Scribd
Upload
10 views3 pages

Micro_Review ch1

The document presents a review of Chapter 1, consisting of multiple-choice questions related to economic concepts such as resources, efficiency, trade-offs, and the roles of different economic systems. It also includes a problem scenario involving two political parties, Hawks and Doves, and their responses to changes in military production. The questions aim to assess understanding of fundamental economic principles and the implications of political decisions on production outputs.

Uploaded by

nthphuong73
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
10 views3 pages

Micro_Review ch1

The document presents a review of Chapter 1, consisting of multiple-choice questions related to economic concepts such as resources, efficiency, trade-offs, and the roles of different economic systems. It also includes a problem scenario involving two political parties, Hawks and Doves, and their responses to changes in military production. The questions aim to assess understanding of fundamental economic principles and the implications of political decisions on production outputs.

Uploaded by

nthphuong73
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

REVIEW - CHAPTER 1

Choose the appropriate answer (Q 1-15)

1. The word “economy” comes from the Greek word oikonomos, which means
a. “environment.”
b. “production.”
c. “one who manages a household.”
d. “one who makes decisions.”

2. Resources are
a. scarce for households but plentiful for economies.
b. plentiful for households but scarce for economies.
c. scarce for households and scarce for economies.
d. plentiful for households and plentiful for economies.

3. Which of the following is a decision that economists study?


a. how much people work
b. what people buy
c. how much money people save
d. All of the above are correct.

4. The principle that "people face tradeoffs" applies to


a. individuals.
b. families.
c. societies.
d. All of the above are correct.

5. Efficiency
a. and equality both refer to how much a society can produce with its resources.
b. and equality both refer to how fairly the benefits from using resources are
distributed between members of a society.
c. refers to how much a society can produce with its resources. Equality refers to how
evenly the benefits from using resources are distributed among members of
society.
d. refers to how evenly the benefits from using resources are distributed between
members of society. Equality refers to how much a society can produce with its
resources

6. In economics, the cost of something is


a. the dollar amount of obtaining it.
b. always measured in units of time given up to get it.
c. what you give up to get it.
d. often impossible to quantify, even in principle.

1
7. A marginal change is a
a. change that involves little, if anything, that is important.
b. large, significant adjustment.
c. change for the worse, and so it is usually a short-term change.
d. small, incremental adjustment.

8. Economists are particularly adept at understanding that people respond to


a. laws.
b. incentives.
c. punishments more than rewards.
d. rewards more than punishments.

9. The principle that "trade can make everyone better off" applies to interactions and trade between
a. families.
b. states within the United States.
c. nations.
d. All of the above are correct.

10. Central planning refers to


a. markets guiding economic activity. Today many countries that had this system
have abandoned it.
b. markets guiding economic activity. Today many countries that did not have this
system have implemented it.
c. government guiding economic activity. Today many countries that had this system
have abandoned it.
d. government guiding economic activity. Today many countries that did not have this
system have implemented it.

11. The invisible hand refers to


a. how central planners made economic decisions.
b. how the decisions of households and firms lead to desirable market outcomes.
c. the control that large firms have over the economy.
d. government regulations without which the economy would be less efficient.

12. The essence of science is


a. the laboratory experiment.
b. the scientific method.
c. the study of nature, but not the study of society.
d. All of the above are correct.

13. The circular-flow diagram is a


a. visual model of the economy.
b. visual model of the relationships among money, prices, and businesses.
c. model that shows the effects of government on the economy.
d. mathematical model of how the economy works.

14. Which of the following is a correct statement about production possibilities frontiers?

2
a. An economy can produce only on the production possibilities frontier.
b. An economy can produce at any point inside or outside a production possibilities
frontier.
c. An economy can produce at any point on or inside the production possibilities
frontier, but not outside the frontier.
d. An economy can produce at any point inside the production possibilities frontier,
but not on or outside the frontier.

15. One way to characterize the difference between positive statements and normative statements is as
follows:
a. Positive statements tend to reflect optimism about the economy and its future,
whereas normative statements tend to reflect pessimism about the economy and
its future.
b. Positive statements offer descriptions of the way things are, whereas normative
statements offer opinions on how things ought to be.
c. Positive statements involve advice on policy matters, whereas normative
statements are supported by scientific theory and observation.
d. Economists outside of government tend to make normative statements, whereas
government-employed economists tend to make positive statements.

Solve the problem below and explain

Imagine a society that produces military goods and consumer goods, which we’ll call “guns” and “butter.” The
society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a
smaller military). Recently, an aggressive neighboring country has reduced the size of its military. As a result,
both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party
would get the bigger “peace dividend,” measured by the increase in butter production?

You might also like