Question 1.Economics is best defined as the

1.Economics is best defined as the
A) study of how people make choices to satisfy their wants.
B) study of individual self-interests.
C) study of how government can most efficiently raise funds by taxation.
D) process by which goods are sold in free markets.

2. Which of the following is NOT a reason to study economics?
A) to learn a way of thinking
B) to understand society and global affairs
C) to learn how eliminate scarcity in your life
D) to learn how to make better decisions

3. In economics, ________ are limited but ________ are unlimited.
A) wants; resources
B) resources; wants
C) money; ideas
D) ideas; money

4. n his book, An Inquiry into the Nature and Causes of the Wealth of Nations, economist Adam Smith argued that individuals

A) always tend to act in an altruistic manner.
B) always consider the impact of their actions on the welfare of others.
C) are motivated by self-interest.
D) are generally not concerned with economic questions.

5.Which of the following statements is true about scarcity?
A) Only expensive goods are considered to be scarce.
B) Scarcity is not a problem for the wealthy.
C) Scarcity is only a problem when a country has too large a population.
D) Scarcity arises when there is a wide disparity in income distribution.
E) None of the above

6. An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.
A) market
B) model
C) variable
D) trade-off

7. If people act as if they systematically pursue their own self-interest, then they will most likely
A) respond irrationally to any incentive.
B) respond to a given incentive in a random manner.
C) respond predictably to a given incentive.
D) not respond to any incentive.

8. Economists assume people behave rationally, which means that people

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