Introduction To Economics Questions!

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Questions: 8 | Attempts: 565 | Updated: Nov 16, 2023

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Introduction To Economics Questions! - Quiz

It doesn’t matter what topic you’re dealing with, whether it’s something you have a great interest in or something you find boring but thinks will come in handy, everybody starts in the same place when they take on a brand-new subject – chapter one! In the following quiz, we’ll be doing just that as we take a look at some chapter one questions with regards to the study of economics!

Questions and Answers

1.

Scarcity implies that the allocation scheme chosen by society can:
- A.
  
  Not make more of any one good
- B.
  
  Always make more of any good
- C.
  
  Typically make more of a good but at the expense of making less of another
- D.
  
  Always make more of all goods simultaneously
Correct Answer
C. Typically make more of a good but at the expense of making less of another

Explanation
Scarcity refers to the limited availability of resources in relation to unlimited wants and needs. The given answer suggests that the allocation scheme chosen by society can typically increase the production of a specific good, but this comes at the cost of producing less of another good. This implies that resources are finite and cannot be used to produce an unlimited amount of goods simultaneously. Therefore, the society needs to make choices and trade-offs when allocating resources to different goods based on their priorities and needs.

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2.

A production possibilities frontier is a simple model of:
- A.
  
  Scarcity and allocation
- B.
  
  Prices and output
- C.
  
  Production and costs
- D.
  
  Inputs and outputs
Correct Answer
A. Scarcity and allocation

Explanation
A production possibilities frontier is a simple model that represents the concept of scarcity and allocation. It demonstrates the limited resources available to produce goods and services, and the need to allocate these resources efficiently to meet society's needs and wants. The production possibilities frontier shows the different combinations of goods and services that can be produced given the available resources and technology, and helps in understanding the trade-offs and opportunity costs involved in production decisions.

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3.

The underlying reason that there are unattainable points on a production possibilities frontier diagram is that there:
- A.
  
  Is government
- B.
  
  Are always choices that have to be made
- C.
  
  Is a scarcity of resources within a fixed level of technology
- D.
  
  Is unemployment of resources
Correct Answer
C. Is a scarcity of resources within a fixed level of technology

Explanation
The correct answer is that there is a scarcity of resources within a fixed level of technology. This means that there are limited resources available to produce goods and services, and these resources cannot be infinitely expanded. Therefore, there will always be a limit to the production possibilities, resulting in unattainable points on the production possibilities frontier diagram.

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4.

The underlying reason production possibilities frontiers are likely to be bowed out (rather that linear) is:
- A.
  
  Choices have consequences
- B.
  
  There are always opportunity costs
- C.
  
  Some resources and people can be better used producing one good rather than another
- D.
  
  There is always some level of unemployment
Correct Answer
C. Some resources and people can be better used producing one good rather than another

Explanation
The correct answer is "some resources and people can be better used producing one good rather than another". This is because production possibilities frontiers represent the maximum output combinations of two goods that an economy can achieve given its resources and technology. The bowed-out shape of the frontier indicates that resources are not equally efficient in producing different goods. Some resources may be better suited for producing one good, while others may be better suited for producing another. This reflects the concept of comparative advantage, where resources are allocated to their most productive uses.

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5.

The optimization assumption suggests that people make:
- A.
  
  Irrational decisions
- B.
  
  Unpredictable decisions
- C.
  
  Decisions to make themselves as well off as possible
- D.
  
  Decisions without thinking very hard
Correct Answer
C. Decisions to make themselves as well off as possible

Explanation
The optimization assumption suggests that people make decisions to make themselves as well off as possible. This means that individuals are rational and will choose the option that maximizes their own benefits or utility. It assumes that people carefully consider the available alternatives and weigh the costs and benefits before making a decision. This assumption is commonly used in economics and decision-making models to understand and predict human behavior.

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6.

Imagine an economist ordering pizza by the slice. WHen deciding how many slices to oder she would pick that number where the enjoyable of the ___equals the enjoyment she could get from using the money on another good.
- A.
  
  First slice
- B.
  
  Last slice
- C.
  
  Average slice
- D.
  
  Total number of slices
Correct Answer
B. Last slice

Explanation
The economist would pick the last slice of pizza because it represents the point where the enjoyment of consuming one more slice equals the enjoyment she could get from using the money on another good. This implies that she has reached the maximum level of satisfaction from consuming pizza and any additional slice would not provide as much enjoyment as using the money for another good.

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7.

Of course, all individual students are better off if they get better grades. If you were to conclude that all students would be better off if everyone received a "A" you would:
- A.
  
  Have fallen victim to the fallacy of scarcity
- B.
  
  Be right
- C.
  
  Have fallen victim to the fallacy of composition
- D.
  
  Be mistaking correlation with causation
Correct Answer
C. Have fallen victim to the fallacy of composition

Explanation
If you were to conclude that all students would be better off if everyone received an "A," you would have fallen victim to the fallacy of composition. This fallacy occurs when someone assumes that what is true for the parts is also true for the whole. In this case, while it may be true that individual students benefit from better grades, it does not necessarily mean that everyone receiving an "A" would be beneficial for all students as a whole. This assumption overlooks the potential negative consequences, such as grade inflation or decreased motivation for students to excel.

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8.

If you were to conclude, after carefully examining data and using proper evaluation techniques, that a tax credit for attending college benefits the poor more than a tax deduction (of equal total cost to the government) would, you would have engaged in ___ analysis to reach that conclusion.
- A.
  
  Negative
- B.
  
  Positive
- C.
  
  Normative
- D.
  
  Creative
Correct Answer
B. Positive

Explanation
The correct answer is positive. This is because the question is asking about the type of analysis used to reach the conclusion that a tax credit for attending college benefits the poor more than a tax deduction. Positive analysis is based on facts and data, and involves examining the actual effects and outcomes of a policy or decision. In this case, the conclusion is reached by carefully examining data and using proper evaluation techniques, which aligns with the characteristics of positive analysis.

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Introduction To Economics Questions!

Scarcity implies that the allocation scheme chosen by society can:

A production possibilities frontier is a simple model of:

The underlying reason that there are unattainable points on a production possibilities frontier diagram is that there:

The underlying reason production possibilities frontiers are likely to be bowed out (rather that linear) is:

The optimization assumption suggests that people make:

Imagine an economist ordering pizza by the slice. WHen deciding how many slices to oder she would pick that number where the enjoyable of the ___equals the enjoyment she could get from using the money on another good.

Of course, all individual students are better off if they get better grades. If you were to conclude that all students would be better off if everyone received a "A" you would:

If you were to conclude, after carefully examining data and using proper evaluation techniques, that a tax credit for attending college benefits the poor more than a tax deduction (of equal total cost to the government) would, you would have engaged in ___ analysis to reach that conclusion.