MULTIPLE CHOICE QUESTIONS ON Ecomnomisc 1) Economics is best defined as the stud
ID: 1091667 • Letter: M
Question
MULTIPLE CHOICE QUESTIONS ON Ecomnomisc
1) Economics is best defined as the study of:
A) financial decision-making.
B) how consumers make purchasing decisions.
C) choices made by people faced with scarcity.
D) inflation, unemployment, and economic growth.
2) Scarcity can best be defined as a situation in which:
A) there are no buyers willing to purchase what sellers have produced.
B) there are not enough goods to satisfy all of the buyers demands.
C) resources are limited in quantity and can be used in different ways.
D) there is more than enough money to satisfy consumers wants.
3) Which of the following is NOT a factor of production?
A) money
B) human capital
C) physical capital
D) labor
4) Printing presses, forklifts and assembly plants are examples of which factor of production?
A) physical capital
B) human capital
C) entrepreneurship
D) labor
5) Ceteris paribus is the Latin expression meaning:
A) other variables are held fixed.
B) let buyer beware.
C) think at the margin.
D) for every action there is an equal and opposite reaction.
6) When Bob has to give up lunch in order to have a fancy dinner, the economic principle that is highlighted by his situation is the:
A) marginal principle.
B) spillover principle.
C) principle of opportunity cost.
D) reality principle.
16) The additional cost resulting from a small increase in some activity is called the:
A) opportunity cost.
B) marginal benefit.
C) marginal cost.
D) diminishing returns of the activity.
17) The principle that individuals and firms pick the activity level where the incremental benefit of that activity equals the incremental cost of that activity is known as the:
A) marginal principle.
B) principle of opportunity cost.
C) principle of diminishing returns.
D) spillover principle.
18) If a consumer can buy four DVDs for $44 and five DVDs for $50, then the marginal cost of the fifth DVD is:
A) $10.
B) $50.
C) $11.
D) $6.
19) If a consumer can buy four pizzas for $24 and five pizzas for $25, then the marginal cost of the fifth pizza is:
A) $25.
B) $5.
C) $6.
D) $1.
22) Adamsonia and Smithsonia are two countries that both produce tea and coffee. The two countries have similar resource bases. Adamsonia can either produce 3000 tea or 6000 coffee. Smithsonia can either produce 2000 tea or 5000 coffee. In the state of autarky, Smithsonia consumed 1000 tea. Assuming Smithsonia used all her resources available during the state of autarky, how much coffee was she able to consume?
A) 2000
B) 1000
C) 5000
D) 2500
23) Adamsonia and Smithsonia are two countries that both produce tea and coffee. The two countries have similar resource bases. Adamsonia can either produce 3000 tea or 6000 coffee. Smithsonia can either produce 2000 tea or 5000 coffee. In the state of autarky, Adamsonia was producing 2000 tea and in the state of autarky Smithsonia was producing 2500 coffee. If the two countries begin to trade based on the theory of comparative advantage, (using a price of 2.25 coffee per tea), and if Adamsonia wishes to remain at 2000 tea, how many bags of coffee would Smithsonia consume after trade?
A) 2250
B) 5000
C) 2750
D) 2500
24) Adamsonia and Smithsonia are two countries that both produce tea and coffee. The two countries have similar resource bases. Adamsonia can either produce 3000 tea or 6000 coffee. Smithsonia can either produce 2000 tea or 5000 coffee. In the state of autarky, Adamsonia was producing 2000 tea and in the state of autarky Smithsonia was producing 2500 coffee. If the two countries begin to trade based on the theory of comparative advantage, (using a price of 2.25 coffee per tea), and if Adamsonia wishes to remain at 2000 tea, how many bags of coffee would Adamsonia consume after trade?
A) 2250
B) 2750
C) 5000
D) 2500
Explanation / Answer
1-C) choices made by people faced with scarcity.
2-C) resources are limited in quantity and can be used in different ways.
3A) money
4-A) physical capital
5-A) other variables are held fixed
6-B) spillover principle
16-C) marginal cost.
17-A) marginal principle.
18-A) $10
19-D) $1.
22-C) 5000
23-A) 2250
24-B) 2750
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