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Chapterȱ1 TheȱScopeȱandȱMethodȱofȱEconomics
1.1 WhyȱStudyȱEconomics?
1 MultipleȱChoice
1) WhichȱofȱtheȱfollowingȱisȱNOTȱlistedȱinȱtheȱbookȱasȱaȱreasonȱtoȱstudyȱeconomics?
A) toȱlearnȱaȱwayȱofȱthinking B) toȱunderstandȱsocietyȱandȱglobalȱaffairs
C) toȱbeȱanȱinformedȱvoter D) toȱlearnȱhowȱtoȱmakeȱlotsȱofȱmoney
Answer: D
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
2) Amongȱtheȱfundamentalȱconceptsȱinȱeconomicsȱare
A) opportunityȱcost. B) marginalism.
C) efficientȱmarkets. D) allȱofȱtheȱabove
Answer: D
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
3) Whichȱofȱtheȱfollowingȱisȱtheȱbestȱdefinitionȱofȱeconomics?
A) theȱstudyȱofȱhowȱindividualsȱandȱsocietiesȱchooseȱtoȱuseȱtheȱscarceȱresourcesȱthatȱnature
andȱpreviousȱgenerationsȱhaveȱprovided
B) theȱstudyȱofȱhowȱconsumersȱspendȱtheirȱincome
C) theȱstudyȱofȱhowȱbusinessȱfirmsȱdecideȱwhatȱinputsȱtoȱhireȱandȱwhatȱoutputsȱtoȱproduce
D) theȱstudyȱofȱhowȱtheȱfederalȱgovernmentȱallocatesȱtaxȱdollars
Answer: A
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Definition
4) TheȱriseȱofȱtheȱmodernȱfactoryȱsystemȱinȱEnglandȱduringȱtheȱlateȱeighteenthȱandȱearly
nineteenthȱcenturiesȱisȱknownȱasȱthe
A) GreatȱMigration. B) IndustrialȱRevolution.
C) WealthȱofȱNations. D) DarkȱAges.
Answer: B
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
1
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5) WhichȱofȱtheȱfollowingȱstatementsȱisȱNOTȱcorrect?
A) Economicsȱisȱaȱbehavioralȱscience.
B) Inȱlargeȱmeasure,ȱeconomicsȱisȱtheȱstudyȱofȱhowȱpeopleȱmakeȱchoices.
C) Ifȱpovertyȱwasȱeliminatedȱthereȱwouldȱbeȱnoȱreasonȱtoȱstudyȱeconomics.
D) Economicȱanalysisȱcanȱbeȱusedȱtoȱexplainȱhowȱbothȱindividualsȱandȱsocietiesȱmake
decisions.
Answer: C
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
6) Theȱstudyȱofȱeconomics
A) isȱaȱveryȱnarrowȱendeavor.
B) isȱaȱwayȱofȱanalyzingȱdecision-makingȱprocessesȱcausedȱbyȱscarcity.
C) isȱconcernedȱwithȱprovingȱthatȱcapitalismȱisȱbetterȱthanȱsocialism.
D) focusesȱonȱhowȱaȱbusinessȱshouldȱfunction.
Answer: B
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Definition
7) Sunkȱcostsȱare
A) costsȱthatȱcannotȱbeȱavoided,ȱbecauseȱtheyȱhaveȱalreadyȱbeenȱincurred.
B) theȱcostsȱofȱwhatȱweȱgiveȱupȱwhenȱweȱmakeȱaȱchoiceȱorȱaȱdecision.
C) theȱadditionalȱcostsȱofȱproducingȱanȱadditionalȱunitȱofȱaȱproduct.
D) theȱadditionalȱcostsȱofȱconsumingȱanȱadditionalȱunitȱofȱaȱproduct.
Answer: A
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Definition
8) Supposeȱthatȱȱyouȱpurchasedȱaȱticketȱtoȱaȱjazzȱfestivalȱforȱ$100ȱaȱmonthȱago.ȱLastȱweek
someoneȱinvitedȱyouȱtoȱaȱhockeyȱgameȱonȱtheȱsameȱnightȱasȱtheȱjazzȱfestival.ȱYouȱwouldȱmuch
ratherȱgoȱtoȱtheȱhockeyȱgameȱthanȱtheȱjazzȱfestival.ȱYouȱhaveȱtriedȱunsuccessfullyȱtoȱsellȱthe
jazzȱfestivalȱticket.ȱWhichȱofȱtheȱfollowingȱstatementsȱregardingȱthisȱsituationȱisȱcorrect?
A) Theȱ$100ȱyouȱpaidȱforȱtheȱjazzȱfestivalȱticketȱisȱrelevantȱtoȱtheȱdecision,ȱasȱthisȱrepresents
theȱopportunityȱcostȱofȱattendingȱtheȱhockeyȱgame.
B) Youȱshouldȱbaseȱyourȱdecisionȱonȱwhetherȱorȱnotȱtheȱhockeyȱgameȱwillȱprovideȱyouȱwith
moreȱthanȱ$100ȱinȱsatisfaction.
C) Theȱ$100ȱyouȱpaidȱforȱtheȱjazzȱfestivalȱticketȱshouldȱbeȱirrelevantȱinȱyourȱdecision
making,ȱbecauseȱitȱisȱaȱsunkȱcost.
D) Theȱ$100ȱjazzȱfestivalȱticketȱshouldȱbeȱirrelevantȱinȱyourȱdecisionȱmaking,ȱbecauseȱit
representsȱtheȱmarginalȱcostȱofȱattendingȱtheȱhockeyȱgame.
Answer: C
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Conceptual
AACSB: ReflectiveȱThinking
2
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