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Economics, Multiple Choice

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1. According to Colander, the best definition of economics is:
a. the study of how limited resources are allocated among competing needs.
b. the study of scarcity and how people deal with the problem of scarcity.
c. the study of how choices are made.
d. the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of that society.

2. The three central coordination problems any economic system must solve are:
a. what to produce, why to produce, how to produce.
b. what to produce, why to produce, for whom to produce.
c. what to produce, how to produce, for whom to produce.
d. what to produce, where to produce, how to produce.

3. Rational decision making means that:
a. marginal benefits and marginal costs of a decision are always easy to measure.
b. if the marginal benefit of the last unit of an activity exceeds its marginal cost, then more of that activity should be undertaken.
c. one should keep doing an activity until the total benefits are maximized.
d. one should keep doing an activity until the marginal costs are minimized.

4. An opportunity cost is:
a. easily measured in dollar terms.
b. the highest valued alternative that must be forgone whenever something is undertaken or
acquired.
c. only incurred when important and costly decisions are to be made.
d. not implicit in every decision we make.

5. Economic models, insights, or theories:
a. are always correct in their predictions.
b. once established as "true," are always "true."
c. are generalizations about the workings of an abstract theory.
d. always include as much detail as possible.

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What is the best answer?

1. According to Colander, the best definition of economics is:
d. the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social ...

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Economics multiple choice questions

1.The opportunity cost of receiving 100 dollars in the future as opposed to getting that 100 dollars today
is:
a.The foregone interest that could be earned if you had the money today.
b.The taxes paid on any earnings.
c.The value of $100 relative to the total income of that person.
d.The value of $100 relative to the total income of all persons.
2. If firms in the pizza industry are earning negative economic profits, which of the following will most likely occur in the future?
a.Some firms will exit the market
b.The economic profits of the firms in the industry will rise
c.The market price for pizza will rise
d.All of the above
3.The economic principle that producers are willing to produce more output when price is high is depicted by the:
a.Upward slope of the supply curve
b.Extreme steepness of the supply curve.
c.Downward slope of the supply curve.
d.Interaction of the supply and demand curves.

4.Because of consumer-consumer rivalry, the price will tend to:
a.Be driven to a lower price.
b.Rise up to the maximum price the consumers are willing and able to pay.
c.Be the same as the competitive price.
d.Be the same as the monopoly price.

5.Opportunity cost differs from accounting costs because of
a.Implicit costs
b.Accounting profits
c.Economic profits
d.Explicit costs
6.If A and B are substitutes, an increase in the price of good A would:
a.Have no effect on the quantity demanded of B.
b.Lead to an increase in demand for B.
c.Lead to a decrease in demand for B.
d.None of the statements associated with this question are correct.

7.Which of the following increases the potential for sustainable long-run industry profits?
a.Entry
b.The availability of multiple substitute
c.Presence of complements
d.None of the above
8.Negotiations between the buyer and seller of a new car is an example of:
a.Consumer-consumer rivalry.
b.Consumer-producer rivalry
c.Producer-producer rivalry.
d.Monopoly.

9.Property owners move scarce resources towards the production of goods most valued by society because
a.Government controls the allocation of resources.
b.Consumers demand inexpensive goods and services.
c.Managers are solely pursuing the interests of society.
d.Firms attempt to maximize profits.

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