Economics

1. Economics is the study of choice under conditions of:

A. Supply B. Scarcity C. Opportunity D. Abundance of resources.
2. According to the Law of Demand, “As prices of the good or service increases demand for that product:”
A. Decreases B. Increases C. Remains the same D. Equal
3. The term used to emphasize that making choices in the face of scarcity involves a cost is:
A. Utility cost B. Accounting cost C. Opportunity cost D. Substitution cost
4. Which of the following terms would best describe the consequence of scarcity?
A. Limited resources B. Tradeoffs C. Unlimited wants D. Poverty and possibly starvation
5. Who is known as the Father of Economics?
A. Adam Smith B. John Smith C. Adam Sims D. John Sims
6. Which statement does NOT relate to the role of the economist?
A. Attempting explain the causes of economic phenomena
B. Measuring general changes in the price level.
C. Identifying ways to make society fairer.
D. Forecasting the effects of a change in government policy.
7. Which statement best describes the ‘economic problem’?
A. The fact that economies often go into recession.
B. Matching endless wants with limited resources.
C. Having high levels of unemployment
D. The problem that high exchange rates deter exports
8. Which of the following statements correctly highlights the difference between microeconomics and
macroeconomics?
A. Macroeconomics studies the repeating patterns in economics while microeconomics studies onetime
anomalies.
B. Macroeconomics is the study of all of the world’s economies while microeconomics is only the study of
the U.S economy.
C. Macroeconomics is the study of industrialized country’s economies while microeconomics is the study
of emerging economies.
D. Macroeconomics is the study of worldwide, national, or a region of economics while microeconomics is
the study of individual market participants.
9. Which of the following is an example of a topic studied by macroeconomics?
A. Productivity of an agricultural farm B. Savings of a single household
B. Total output of an economy D. Price determination by a monopolist.
10. Which of the following is NOT included in the decisions that every society must make?
A. What goods will be produced
B. Who will produce goods
C. What determines consumer preferences
D. Who will consume the goods

Answers:

1. B 6. C
2. A 7. B
3. C 8. D
4. A 9. B
5. A 10. C