Question 1 of 20
An arrangement that allows buyers and sellers to exchange things is called __________ .
A. a contract
B. a market
C. money
D. efficient
Question 2 of 20
Which of the following is a question answered with normative economic reasoning?
A. If the college offers free textbooks for students, will more students read their textbooks?
B. If the college provided less financial aid for out-of-state students, would more in-state students benefit?
C. If the college increased its enrollment requirements, would class size decline?
D. Should the college increase tuition to fund its athletic programs?
Question 3 of 20
Suppose that you own a house. What is the opportunity cost of living in the house?
A. There is no opportunity cost because you own the house.
B. There is no opportunity cost unless you could set up a business in the house.
C. The opportunity cost is the rent you could have received from a tenant if you didn't live there.
D. The opportunity cost is the cost of your monthly mortgage payment plus bills.
Question 4 of 20
You have an hour between your economics and math classes. What is the opportunity cost of that time if you use it to complete your math homework instead of your economics homework?
A. the economics homework you could have completed
B. the math homework you chose to complete
C. the cost of your calculator and math textbook
D. zero, because it doesn't cost any money to do your math homework
Question 5 of 20
Normative economics __________ .
A. is the focus of most modern economic reasoning
B. answers the question "What ought to be?"
C. predicts the consequences of alternative actions
D. answers the question "What is?"
Question 6 of 20
Economics is best defined as the study of __________ .
A. financial decision-making
B. how consumers make purchasing decisions
C. the choices made by people faced with scarcity
D. inflation, unemployment, and economic growth
Question 7 of 20
Scarcity can best be defined as a situation in which __________ .
A. there are no buyers willing to purchase what sellers have produced
B. there are not enough goods to satisfy all of the buyers' demand
C. the resources we use to produce goods and services are limited
D. there is more than enough money to satisfy consumers' wants
Question 8 of 20
Spending money on a new car instead of a used car when you are on a fixed budget is an example of __________ .
A. the incursion of an opportunity cost
B. isolating variables
C. a bad thing to do because you run out of money
D. living on the edge
Question 9 of 20
Which of the following is an example of a normative question?
A. How will an increase in the inheritance tax affect tax revenues?
B. What fraction of an income tax cut will be spent on imported goods?
C. Should Florida implement a state income tax to reduce its deficit?
D. How will an increase in unemployment benefits affect the unemployment rate?
Question 10 of 20
Because resources are limited, __________ .
A. only the very wealthy can get everything they want
B. firms will be forced out of business
C. the availability of goods will be limited but the availability of services will not
D. people must make choices
Question 11 of 20
Economics is the study of __________ .
A. how to invest in the stock market
B. how society uses limited resources
C. the role of money in markets
D. how government officials decide which goods and services are produced
Question 12 of 20
Angelina, age seven, decides to dress up like Princess Fiona for Halloween. What is the opportunity cost of her decision?
A. the cost of the costume
B. the fact that she can't dress up like Dora the Explorer, her second choice
C. zero, because seven-year-olds don't have opportunity costs
D. the cost of the Lady Gaga costume which she did not want
Question 13 of 20
The effort used to coordinate the factors of production is a description of __________ .
A. physical capital
B. human capital
C. labor
D. entrepreneurship
Question 14 of 20
The opportunity cost of going to college __________ .
A. is zero if your parents pay your tuition
B. is equal to the cost of tuition, room and board, and other expenses
C. includes wages you lose by going to school instead of working
D. is the same for all students at a particular school who pay full tuition
Question 15 of 20
Jacinda quit her job as a blackjack dealer where she made $42,000 per year to start her own florist business. Her business expenses are $14,000 per year on rent, $21,000 per year on supplies, and $9,000 per year on part-time help. As for her personal expenses, her apartment costs her $12,000 per year and her personal bills are an extra $6,000 per year. What is Jacinda's opportunity cost of running the business?
A. $104,000
B. $86,000
C. $62,000
D. $44,000
Question 16 of 20
Which of the following is a question answered with positive economic analysis?
A. Should the college reduce tuition for out-of-state residents?
B. Should the college charge higher tuition for part-time students?
C. If the college increased its eligibility requirements for enrollment, will class sizes decline?
D. Should the college eliminate its athletic program to cut its costs?
Question 17 of 20
An unemployed individual decides to spend the day fishing. The opportunity cost of fishing is __________ .
A. the cost of bait and any other monetary expenses
B. zero, because the person doesn't have a job
C. the cost of bait, any other monetary expenses, and the value of the individual's wages while he was working
D. the cost of bait, any other monetary expenses, and the value of the best alternative use of the individual's time
Question 18 of 20
The opportunity cost of something is __________ .
A. the cost of the labor used to produce it
B. what you sacrifice to get it
C. the price charged for it
D. the search cost required to find it
Question 19 of 20
All of the following are considered natural resources EXCEPT __________ .
A. a coral reef
B. gold
C. labor
D. a redwood forest
Question 20 of 20
Steven lives in a big city where there is a shortage of parking. He has a parking spot in his driveway where he parks his car. Which of the following statements is most correct?
A. Steven has a lower opportunity cost of owning a car than his neighbor, who must rent a parking spot.
B. The opportunity cost of using the spot is zero, because Steven owns the house.
C. The opportunity cost of using the parking spot is the price he could charge someone else for using the spot.
D. The opportunity cost depends on how much Steven's mortgage payment is.
