Principles Of Economics Quiz #1

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 Principles Of Economics Quiz #1
Each quiz is worth 2. 5 percent of your final grade in this course. This is the first of a total of 4 quizzes you must take.

  
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  • 1. 
    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


  • 2. 
    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


  • 3. 
    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


  • 4. 
    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.


  • 5. 
    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


  • 6. 
    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


  • 7. 
    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


  • 8. 
    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


  • 9. 
    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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