Unit 1 – Introduction to economics in a technological setting
1. Economics is best defined as the study of:
A. prices and quantities.
B. inflation and interest rates.
C. how people make choices under conditions of scarcity and the results of those choices. D. wages and incomes.
2. For a given question to be considered an economic question, it would need to involve: A. explicit prices.
B. making a choice.
C. limited resources.
D. limited resources and making a choice.
3. With limited resources, the best choice of a course of action takes into account: A. only the benefits of making that choice.
B. the least possible cost of making that choice.
C. both the benefits and the cost of making that choice.
D. what gives the greatest pleasure.
4. The scarcity principle indicates that:
A. no matter how much one has, it is never enough.
B. compared with 100 years ago, individuals have less time today. C. with limited resources, having more of ‘this’ means having less of ‘that’. D. the wealthier one is, the fewer the number of trade-offs one must make. 5. The logical implication of the scarcity principle is that: A. one will never be satisfied with what one has.
B. as wealth increases, making trade-offs becomes less necessary. C. as wealth decreases, making trade-offs becomes less necessary. D. choices must be made.
6. The principle of scarcity applies to:
A. the poor exclusively.
B. all consumers.
C. all firms.
D. everyone:consumers, firms, governments and nations.
7. The scarcity principle applies to:
A. all decisions.
B. only market decisions; e.g. buying a car.
C. only non-market decisions; e.g. watching a sunset.
D. only the poor.
MBT Economics Multiple Choice – Unit 1
8. Dr Smith makes around $200 000 per year and lives in town, close to his medical practice. Allen works as dishwasher in a restaurant next to Dr Smith’s office, where he makes $13 per hour. Allen has to drive two hours every day to get to work, but lives in a much nicer neighbourhood than Dr Smith, who earns much more than Allen. The most likely explanation for this is that:
A. the opportunity cost of Dr Smith’s time is lower than that of Allen’s time. B. the scarcity principle applies to Dr Smith, but does not apply to Allen. C. the opportunity cost of Dr Smith’s time is higher than that of Allen’s time. D. Allen loves to drive but Dr Smith doesn’t.
9. Josh wants to go to the football game this weekend, but he has an essay due on Monday. It will take him the whole weekend to write the essay. Josh decides to stay at home and work on the essay. According to the scarcity principle, the reason Josh doesn’t go to the game is that: A. the marginal benefit of writing the essay exceeds the marginal benefit of going to the football game.
B. writing the essay is easier than going to the game.
C. Josh doesn’t have enough time for writing the essay and going to the game. D. it’s too expensive to go to the game.
10. Whether studying the size of the Australian economy or the number of children a couple will choose to have, the unifying concept is that wants are: A. limited, resources are limited, and thus trade-offs must be made. B. unlimited, resources are limited, and thus trade-offs must be made. C. unlimited, resources are limited for some but not for others, and thus some people must make trade-offs.
D. unlimited, resources are unlimited, and thus nirvana has been reached. 11. The opportunity cost of an activity is the value of:
A. the next-best alternative forgone.
B. the least-best alternative forgone.
C. the difference between the chosen activity and the next-best alternative forgone. D. the alternative one would have preferred to choose.
12. Lauren is thinking about going to the cinema tonight to see the new Harry Potter film. A ticket costs $15 and she will have to cancel her dog-sitting job that pays $30. The cost of seeing the movie is:
D. $45 minus the benefit of seeing the movie.
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