Microeconomics Private and Public Choice
Microeconomics
( Test Bank)
Microeconomics Private and Public Choice, 15th Edition James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson Test Bank
Edition: 15thEdition
Author Name:Â James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
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Microeconomics Chapter 1—The Economic Approach
MULTIPLE CHOICE
- What do economists mean when they state that a good is scarce?
a. | There is a shortage or insufficient supply of the good at the existing price. |
b. | It is impossible to expand the availability of the good beyond the current amount. |
c. | People will want to buy more of the good regardless of the price of the good. |
d. | The amount of the good that people would like exceeds the supply freely available from nature. |
ANS: D                  PTS:  1                   DIF:   Moderate       NAT: BUSPROG: Analytic
STA:  DISC: Scarcity, tradeoffs, and opportunity cost                TOP:  What is Economics About?
KEY: Bloom’s: Comprehension                MSC: Suggested Quiz
- Economic choice and competitive behavior are the result of
a. | basic human greed. |
b. | poverty. |
c. | private ownership of resources. |
d. | scarcity. |
ANS: D                  PTS:  1                   DIF:   Moderate       NAT: BUSPROG: Analytic
STA:  DISC: Scarcity, tradeoffs, and opportunity cost                TOP:  What is Economics About?
KEY: Bloom’s: Comprehension                MSC: Suggested Quiz
- Jacob and Mason go to a diner that sells burritos for $5 and tacos for $3. They agree to split the lunch bill evenly. Mason chooses a taco. The marginal cost to Jacob of ordering a burrito instead of a taco is
a. | $1. |
b. | $2. |
c. | $2.50. |
d. | $3. |
ANS: A                  PTS:  1                   DIF:   Moderate       NAT: BUSPROG: Analytic
STA:  DISC: Marginal costs & benefits     TOP:  The Economic Way of Thinking
KEY: Bloom’s: Application                      MSC: Suggested Quiz
- The expression, “There’s no such thing as a free lunch,” implies that
a. | everyone has to pay for his own lunch. |
b. | the person consuming a good must always pay for it. |
c. | opportunity costs are incurred when resources are used to produce goods and services. |
d. | no one has time for a good lunch anymore. |
ANS: C                   PTS:  1                   DIF:   Moderate       NAT: BUSPROG: Analytic
STA:Â Â DISC: Scarcity, tradeoffs, and opportunity cost
TOP:  The Economic Way of Thinking     KEY: Bloom’s: Comprehension
MSC:Â Suggested Quiz
- Which one of the following states a central element of the economic way of thinking?
a. | Scarce goods are priceless. |
b. | Incentives matter–human choice is influenced in predictable ways by changes in personal costs and benefits. |
c. | The realism of the assumptions is the best test of an economic theory. |
d. | When deciding how to allocate time, the concept of opportunity cost is meaningless. |
ANS: B                   PTS:  1                   DIF:   Moderate       NAT: BUSPROG: Analytic
STA:  DISC: The role of incentives           TOP:  The Economic Way of Thinking
KEY: Bloom’s: Comprehension                MSC: Suggested Quiz
- Which of the following is most clearly consistent with the basic postulate of economics regarding the reaction of people to a change in incentives.
a. | Farmers produce fewer bushels of wheat in response to an increase in the price of wheat. |
b. | People will buy more milk at a price of $2 per gallon than at $1 per gallon. |
c. | People will buy less gas if the price of gas increases by $.20 per gallon. |
d. | People will consume more beef if the price increases from $1 to $2 per pound. |
ANS: C                   PTS:  1                   DIF:   Moderate       NAT: BUSPROG: Analytic
STA:  DISC: The role of incentives           TOP:  The Economic Way of Thinking
KEY: Bloom’s: Application                      MSC: Suggested Quiz
- Which one of the following is a positive economic statement?
a. | An increase in the minimum wage will reduce employment. |
b. | The minimum wage should be increased. |
c. | Social justice will be served by increasing the minimum wage. |
d. | Thoughtful people oppose an increase in the minimum wage. |
ANS: A                  PTS:  1                   DIF:   Moderate       NAT: BUSPROG: Analytic
STA:Â Â DISC: Scarcity, tradeoffs, and opportunity cost
TOP:  Positive and Normative Economics                                  KEY: Bloom’s: Comprehension
MSC:Â Suggested Quiz
- The basic difference between macroeconomics and microeconomics is that
a. | macroeconomics is concerned with the forest (aggregate markets), while microeconomics is concerned with the individual trees (subcomponents). |
b. | macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. |
c. | microeconomics is concerned with the forest (aggregate markets), while macroeconomics is concerned with the trees (subcomponents). |
d. | opportunity cost is applicable to macroeconomics, and the fallacy of composition relates to microeconomics. |
ANS: A                  PTS:  1                   DIF:   Moderate       NAT: BUSPROG: Analytic
STA:Â Â DISC: Scarcity, tradeoffs, and opportunity cost
TOP:  Pitfalls to Avoid in Economic Thinking                           KEY: Bloom’s: Comprehension
MSC:Â Suggested Quiz
- Economic analysis assumes that
a. | individuals act only out of selfish motives. |
b. | although individuals are at times selfish and at times unselfish, only their selfish actions may be predicted. |
c. | people are basically humanitarian, and their actions are, therefore, impossible to predict. |
d. | changes in the personal benefits and costs associated with a choice will exert a predictable influence on human behavior. |
ANS: D                  PTS:  1                   DIF:   Moderate       NAT: BUSPROG: Analytic
STA:  DISC: Utility and consumer choice                                  TOP:  What is Economics About?
KEY: Bloom’s: Comprehension                MSC: Suggested Quiz
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