated with rising unemployment.
c. In the long run, falling inflation is associated with falling unemployment.
d. In the long run, falling inflation is associated with rising unemployment.
Short Answers
Chapter 1: Ten Principles of Economics
1045. (0.5 point)
List four principles that describe how people make decision.
1046. (0.5 point)
List three principles that describe how people interact.
1047. (0.5 point)
List the three principles that describe how the economy as a whole works.