Economics Midterm Exam review MGEA01
A basic underlying point in economics is that
(A) people have limited wants in the face of limited resources.
(B) there are unlimited resources.
(C) governments should never interfere in the workings of a market economy.
(D) people have unlimited wants in the face of limited resources.
A2. The opportunity cost of producing good is defined to be
(A) the money cost of the factors of production used in good .
(B) the retail price of good .
(C) what must be sacrificed of other goods to get an additional unit of good .
(D) the cheapest method of producing good .
A3. In the circular flow of income, the allocation of resources is largely decided by
(A) central authorities and firms only.
(B) individuals only.
(C) central authorities only. (D) firms and households acting independently.
A4. A barter system of exchange
(A) developed late in history.
(B) requires the use of money.
(C) involves the trading of goods directly for other goods.
(D) is the most efficient form of exchange.
A5. Behaviour in free-market economies is
(A) determined by a central authority.
(B) based primarily on custom and habit.
(C) mostly directed by self-interest.
(D) random and unpredictable.
A6. A positive statement is one that states
(A) what should be but is not.
(B) what is, was, or will be.
(C) what is and what should be.
(D) what is desirable.
A7. Economic theories
(A) can be used to help explain and predict economic behaviour.
(B) are not useful because of the unrealistic assumptions they contain.
(C) must apply to all economies to be true.
(D) cannot help to predict future behaviour.
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A8. Economists build models that abstract from the complexities of reality because
(A) they believe they gain a greater understanding of reality.
(B) economists do not understand the real world.
(C) the complexities of reality are unimportant.
(D) economists are not interested in reality.
(A) people have limited wants in the face of limited resources.
(B) there are unlimited resources.
(C) governments should never interfere in the workings of a market economy.
(D) people have unlimited wants in the face of limited resources.
A2. The opportunity cost of producing good is defined to be
(A) the money cost of the factors of production used in good .
(B) the retail price of good .
(C) what must be sacrificed of other goods to get an additional unit of good .
(D) the cheapest method of producing good .
A3. In the circular flow of income, the allocation of resources is largely decided by
(A) central authorities and firms only.
(B) individuals only.
(C) central authorities only. (D) firms and households acting independently.
A4. A barter system of exchange
(A) developed late in history.
(B) requires the use of money.
(C) involves the trading of goods directly for other goods.
(D) is the most efficient form of exchange.
A5. Behaviour in free-market economies is
(A) determined by a central authority.
(B) based primarily on custom and habit.
(C) mostly directed by self-interest.
(D) random and unpredictable.
A6. A positive statement is one that states
(A) what should be but is not.
(B) what is, was, or will be.
(C) what is and what should be.
(D) what is desirable.
A7. Economic theories
(A) can be used to help explain and predict economic behaviour.
(B) are not useful because of the unrealistic assumptions they contain.
(C) must apply to all economies to be true.
(D) cannot help to predict future behaviour.
Page 2 of 5
A8. Economists build models that abstract from the complexities of reality because
(A) they believe they gain a greater understanding of reality.
(B) economists do not understand the real world.
(C) the complexities of reality are unimportant.
(D) economists are not interested in reality.