1. Which of the following best define economics?

a. how society manages its scarce resources.

b. how to run a business most profitably.

c. how to predict inflation, unemployment, and stock prices.

d. how the government can stop the harm from unchecked self-interest

2. A person should consume less or even none of something when its marginal:

a. Benefit exceeds its marginal cost.

b. Cost exceeds its marginal benefit.

c. Cost equals its marginal benefit.

d. Benefit is still positive.

3. Among the following which is an economic problem?

A.What is the current national rate of unemployment?

B.Is the economy experiencing a decline in the rate of inflation?

C.Will a new type of television set increase the number of buyers?

D.Is the production of goods and services in the economy greater this year than last year?

4. A normative statement is one that:

A.Is based on the law of averages.

B.Applies only to microeconomics.

C.Applies only to macroeconomics.

D.Is based on value judgments.

5.The problems of aggregate inflation and unemployment are:

A.Major topics of macroeconomics.

B.Not relevant to a nation's economy.

C.Major topics of microeconomics.

D.Peculiar to command economies

6.The term business cycle refers to the

a.Short-term ups and downs in the price level

b.Long-term trends in the price level

c.Short-term ups and down in the level of economic activity

d.Long-term trends in the level of economic activity

7.A policy of causation is ___________

a.Post hoc fallacy

b.Fallacy of composition

c.Ockham's razor

d.Ceteris paribus

8.A statement or set of related statements about cause and effect, action and reaction.

a.Descriptive economics

b.Economic theory

c.Model

d.Variable

9.What is economics?

a.Economics is the study of money and financial systems.

b.Economics is the study of business.

c.Economics is a behavioral science that studies how people make choices.

d.Economics is a natural science that studies the resources that nature and previous generations have provided.

10.What is opportunity cost?

a.Opportunity cost refers to costs that cannot be avoided, regardless of what is done in the future, because they have already been incurred.

b.Opportunity cost is the value of what we give up by not making the alternative choice.

c.Opportunity cost is a business concept that explains why it is important to consider the additional cost of production, not just the initial cost, in making production decisions.

d.Opportunity cost is a cost associated with the allocation of abundant resources among alternative uses.