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ECO 213 - test 1 Exam with complete solutions 2024_2025
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ECO 213 - test 1 Exam with complete solutions 2024_2025
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ECO 213 - test 1 Exam with completesolutions 2024/2025
1) Economics is the study of
A) supply and demand.
B ) how to make money in a market economy.
C) the choices everybody makes to attain their goals, given their scarce
resources.
D) how to make money in the stock market. - ANSWER-C) the choices everybody
makes to attain their goals, given their scarce resources.
2) What assumptions about humans do economists make?
A) People are greedy and selfish.
B ) None, because economics takes humans as given.
C) Humans prefer to live in a society that values fairness above all else.
D) People are rational and respond to incentives - ANSWER-D) People are rational
and respond to incentives
3) Scarcity
A) is found only in developing nations.
B ) occurs because there are too many people.
C) occurs because of unlimited wants and limited resources available to fulfill
these wants.
D) is not a problem for the wealthy. - ANSWER-C) occurs because of unlimited
wants and limited resources available to fulfill these wants.
,4) Which of the following best describes the assumption about human behavior
that economics makes?
A) People weigh religious, envy, compassion, anger aspects in all decisions they
make.
B ) Assuming rational behavior is useful in explaining choices people make even
though they may not behave rationally all the time.
C) Economics assumes individuals act rationally all the time in all circumstances.
D) None of these describes what economics assumes about human behavior. -
ANSWER-B ) Assuming rational behavior is useful in explaining choices people
make even though they may
not behave rationally all the time.
5) What does the adjective marginal mean in economics?
A) Something done at the edge of a market, like buying a table at a garage sale.
B ) Buying something that is illegal to buy.
C) Incremental, additional, or extra of some action.
D) None of these illustrate how the word marginal is used in economics. -
ANSWER-C) Incremental, additional, or extra of some action
6) Where are buyers and sellers brought together?
A) Only in cities, towns, and villages.
B ) A market, which can be a location or an electronic connection.
C) A market, which has to be a physical location.
D) Only in shopping malls. - ANSWER-B ) A market, which can be a location or an
electronic connection.
7) What does marginal analysis involve?
A) Comparing total costs to total benefits.
B ) Subtracting total costs from total benefits.
C) Comparing average costs to average benefits.
D) Comparing marginal costs to marginal benefits. - ANSWER-D) Comparing
marginal costs to marginal benefits.
,8) What forces humans to make tradeoffs?
A) productive inefficiency
B ) confusion
C) scarcity
D) more than one political party - ANSWER-C) scarcity
9) How is the decision about what goods and services will be produced made in a
market economy?
A) What will be produced is determined by what society needs the most.
B ) Producing firms decide to produce only what the boss says must be
produced.
C) Lawmakers in the government vote on what will be produced.
D) By consumers, firms, and government choosing which goods and services to
buy. - ANSWER-D) By consumers, firms, and government choosing which goods
and services to buy.
10) Every society faces economic tradeoffs, which means
A) if one political party controls the government, the other party can't.
B ) some people live better than others do.
C) producing less of one good means more of another good can be produced.
D) none of these. - ANSWER-C) producing less of one good means more of
another good can be produced.
11) Which of the following is correct?
A) Economics is a decision science that studies the tradeoffs we are forced to
make because of
scarcity.
B ) Every individual, no matter how rich or poor, is faced with making tradeoffs.
C) Anytime you have to decide which action to take you are facing an economic
tradeoff.
D) All of these are correct. - ANSWER-D) All of these are correct.
, 12) Who ultimately decides what goods and services will be produced in a market
economy?
A) none of these
B ) producing firms
C) the ruling political party
D) consumers - ANSWER-D) consumers
13) Which of the following is a problem inherent in centrally planned economies?
A) Production managers do not satisfy consumer wants but the government's
orders.
B ) There are no problems, everyone including consumers are satisfied.
C) Too much production of low-cost, high-quality goods and services.
D) None of these describe the problem inherent in a centrally planned economy. -
ANSWER-A) Production managers do not satisfy consumer wants but the
government's orders.
14) What explains the efficiency of markets?
A) They always result in equity.
B ) Markets promote equal standards of living.
C) The government stays out.
D) Markets promote competition and voluntary exchange - ANSWER-D) Markets
promote competition and voluntary exchange
15) Which of the following uses do economic models fulfill?
A) Make economic ideas explicit and concrete for use by decision makers.
B ) Simplification of some aspect of economic life.
C) To answer economic questions.
D) All of these. - ANSWER-D) All of these.
16) Why does voluntary exchange increase economic efficiency?
A) Because the true economic value of the good or service is established.
B ) Because it is free and consequently does not cost anything.
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