Question(TCO 1) The general concern of economics is with the study of th

(TCO 1) The general concern of economics is with the study of the

Student Answer: degree of competition in stock and bond markets in the economy.

efficient use of limited productive resources to satisfy economic wants.

issue of equality in the distribution of income and wealth among households.

budget deficits in the domestic economy and trade deficits in the international economy.

Question 2. Question :

(TCO 1) The term scarcity in economics refers to the fact that

economic wants are limited and resources are abused.

even in the richest country some people go hungry.

no country can produce enough products to satisfy everybody’s economic wants.

it is impossible to produce too much of any particular good or service in a market economy.

Question 3. Question :

(TCO 1) Are the goods that businesses offer for “free” to consumers also free to society?

Yes, because the individual consumer does not have to pay for them.

Yes, because the marginal benefit is greater than the marginal cost.

No, because scarce resources were used to produce the free goods.

No, because society does not assign a value to free goods.

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Question 4. Question :

(TCO 1) Which is considered to be an economic resource by economists?

Rent

Money

Labor

Wages

Question 5. Question :

(TCO 1) If an economy is producing at a point inside a production possibilities curve, then

the economy is efficient.

there is economic growth.

resources are unemployed.

resources are fully employed.

Question 6. Question :

(TCO 1) Which would not be characteristic of a capitalist economy?

Government ownership of the factors of production

Competition and unrestricted markets

Reliance on the market system

Free enterprise and choice

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Question 7. Question :

(TCO 1) The term dollar votes means

inflation will occur if consumers don’t spend wisely.

voters may be offered dollars to help elect certain political candidates.

government is responsible for determining what will be considered legal tender.

consumers “vote” for certain products to be produced by how they spend their incomes.

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Question 8. Question :

(TCO 1) The circular flow model

assumes that central planning is taking place.

illustrates how natural resources are created.

illustrates how money is created by the banking system.

illustrates the interdependence of businesses and consumers.

Question 9. Question :

(TCO 1) In a market system, well-defined property rights are important because they

reduce unnecessary investment.

limit destructive economic growth.

create economic problems.

encourage economic activity.

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Question 10. Question :

(TCO 1) Which is necessary to make a trade in a barter economy?

Money

Unlimited wants

A medium of exchange

A coincidence of wants

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Question 11. Question :

(TCO 1) Tammie makes $150 a day as a bank clerk. She takes off two days of work without pay to fly to another city to attend the concert of her favorite music group. The cost of transportation for the trip is $250. The cost of the concert ticket is $50. What is the opportunity cost of Tammie’s trip to the concert? Show your calculations

Question 12. Question :

(TCO 1) Identify some intrinsic qualities of capitalist and command economic systems. Identify two countries that practice each.

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