Chapter1 2
Chapter1 2
Chapter1 2
Chapter 1 Introduction
1.1 Microeconomics: The Allocation of Scarce Resources
1) Microeconomics studies the allocation of
A) decision makers.
B) scarce resources.
C) models.
D) unlimited resources.
Answer: B
Topic: Microeconomics: The Allocation of Scarce Resources
2) Microeconomics is often called
A) price theory.
B) decision science.
C) scarcity.
D) resource theory.
Answer: A
Topic: Microeconomics: The Allocation of Scarce Resources
3) Most microeconomic models assume that decision makers wish to
A) make themselves as well off as possible.
B) act selfishly.
C) make others as well off as possible.
D) None of the above.
Answer: A
Topic: Microeconomics: The Allocation of Scarce Resources
4) Society faces trade-offs because of
A) government regulations.
B) greedy corporations.
C) faceless bureaucrats.
D) scarcity.
Answer: D
Topic: Microeconomics: The Allocation of Scarce Resources
5) A market
A) always involves the personal exchange of goods for money.
B) allows interactions between consumers and firms.
C) always takes place at a physical location.
D) has no influence on prices.
Answer: B
Topic: Microeconomics: The Allocation of Scarce Resources
1
Copyright 2011 Pearson Education, Inc.
2
Copyright 2011 Pearson Education, Inc.
12) Explain how a market helps determine which goods and services will be produced, how to produce
them, and who gets them.
Answer: A market promotes interaction between consumers and firms. This interaction will result in
prices, which influence the decisions of consumers and firms.
Topic: Microeconomics: The Allocation of Scarce Resources
1.2 Models
1) The purpose of making assumptions in economic model building is to
A) force the model to yield the correct answer.
B) minimize the amount of work an economist must do.
C) simplify the model while keeping important details.
D) express the relationship mathematically.
Answer: C
Topic: Models
2) Einstein was quoted saying "Everything should be made as simple as possible, but not simpler."
When it comes to economic models this means that
A) models shouldn't be too complex.
B) models shouldn't be too simple.
C) models should have a level of abstraction appropriate to the topic investigated.
D) All of the above
Answer: D
Topic: Models
3) If a model's predictions are correct, then
A) its assumptions must have been correct.
B) it is proven to be correct.
C) Both A and B above.
D) None of the above.
Answer: D
Topic: Models
4) Economists tend to judge a model based upon
A) the reality of its assumptions.
B) the accuracy of its predictions.
C) its simplicity.
D) its complexity.
Answer: B
Topic: Models
5) Which of the following is an example of a normative statement?
A) A higher price for a good causes people to want to buy less of that good.
B) A lower price for a good causes people to want to buy more of that good.
C) To make the good available to more people, a lower price should be set.
D) If you consume this good, you will be better off.
Answer: C
Topic: Models
3
Copyright 2011 Pearson Education, Inc.
4
Copyright 2011 Pearson Education, Inc.
5
Copyright 2011 Pearson Education, Inc.
6
Copyright 2011 Pearson Education, Inc.