QUESTION 1

Scarcity is a situation in which resources are limited in quantity and can be used in different ways.

True

False

QUESTION 2

One of the key economic questions is "what products do we produce?"

True

False

QUESTION 3

Ceteris paribus means "Let the buyer beware".

True

False

QUESTION 4

A small, one-unit change in value is called a marginal change.

True

False

QUESTION 5

Economists assume that individuals make informed decisions and act in their own self-interest.

True

False

QUESTION 6

Opportunity cost is the difference between the benefit and cost of some action.

True

False

QUESTION 7

The cost of a master's degree in engineering equals the tuition plus the cost of books.

True

False

QUESTION 8

When Jimmy produces 1 guitar his costs total $250. When he produces 2 guitars his total costs are $400. This means that Jimmy's marginal cost of producing the second guitar is $200.

True

False

QUESTION 9

If a company's total costs per day increase from $500 to $600 by adding another worker, but its additional benefits are $150, it is sensible to add that additional worker.

True

False

QUESTION 10

According to the principle of diminishing returns, an additional worker decreases total output.

True

False

False

QUESTION 11

When product prices increase faster than nominal wages increase, the real value of wages decreases.

True

False

QUESTION 12

What matters to people is the real value of money or income.

True

False

QUESTION 13

Markets exist to facilitate exchange between people.

True

False

QUESTION 14

The market system works by getting each person, motivated by his or her own self-interest, to produce products for other people.

True

False

QUESTION 15

If the quantity supplied of a product is greater than the quantity demanded for a product, there is pressure in the market to push the price upward.

True

False

QUESTION 16

Excess supply in an unregulated market will cause the price of a product to fall.

True

False

QUESTION 17

Two goods are substitutes if an increase in the price of one good leads to an increase in demand for the other.

True

False

QUESTION 18

An increase in demand will cause the equilibrium price and quantity to rise, ceteris paribus.

True

False

QUESTION 19

A decrease in population would shift the demand curve to the left.

True

False

QUESTION 20

An increase in wages will shift the supply curve up and to the left.

True

False

QUESTION 21

If supply of a product increases and demand for the product decreases, equilibrium price will definitely change.

True

False

QUESTION 22

Real GDP measures the value of goods and services using current-year prices.

True

False

QUESTION 23

GDP measures underestimate the value of output produced by an economy because they include services not transferred through markets.

True

False

QUESTION 24

Unemployment occurs even during periods when the economy is growing.

True

False

QUESTION 25

Structural unemployment is unemployment reflecting a mismatch of skills and jobs.

True

False