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Virginia Tech EC 201 EC201 Chapter 1 Practice Quiz 1)Economics is the study of how: A)Best to use society's scarce resources

Economics

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Virginia Tech

EC 201

EC201 Chapter 1 Practice Quiz

1)Economics is the study of how:

A)Best to use society's scarce resources.

B)            Society spends the income of individuals.

C)            Society purchases resources, given its macroeconomic goals.

D)           Individual market participants decide what to produce given fixed resource constraints.

 

2.            A consequence of the economic problem of scarcity is that:

A)           Choices have to be made about how resources are used.

B)            There is never too much of any good or service produced.

C)            The production of goods and services must be controlled by the government.

D)           The production-possibilities curve is bowed outward.

 

3.            Which of the following performs the role of both capital and land?

A)           A manufacturing plant and the property on which it is located.

B)            A delivery van.

C)            A mine that has been vacated because it is no longer profitable.

D)           All of the above.

 

4.            An entrepreneur is:

A)           An innovator.

B)            Someone who brings resources together and produces a product.

C)            A risk taker.

D)           All of the above.

 

5.            Opportunity cost is:

A)           Only measured in dollars and cents.

B)            The dollar cost to society of producing the goods.

C)            The difficulty associated with using one good in place of another.

D)           The alternative that must be given up in order to get something else.

 

6.            The alternative combinations of goods and services that can be produced in a given time period with all available resources and technology is referred to as:

A)           Opportunity cost.            B) Factors of production.              C) Production possibilities.           D) Capital.

 

7.            According to the law of increasing opportunity costs:

A)           Greater production leads to greater inefficiency.

B)            Greater production means factor prices rise.

C)            Greater production of one good requires increasingly larger sacrifices of other

goods.

D)           Higher opportunity costs induce higher output per unit of input.

 

8.            In terms of the production-possibilities curve, inefficiency is represented by:

A)           All points on the curve. C)            All points outside the curve. B)  All points inside the curve.           D)           A rightward shift of the curve.

 

 

9.            A technological advance would best be represented by:

A)           A shift outward of the production-possibilities curve.

B)            A shift inward of the production-possibilities curve.

C)            A movement from inside the production-possibilities curve to a point on the production-

possibilities curve.

D)           A movement from the production-possibilities curve to a point inside the production-

possibilities curve.

 

10.          A mixed economy:

A)           Is justified by the superiority of laissez faire over government intervention. B)   Utilizes both market and nonmarket signals to allocate goods and services.

C)            Relies on the use of central planning by private firms rather than the government.

D)           All of the above.

 

11.          The invisible hand refers to:

A)           Intervention in the economy by the government bureaucrats we do not see and

 

over

 

 

whom we have no control.

B)            Undiscovered natural resources.

C)            The allocation of resources by market forces.

D)           The person who has the responsibility to coordinate all the markets in a market economy.