Enter your answer to each of the questions in the blank to the left of the question. Be sure to use lowercase letters only!
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1. Economics is the study of how societies use __________ resources to produce __________ and distribute them among different people.
a. abundant; tires
b. scarce; commodities
c. scarce; tires
d. abundant; commodities
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2. The situation in which there is not enough of something to satisfy all the desires for that thing is called:
a. abundance.
b. scarcity.
c. demand.
d. plethora.
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3. The situation in which limited resources are being used most effectively is called:
a. efficient.
b. economic.
c. abundant.
d. scarce.
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4. The study of the behavior of firms, individual markets, and households is called:
a. normative economics.
b. positive economics.
c. macroeconomics.
d. microeconomics.
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5. The study of the behavior of the overall economy is called:
a. normative economics.
b. positive economics.
c. macroeconomics.
d. microeconomics.
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6. Adam Smith wrote _______; John Maynard Keynes wrote _______.
a. The Wealth of Nations; The General Theory of Employment, Interest and Money.
b. The General Theory of Employment, Interest and Money; The Wealth of Nations.
c. The Wealth of Nations; How the Business Cycle Works.
d. The Invisible Hand; The General Theory of Employment, Interest and Money.
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7. If we believed that event b occurs simply because it follows event a, then we would be trapped by the:
a. failure to hold other things equal.
b. fallacy of composition.
c. post hoc fallacy.
d. Adam Smith syndrome.
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8. The three fundamental questions of economic organization are:
a. when, for whom, and how.
b. how, what, and for whom.
c. who, how, and when.
d. what, who, and why.
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9. Economic questions that can be answered by examining data and making observations are part of:
a. normative economics.
b. positive economics.
c. macroeconomics.
d. microeconomics.
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10. Economic questions that can be answered through political debate and decisions are part of:
a. normative economics.
b. positive economics.
c. macroeconomics.
d. microeconomics.
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11. An economy which allows firms and individuals to decide the answers to the three fundamental questions of economic organization is called a:
a. mixed economy.
b. market economy.
c. normative economy.
d. command economy.
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12. The extreme case of a market economy is one in which government does not intervene in economic decisions. This kind of market economy is called a _______ market.
a. command
b. mixed
c. weak
d. laissez-faire
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13. An economy in which government make all important economic decisions is called a:
a. mixed economy.
b. market economy.
c. normative economy.
d. command economy.
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14. Most economies are in fact:
a. mixed economies.
b. market economies.
c. normative economies.
d. command economies.
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15. The three broad categories of inputs to production are:
a. earth, wind, and fire.
b. earth, water, and fire.
c. land, labor, and capital.
d. land, labor, and money.
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16. The production-possibility frontier (PPF) shows the _______ of production that can be obtained by an economy, given _______.
a. minimum amounts; technology and inputs to production
b. minimum amounts; efficiency
c. maximum amounts; a command economy
d. maximum amounts; technology and inputs to production
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17. Points _______ the PPF are attainable, but inefficient. Points _______ the PPF are attainable and efficient. Points _______ the PPF are unattainable given available technology and resources.
a. outside; on; inside
b. inside; on; outside
c. inside; outside; on
d. on; inside; outside
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18. To show general economic growth on the PPF, one would:
a. shift the PPF inward.
b. shift the PPF outward.
c. leave the PPF alone, but draw a circle around the origin.
d. draw a line from the origin to the previous PPF.
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19. The _______ of a decision is the value of the good or service forgone.
a. opportunity cost
b. efficiency
c. economics
d. scarcity
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20. Productive _______ exists when an economy cannot produce more of one good without producing less of another good.
a. scarcity
b. economics
c. efficiency
d. opportunity cost
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