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Q.1)	The word “economy” comes from the Greek word oikonomos, which means

Q.2)	The phenomenon of scarcity stems from the fact that

A.	most economies’ production methods are not very good.

B.	in most economies, wealthy people consume disproportionate quantities of goods and services.

C.	governments restricts production of too many goods and services.

D.	resources are limited.

E.	people are greedy

Q.3)	The opportunity cost of going to college is

A.	the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses.

B.	the value of the best opportunity a student gives up to attend college.

C.	zero for students who are fortunate enough to have all of their college expenses paid by someone else.

D.	zero, since a college education will allow a student to earn a larger income after graduation.

E.	none of the above

Q.4)	The opportunity cost of an item is

A.	what you give up to get that item.

B.	the dollar value of the item.

C.	usually less than the dollar value of the item.

D.	the number of hours needed to earn money to buy the item.

E.	none of the above

Q.5)	In a market economy, economic activity is guided by

A.	the government.

B.	corporations.

C.	central planners.

D.	the president

E.	self-interest and prices.

Q.6)	Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

A.	There is no such thing as a free lunch.

B.	People buy more when prices are low than when prices are high.

C.	No matter how much people earn, they tend to spend more than they earn.

D.	Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.

E.	none of the above

Q.7)	Which of the following is not among the reasons why we need the government?

A.	the government provides social welfare services for the poor and the needy

B.	the government provides public goods and services

C.	the government regulates markets when there is a market failure

D.	the government provides free food for everyone

E.	the government imposes laws and controls to protect competitiveness of the industry

Q.8)	An outward shift of the PPF means:

A.	increased size of the government

B.	economic growth

C.	more consumption

D.	more equality among citizens

E.	none of the above

Q.9)	The PPF of a nation shows:

A.	how much people consume

B.	how much production takes place with the existing resources

C.	the prices of products

D.	the population

E.	all of the above

Q.10)	Suppose a gardener produces both green beans and corn in her garden. If she must give up 14 bushels of corn to get 5 bushels of green beans, then her opportunity cost of 1 bushel of green beans is

A.	0.36 bushel of corn.

B.	2.4 bushels of corn.

C.	2.8 bushels of corn.

D.	70 bushels of corn.

E.	1 bushel of corn

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