charitable contributions in an economy.

03 Oct charitable contributions in an economy.

Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.

1. When a society cannot produce all the goods and services people wish to have it is said that the economy is experiencing

a. scarcity.

b. communism.

c. externalities.

d. market failure.

2. Daniel decides to spend the last two hours of the night before his economics exam studying instead of sleeping. For Daniel, his tradeoff would be

a. nothing, since no dollar value can be put on sleep.

b. nothing, since studying would be more beneficial than sleep.

c. the six hours of sleep he could have had if he had gone to bed before midnight.

d. the two hours of rest he would have gotten.

3. Which of the following best defines efficiency?

a. absolute fairness

b. equal distribution

c. minimum waste

d. consumer sovereignty

4. When government policies such as the welfare system try to help the most needy members of society, it

a. increases equity and reduces efficiency.

b. reduces charitable contributions in an economy.

c. increases the productivity of the needy in the society.

d. causes market failure to occur.

5. The decisions of firms and households are guided by profit and self-interest in a

a. command economy.

b. traditional economy.

c. market economy.

d. All of the above are correct.

6. Prior to its collapse, communist countries worked on the premise that economic well-being could be organized only through/by

a. a market economy.

b. government central planners.

c. government-imposed private monopolies.

d. increased competition.

7. The term market failure refers to

a. a situation in which the market on its own fails to allocate resources efficiently.

b. an unsuccessful advertising campaign which reduces buyer demand.

c. a situation in which competition among firms becomes ruthless.

d. a firm which is forced out of business because of losses.

8. The self-interest of the participants in an economy is guided into promoting general economic self-interest by

a. the invisible hand.

b. market power.

c. government intervention.

d. property rights.

9. Factors of production are

a. the mathematical calculations firms make to determine production.

b. weather and social and political conditions that affect production.

c. the physical relationships between economic inputs and outputs.

d. inputs into the production process.

Figure 2-1

????

10. Refer to Figure 2-1. Which arrow shows the flow of income payments?

a. A

b. B

c. C

d. D

Figure 2-3

????

11. Refer to Figure 2-3. The economy CANNOT produce at which point or points?

a. A

b. C

c. A, C

d. A, C, D,

12. Refer to Figure 2-3. Which point or points are efficient?

a. B, E

b. A, B, E

c. D

d. C

Figure 2-4

????

13. Refer to Figure 2-4. The opportunity cost to the economy of getting 30 additional toothbrushes by moving from point A to point D is

a. 10 toasters.

b. 15 toasters.

c. 20 toasters.

d. 25 toasters.

Figure 2-5

????

14. Refer to Figure 2-5. The shift of the frontier from A to B was most likely caused by which of the following?

a. technological improvement in the production of batteries

b. more labour available in the economy

c. a general technological breakthrough

d. more capital available in the economy

15. Microeconomics is the study of

a. the behaviour of consumers.

b. how individual households and firms make decisions.

c. how government affects the economy.

d. how the economy as a whole works.

Figure 2-9

????

16. Refer to Figure 2-9. Cups of coffee per day and the hours that someone can go without sleep have