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Answer: C

The document contains 40 multiple choice questions that test understanding of basic economic concepts. It covers topics like the definition of an entrepreneur, different types of resources, the difference between goods and services, and the concept of scarcity. Key ideas assessed include that entrepreneurs seek profitable opportunities and accept risks, resources are scarce so choices must be made, and there is no such thing as a free lunch since producing goods and services requires using limited resources.

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wendychen
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© © All Rights Reserved
72 views

Answer: C

The document contains 40 multiple choice questions that test understanding of basic economic concepts. It covers topics like the definition of an entrepreneur, different types of resources, the difference between goods and services, and the concept of scarcity. Key ideas assessed include that entrepreneurs seek profitable opportunities and accept risks, resources are scarce so choices must be made, and there is no such thing as a free lunch since producing goods and services requires using limited resources.

Uploaded by

wendychen
Copyright
© © All Rights Reserved
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21.

 An entrepreneur _____


  a. always makes a profit.
  b. is appointed by the board of directors to manage the operations of a
firm.
  c. is a profit-seeking decision maker.
  d. is a parasite that benefits by not paying other resources for their services.
  e. is the manager who runs an enterprise and keeps the customers happy.
ANSWER:  c

22. The payment in return for the use of capital is _____


  a. profit.
  b. wages.
  c. rent.
  d. dividends.
  e. interest.
ANSWER:  e

23. The payment in return for the use of natural resources is _____


  a. profit.
  b. wages.
  c. rent.
  d. dividends.
  e. interest.
ANSWER:  c

24. Entrepreneurial ability is rewarded by _____


  a. profit.
  b. wages.
  c. rent.
  d. dividends.
  e. interest.
ANSWER:  a

25. Resources can be divided into _____


  a. people, money, and machines.
  b. savings, spending, investment, and capital.
  c. human resources, technology, and government.
  d. natural resources, labor, capital, and entrepreneurial ability.
  e. income, interest, and expenditure.
ANSWER:  d

26. Natural resources _____


  a. include bodies of water, trees, oil reserves, and minerals.
  b. are not scarce.
  c. are inexhaustible as long as they are managed properly.
  d. are the result of human effort.
  e. do not follow the law of demand and supply.
ANSWER:  a

27. In economics, capital refers to _____


  a. wages earned by workers.
  b. dividends and interest earned by investors.
  c. the foreign reserves held by governments.
  d. machines, buildings, tools, and knowledge.
  e. the net worth of firms.
ANSWER:  d

28. An entrepreneur is _____


  a. an individual who has an education.
  b. an organizer who seeks profitable opportunities and is willing to accept risks.
  c. a person who is hired by a firm to manage its operations.
  d. a person who earns profit without accepting any risks.
  e. a person who is appointed by the board of directors of a firm for a term of five
years.
ANSWER:  b

29. If a firm produces and sells only one unit of a good, its profit would be equal to the _____
  a. market price of the good.
  b. revenue from the item sold minus the cost of the resources used to produce the good.
  c. difference between the interest paid by the firm on its outstanding loans and the rate of
depreciation.
  d. sum of the price of the good and the wages paid to labor.
  e. product of the wages paid to labor and the market price of the good.
ANSWER:  b

30. Unlike a service, a good _____


  a. is desirable.
  b. uses resources to satisfy wants.
  c. is physical and tangible.
  d. is abundant and free.
  e. is a resource.
ANSWER:  c

31. The difference between a good and a service is that _____


  a. a good helps satisfy unlimited wants, but a service does not.
  b. a service helps satisfy unlimited wants, but a good does not.
  c. a service is available in unlimited quantities, but a good is not.
  d. a good is available in unlimited quantities, but a service is not.
  e. a good is tangible, but a service is not.
ANSWER:  e

32. Which of the following is a service?


  a. anything that can be used indefinitely
  b. anything for which people pay less money than they pay for a good
  c. an intangible activity that satisfies human wants
  d. any output produced by the service sector industry, such as fast food
  e. something that is more desirable than a good
ANSWER:  c

33. As goods and services are scarce, _____


  a. the opportunity cost is zero.
  b. people must choose among alternatives.
  c. all human wants can be satisfied.
  d. resource prices are fixed.
  e. commodities are free.
ANSWER:  b

34. Goods and services are limited in supply because _____


  a. people are greedy.
  b. they are produced using scarce resources.
  c. people have limited wants.
  d. they are produced by firms that seek profits.
  e. the government wants to maintain its power over the economy.
ANSWER:  b

35. A good or service is considered scarce if _____


  a. any quantity of it can be consumed at a zero price.
  b. the amount people desire exceeds the amount available at a zero price.
  c. the amount people desire equals the amount available at any price.
  d. the amount people desire is less than the amount available at any price.
  e. the amount people desire is less than the amount available at a zero price.
ANSWER:  b

36. The expression "there's no such thing as a free lunch" means that _____
  a. services may be free, but goods are never free.
  b. even if a good or service has a price of zero, it has a cost.
  c. charitable organizations should not serve free lunches to the poor.
  d. poor people are really the ones who pay for their allegedly free lunches.
  e. someone has to pay the market price for a good or service.
ANSWER:  b

37. Your best friend buys you lunch on your birthday. You think this was not a free lunch because _____
  a. even if you didn’t pay in dollars for it, you paid for it in extra calories.
  b. the resources used to produce the lunch were not available to satisfy other wants.
  c. you disagree with the expression "the best things in life are free."
  d. you can eat only if you work out first.
  e. neither sea water nor air is free.
ANSWER:  b

38. The interaction of economic decision makers _____


  a. is not based on marginal analysis.
  b. determines how an economy’s resources are allocated.
  c. is not important in economic analysis.
  d. occurs infrequently.
  e. does not involve ordinary citizens.
ANSWER:  b

39. Goods and services are bought and sold in _____


  a. product markets.
  b. resource markets.
  c. foreign exchange markets.
  d. the stock market.
  e. the spot market.
ANSWER:  a

40. Resources are bought and sold in _____


  a. product markets.
  b. resource markets.
  c. foreign exchange markets.
  d. the stock market.
  e. the spot market.
ANSWER:  b

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