Name:     ID: 
 
Email: 

Chapter 1 Practice  Test        Fall 2010                         Hit Counter

Completion
Complete each statement.
 

 1. 
A(n) ______________________________ is a graphic representation of all possible combinations of two goods that an economy can produce in a specific period of time.
 

 

 2. 
Price is the most commonly used method to ______________________________ available goods and resources.
 

 

 3. 
______________________________ include anything used to produce goods or services.
 

 

 4. 
______________________________ exists when our wants are greater than the resources available to satisfy those wants.
 

 

 5. 
When you make any choice, the most valued alternative you give up (second choice) is considered your ______________________________.
 

 

 6. 
Something that encourages or motivates a person to take an action is called a(n) ______________________________.
 

 

 7. 
______________________________ is another word for additional and is frequently used with the words costs and benefits.
 

 

 8. 
The branch of economics that deals with human behavior and choices as they relate to relatively small units like an individual or a single market is called ______________________________.
 

 

 9. 
The branch of economics that deals with human behavior and choices as they relate to the entire economy is called ______________________________.
 

 

 10. 
Something that can be felt or touched is ______________________________.
 

 

 11. 
A good is anything that satisfies a person’s wants and brings that person satisfaction, happiness, or ______________________________.
 

 

 12. 
______________________________ cannot be touched, but they represent valuable actions that others perform for us.
 

 

 13. 
In economics, a synonym for factors of production is ______________________________.
 

 

 14. 
The category of ______________________________ includes things found in nature including animals, forests, water, and minerals.
 

 

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 15. 
Rationing exists because of
a.
a surplus of products.
c.
scarcity.
b.
price.
d.
incentives.
 

 16. 
The opportunity cost of something is
a.
the dollar value of the item.
c.
more costly to the poor.
b.
less than the dollar value of the item.
d.
what you give up to get the item.
 

 17. 
The marginal cost of something is
a.
never greater than the marginal benefit.
b.
the opportunity cost minus the actual cost.
c.
the cost to produce one additional unit.
d.
an intangible resource.
 

 18. 
As the opportunity cost of college increases compared to the benefits, a person is
a.
more likely to attend college.
c.
unaffected by the change.
b.
less likely to attend college.
d.
Cannot predict.
 

 19. 
A production possibilities frontier shows
a.
all possible combinations of two goods an economy can produce.
b.
all the possible production of one particular good.
c.
all possible combinations of all the goods that an economy can produce.
d.
all the possible combinations of four goods an economy can produce.
 

 20. 
If you are making decisions at the margin, you are
a.
selecting either all or nothing at all.
b.
confused about what to do.
c.
comparing the extra benefit to the extra cost.
d.
All of the above
 

 21. 
If your parents offer you cash for every A on your report card, that is an example of
a.
an incentive.
c.
marginal cost.
b.
a bribe.
d.
a trade-off.
 

 22. 
Things that can be felt or touched are
a.
real.
c.
renewable.
b.
intangible.
d.
tangible.
 

 23. 
Labor refers to
a.
physical talents.
b.
physical and mental talents.
c.
goods that can be used as resources for production.
d.
foreign workers.
 

 24. 
Animals are classified as which of the following factors of production?
a.
land
c.
capital
b.
labor
d.
entrepreneurship
 

 25. 
Scarcity exists when
a.
things are rare.
b.
prices change.
c.
there is less of a good than people would like to have.
d.
there is an unlimited supply of a good.
 

 26. 
Which of the following groups is faced with scarcity?
a.
individuals
c.
society
b.
businesses
d.
All of the above
 

 27. 
Which of the following is scarce?
a.
resources
c.
cars
b.
clothing
d.
All of the above
 

 28. 
Economics would not exist if it were not for
a.
mathematics.
c.
incentives.
b.
scarcity.
d.
money.
 

 29. 
Opportunity cost is most similar to
a.
a trade-off.
c.
your choice.
b.
the dollar value given up.
d.
all the alternatives forfeited.
 

 30. 
Opportunity cost could be described as
a.
the dollar price paid for your selection.
c.
all the alternatives you consider.
b.
your first choice.
d.
your second choice.
 

 31. 
As the opportunity cost of a decision increases, a person will be
a.
more likely to make such a decision.
c.
unaffected.
b.
less likely to make such a decision.
d.
Cannot predict
 

 32. 
When a society spends money on national defense, there is
a.
a trade-off, since that money cannot be used for a school or a bridge.
b.
no trade-off, since everyone benefits from national defense.
c.
a trade-off during peacetime, but not during wartime.
d.
no trade-off, since it is not a personal decision.
 

 33. 
Which economic concept explains why Kobe Bryant and LeBron James chose to go directly into professional basketball rather than college?
a.
unintended effects
c.
opportunity cost
b.
marginal costs
d.
production possibilities
 

 34. 
Scarcity exists because
a.
resources are limited and wants are limited.
b.
wants are unlimited and resources are unlimited.
c.
wants can be satisfied and resources are unlimited.
d.
resources are limited and wants are unlimited.
 

 35. 
Which of the following is an example of an incentive?
a.
money
c.
a promotion
b.
grades
d.
All of the above
 

 36. 
In economics the opportunity cost of something is
a.
a bargain if it is on sale.
b.
how much it adds up to in dollars and cents.
c.
what you give up to get the item.
d.
part of your budget.
 

 37. 
High school athletes who choose not to attend college but instead select professional sports
a.
don’t realize what a college education is worth.
b.
have weighed the costs and benefits.
c.
can’t play forever and are making a poor decision.
d.
should attend college first, then play professional sports.
 

 38. 
The cost of going to college is
a.
whatever the student would have been doing if not attending college.
b.
nothing, since a degree will eventually earn more for a student later.
c.
the bill for tuition, books, dorm, food, and transportation to college.
d.
nothing for a student who receives a scholarship.
 
 
nar001-1.jpg
 

 39. 
On the accompanying production possibilities graph, which point or points are feasible?
a.
A, B, C, D, E, F
c.
F
b.
A, B, C, D, E
d.
E
 

 40. 
On the accompanying production possibilities graph, which point represents the maximum production of snowboards?
a.
A
c.
F
b.
B
d.
E
 

 41. 
On the accompanying production possibilities graph, which point or points are not feasible?
a.
D
c.
A, B, C
b.
E
d.
F
 

 42. 
Economists believe that people respond to
a.
politicians.
c.
theories.
b.
incentives.
d.
unlimited wants.
 

 43. 
Another word for marginal is
a.
modified.
c.
additional.
b.
edge.
d.
summarized.
 

 44. 
Economists believe that the British troops probably wore bright red uniforms due to the important economic concept of
a.
opportunity cost.
c.
unintended consequences.
b.
marginal utility.
d.
scarcity.
 

 45. 
To an economist, capital refers to
a.
money.
c.
resources found in nature.
b.
machinery and tools.
d.
new business opportunities.
 

 46. 
Price
a.
isn’t a fair method of rationing.
b.
allocates products to those who are willing and able to pay.
c.
constantly increases on all products.
d.
drops when a product becomes popular.
 

 47. 
Incentives include
a.
speeding tickets.
c.
taxes.
b.
grades.
d.
All of the above
 

 48. 
According to this textbook, an example of a nonrenewable resource is
a.
oil.
c.
timber.
b.
crops.
d.
animals.
 

 49. 
Which of the following is a renewable resource?
a.
oil
c.
natural gas
b.
coal
d.
timber
 

 50. 
Mandatory seatbelt laws have
a.
saved lives.
c.
impacted driver behavior.
b.
cost lives.
d.
All of the above
 



 
         Start Over