Chapter 1 and 2 Microeconomics

Chapters 1 and 2

MULTIPLE-CHOICE QUESTIONS

1. In economics, choices are necessary because of the presence of:

a. luxuries.

b. inefficiency.

c. needs.

d. scarcity.

e. incentives.

2. Economics is the study of:

a. how to make money.

b. how to allocate resources to satisfy wants and needs.

c. capitalism.

d. how to make workers more productive and firms more profitable.

e. markets.

3. Thomas Malthus’s prediction of mass starvation failed to come true because of increases in:

a. population.

b. productivity.

c. temperature.

d. government involvement.

e. income.

4. The basic goal of economics is:

a. controlling the effects of government actions.

b. determining how to distribute all that is produced in an economy.

c. addressing the scarcity problem created because the population’s desire for goods exceeds the ability to produce them.

d. matching limited resources to people’s limited wants and needs.

e. controlling tastes and wishes so that there will be enough resources to produce all the goods and services that people want.

5. An economist is an individual who would be least able to answer which research question?

a. how much of a product is purchased at a specific price

b. how the tastes and preferences of consumers are determined

c. what firms decide to produce

d. how goods and services are distributed to the population

e. how firms decide to produce a good or service

6. Which of the following is a positive statement?

a. An economist should test every theory at least twice.

b. Increases in the minimum wage cause unemployment.

c. We ought to deregulate the mortgage market.

d. The government must provide unlimited health care to citizens.

e. We should forgo some current consumption in order to invest in the future.

7. Which of the following is a normative statement?

a. The sky is blue.

b. The sky is green with pink polka dots.

c. Points...