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b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 36
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | Scarcity and Resources
9. If you made a wish list of things you wanted but did not now have, they you became able to have the things on that list,
scarcity would be eliminated.
a. True b. False
ANSWER: False
POINTS: 1
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | Does Everyone Face Scarcity?
11. A permanent change to a much higher price of gasoline would lead us to expect fewer gas guzzlers on the road, ceteris
paribus.
a. True
b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 44
TOPICS: 2.2 People Engage in Rational Decision Making and Marginal Thinking | Many Choices We Face
Involve Marginal Thinking
12. Economists would predict that if salaries increased for engineers and decreased for MBAs, fewer people than before
would go to graduate school in business and more than before would go in engineering, ceteris paribus.
a. True
b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 46-47
13. Marginal cost is the additional cost incurred as a result of making an economic decision.
a. True
b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 42-43
TOPICS: 2.2 People Engage in Rational Decision Making and Marginal Thinking | Many Choices We Face
Involve Marginal Thinking
14. When considering whether or not to consume a second slice of cake, an individual is following marginal thinking if
she compares the total cost of consuming both the first and second slices with their total benefit before making a decision.
a. True
b. False
ANSWER: False
POINTS: 1
REFERENCES: p. 43
TOPICS: 2.2 People Engage in Rational Decision Making and Marginal Thinking | Many Choices We Face
Involve Marginal Thinking
15. If Xavier gives up a job in which he earns $23,000 per year in order to go to college full time, his foregone income is
part of the opportunity cost of going to college.
a. True
b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 40
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | The Opportunity Cost of Going to College or Having a
Child
16. The opportunity cost of attending college is likely to be higher for a high school graduate who leaves a job grilling
hamburgers than it is for a high school dropout who leaves a job working as a computer network administrator.
a. True
b. False
ANSWER: False
POINTS: 1
REFERENCES: p. 40
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | The Opportunity Cost of Going to College or Having a
Child
17. The opportunity cost of a decision is the value of the best foregone alternative to the decision-maker.
a. True
b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 39
18. The opportunity cost of a decision is the value of all of the available alternatives that were not chosen.
a. True
b. False
ANSWER: False
POINTS: 1
REFERENCES: p. 39
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | To Choose Is to Lose
19. Since it is possible to grow coffee in the United States, the U.S. would gain by creating a domestic coffee industry
rather than importing coffee from Brazil.
a. True
b. False
ANSWER: False
POINTS: 1
REFERENCES: p. 49
TOPICS: 2.4 Specialization and Trade Can Make Everyone Better Off | Specialization and Trade Lead to Greater
Wealth and Prosperity
20. A country has a comparative advantage in the production of DVD players if it can produce DVD players at a lower
opportunity cost than others.
a. True
b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 48
TOPICS: 2.4 Specialization and Trade Can Make Everyone Better Off | Why Do People Specialize?
21. Small, developing countries must first become self-sufficient before they can benefit from international trade.
a. True
b. False
ANSWER: False
POINTS: 1
REFERENCES: p. 49
TOPICS: 2.4 Specialization and Trade Can Make Everyone Better Off | Specialization and Trade Lead to Greater
Wealth and Prosperity
22. Market failure is a term used to describe what happens when market arrangements do not allocate resources
efficiently.
a. True
b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 54
TOPICS: 2.6 Appropriate Government Policies Can Improve Market Outcomes | Market Failure
24. It is difficult to make the concept of need useful because it is difficult to define and compare “needs” among people.
a. True
b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 37
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | Human Wants Exceed Available Resources
25. The market mechanism assures full employment and stable prices
a. True
b. False
ANSWER: False
POINTS: 1
REFERENCES: p. 57
TOPICS: 2.7 Government Policies May Help Stabilize the Economy | Introduction
26. Almost everyone is affected directly or indirectly by high rates of employment or high and variable rates of inflation.
a. True
b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 57
TOPICS: 2.7 Government Policies May Help Stabilize the Economy | Introduction
28. Unemployment can be caused by downswings in the business cycle, people changing jobs, different skills needed by
employers, or seasonal fluctuations in demand.
a. True
b. False
ANSWER: True
POINTS: 1
Copyright Cengage Learning. Powered by Cognero. Page 6
REFERENCES: p. 58
TOPICS: 2.7 Government Policies May Help Stabilize the Economy | Unemployment
30. The only way that an economy can increase its rate of consumption in the long run is by increasing the amount that it
produces.
a. True
b. False
ANSWER: True
POINTS: 1
REFERENCES: p. 61
TOPICS: 2.8 Higher Productivity Growth Leads to Greater Long-Run Economic Growth | Economic Growth,
Productivity, and the Standard of Living
34. Scarcity:
a. is only a problem in communist countries.
b. is a problem in both communist and socialist countries, but not in market economies.
c. does not exist in wealthy countries.
d. will never be eradicated because humans develop new wants as productive capabilities improve.
ANSWER: d
POINTS: 1
REFERENCES: p. 37-38
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | Will Scarcity Ever Be Eradicated?
35. Scarcity:
a. exists in command economies.
b. exists in market economies.
c. exists only for the poor in any type of economy.
d. (a) and (b) above are correct
ANSWER: d
POINTS: 1
REFERENCES: p. 37
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | Scarcity and Resources
38. Scarcity
Copyright Cengage Learning. Powered by Cognero. Page 8
a. Can be eradicated with sufficient economic growth.
b. Could be eradicated if we could just eliminate greed.
c. Can never be eradicated
d. Both a. and b. are true
ANSWER: c
POINTS: 1
REFERENCES: p. 37
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | Will Scarcity Ever Be Eradicated?
47. To economists, the resource category land includes all of the following except:
a. trees.
b. a sawmill.
48. Which of the following would be categorized as capital resources for a college or university?
a. water, trees, and the acreage a campus rests on
b. chalkboards, overhead projectors, and computers
c. exams, fuel oil (which heats the buildings), and electricity
d. the work effort of registrars, clerical assistants and teaching assistants
ANSWER: b
POINTS: 1
REFERENCES: p. 36
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | Scarcity and Resources
56. Every time an individual decides to try out new equipment, or finds better ways to manage money, he or she is
exhibiting aspects of:
a. money management.
b. entrepreneurship.
c. strategic management.
62. The expression, "There's no such thing as a free lunch" implies that:
a. everyone has to pay for his/her own lunch.
b. the person consuming a good must always pay for it.
c. costs must be incurred when resources are used to produce goods and services.
d. no one has time for a good lunch anymore.
ANSWER: c
POINTS: 1
REFERENCES: p. 40-41
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | Is That Really a Free Lunch, a Freeway, or a Free
Beach?
64. Trent decides to spend an hour playing basketball rather than studying. His opportunity cost is:
a. nothing because he enjoys playing basketball more than studying.
b. the foregone benefit to his grades from studying for an hour.
c. the increase in skill he obtains from playing basketball for that hour.
d. nothing because he had a free pass into the sports complex to play basketball.
ANSWER: b
POINTS: 1
REFERENCES: p. 39
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | To Choose Is to Lose
69. A student has a chance to see Taylor Swift in concert. The student also has a major economics exam in the morning. If
the student goes to the concert:
a. she may receive a lower grade on the economics exam.
b. the opportunity cost of the concert includes the value of the time that would otherwise have been spent
studying.
c. the decision involves a tradeoff.
d. all of the above are correct.
ANSWER: d
POINTS: 1
Copyright Cengage Learning. Powered by Cognero. Page 14
REFERENCES: p. 39
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | To Choose Is to Lose
71. "If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10
per hour." The opportunity cost of attending class this evening is:
a. $4.
b. $40.
c. $44.
d. $0.
ANSWER: c
POINTS: 1
REFERENCES: p. 39
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | To Choose Is to Lose
72. "If I didn't go to class tonight, I would save the $2 campus parking fee and spend three hours at work where I earn $10
per hour." The opportunity cost of attending class this evening is:
a. $0.
b. $2.
c. $30.
d. $32.
ANSWER: d
POINTS: 1
REFERENCES: p. 39
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | To Choose Is to Lose
73. As student reasons that "If I didn't go to class tonight, I would spend three hours at work where I earn $10 per hour. In
addition, my annual parking permit costs the equivalent of $2 per day.” The opportunity cost to that student of attending
that class this evening is:
a. $0.
b. $2.
c. $30.
d. $32.
ANSWER: c
POINTS: 1
REFERENCES: p. 39
TOPICS: 2.1 People Face Scarcity and Costly Trade-offs | To Choose Is to Lose
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