PRACTICE 1: LIMITS, CHOICES, AND ALTERNATIVES Student: ___________________________________________________________________________ 1. Economics may best be defined as the:
A. interaction between macro and micro considerations.
B. social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity. C. empirical testing of value judgments through the use of logic. D. use of policy to refute facts and hypotheses.
2. The scarcity problem:
A. persists only because countries have failed to achieve continuous full employment. B. persists because economic wants exceed available productive resources. C. has been solved in all industrialized nations.
D. has been eliminated in affluent societies such as the United States and Canada.
3. In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of: A. scarcity and opportunity costs.
B. money and real capital.
C. complementary economic goals.
D. full production.
4. You should decide to go to a movie:
A. if the marginal cost of the movie exceeds its marginal benefit. B. if the marginal benefit of the movie exceeds its marginal cost. C. if your income will allow you to buy a ticket.
D. because movies are enjoyable.
5. The assertion that "There is no free lunch" means that: A. there are always tradeoffs between economic goals.
B. all production involves the use of scarce resources and thus the sacrifice of alternative goods. C. marginal analysis is not used in economic reasoning.
D. choices need not be made if behavior is rational.
6. Which one of the following expressions best states the idea of opportunity cost? A. "A penny saved is a penny earned."
B. "He who hesitates is lost."
C. "There is no such thing as a free lunch."
D. "All that glitters is not gold."
7. (Consider This) A direct cost of going to college is:
A. tuition, while an indirect cost (opportunity...
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