Name:________________________Class:___________________Date:__________ID:AExam1StudyGuide
MultipleChoice
Identifythechoicethatbestcompletesthestatementoranswersthequestion.
____1.Whichofthefollowingquestionsisnotansweredbythedecisionsthateverysocietymustmake
a.Whatdeterminesconsumerpreferences
b.Whatgoodswillbeproduced
c.Whowillproducethegoods
d.Whowillconsumethegoods
____2.Economicsisthestudyof
a.howsocietymanagesitsscarceresources.
b.thegovernment'sroleinsociety.
c.howamarketsystemfunctions.
d.howtoincreaseproduction.
____3.Whenyoucalculateyourtruecostsofgoingtocollege,whatportionofyourroom-and-boardexpensesshouldbeincluded
a.Yourfullroom-and-boardexpensesshouldalwaysbeincluded.
b.Noneofyourroom-and-boardexpensesshouldeverbeincluded.
c.Youshouldincludeonlytheamountbywhichyourroom-and-boardexpensesexceedthe
incomeyouearnwhileattendingcollege.
d.Youshouldincludeonlytheamountbywhichyourroom-and-boardexpensesexceedthe
expensesforrentandfoodifyouwerenotincollege.
____4.Theopportunitycostofanitemis
a.thenumberofhoursneededtoearnmoneytobuytheitem.
b.whatyougiveuptogetthatitem.
uallylessthanthedollarvalueoftheitem.
d.thedollarvalueoftheitem.
____5.Adonutshopsellsfreshbakeddonutsfrom5a.m.until3p.m.everyday.Theshopdoesnotsellday-olddonuts,soallunsolddonutsarethrownawayat3p.m.eachday.Thecostofmakingandsellingadozen
donutsis$1.50;therearenocostsassociatedwiththrowingdonutsaway.Ifthemanagerhas10dozendonutsleftat2:30p.m.onaparticularday,whichofthefollowingalternativesismostattractive
a.Lowerthepriceoftheremainingdonuts,evenifthepricefallsbelow$1.50perdozen.
b.Lowerthepriceoftheremainingdonuts,butundernocircumstancesshouldtheprice
fallbelow$1.50perdozen.
c.Throwthedonutsawayandproduce10fewerdozendonutstomorrow.
d.Startingtomorrow,lowerthepriceonalldonutssotheywillallbesoldearlierinthe
day.
____6.Evidenceindicatesthatseatbeltlawshaveledto
a.fewerpedestriandeaths.
b.fewerautomobileaccidents.
c.fewerdeathsperautomobileaccident.
d.Alloftheabovearecorrect.
____7.Whichofthefollowingstatementsabouttradeisfalse
a.Tradeincreasescompetition.
b.Withtrade,onecountrywinsandonecountryloses.
c.Bulgariacanbenefit,potentially,fromtradewithanyothercountry.
d.Tradeallowspeopletobuyagreatervarietyofgoodsandservicesatlowercost.
____8.SenatorSmart,whounderstandseconomicprinciples,istryingtoconvinceworkersinherdistrictthattradewithothercountriesisbeneficial.SenatorSmartshouldarguethattradecanbebeneficial
a.onlyifitallowsustoobtainthingsthatwecouldn'tmakeforourselves.
b.becauseitallowsspecialization,whichincreasestotaloutput.
c.tousifwecangainandtheothersinvolvedinthetradelose.
d.inonlyalimitednumberofcircumstancesbecauseothersaretypicallyself-interested.
____9.Thedecisionsoffirmsandhouseholdsareguidedbypricesandself-interestina
mandeconomy.
b.centrally-plannedeconomy.
c.marketeconomy.
____10.Theterm"invisiblehand"wascoinedby
a.AdamSmith.
b.DavidRicardo.
c.KarlMarx.
d.BenjaminFranklin.
____11.The"invisiblehand"directseconomicactivitythrough
a.advertising.
b.prices.
c.centralplanning.
ernmentregulations.
____12.Marketeconomiesaredistinguishedfromothertypesofeconomieslargelyonthebasisof
a.thepoliticalaffiliationsofgovernmentofficials.
b.theprocessbywhichgovernmentofficialsareelectedorappointed.
c.thewaysinwhichscarceresourcesareallocate
d.
d.thenumberofretailoutletsavailabletoconsumers.
____13.Whichoftheseactivitieswillmostlikelyresultinanexternalbenefit
a.Acollegestudentbuysadeckofcardstoplaysolitaireinherdormroom.
b.Anelderlywomanplantsaflowergardenonthevacantlotnexttoherhouse.
c.Anexecutivepurchasesabooktoreadonabusinesstrip.
d.Aten-year-olduseshisallowancetobuynewNikeshoes.
____14.Thefactthatdifferentcountriesexperiencedifferentstandardsoflivingislargelyexplainedbydifferencesinthosecountries'
a.populations.
b.productivitylevels.
c.locations.
d.noneoftheabove;economistsarepuzzledbydifferencesinstandardsoflivingaround