Excercise 1.

1
Multiple Choice
Identify the choice that best completes the statement or answers the question.
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1. Economics is the study of choice under conditions of

a. demand
b. supply
c. scarcity
d. opportunity
e. abundance
2. Scarcity is a situation in which
a. available resources cannot satisfy all potential uses for the resources
b. there are unlimited wants
c. resources outnumber the potential uses for resources in society
d. there is a surplus, since buyers cannot obtain all of the goods that they want
e. society's productive capital is publicly owned
3. Economics is the study of
a. scarcity under conditions of democracy
b. choice within a system of capitalism
c. financial markets
d. the role of government in a market system
e. choice under conditions of scarcity
4. Microeconomic models focus on the behavior of
a. the household, business, and government sectors
b. the household sector as a whole
c. individual households and business firms
d. individual households, business firms, and government agencies
e. the business and government sectors
5. Suppose two economists disagree about who would be helped or hurt by certain legislation. These
disagreements
a. are positive in nature
b. are minor and rarely lead to different policies or conclusions
c. are normative in nature
d. occur as the result of a mistake made by an economist
e. occur because economic models are more complex, and subject to error, than the real
world
6. Normative economics deals with
a. social norms and customs that influence economic behavior
b. norms of behavior that can be taken as facts
c. statements of fact
d. statements about the way things ought to be
e. government rules and regulations that drag down the economy
7. A critical assumption is one
a. that affects a model in important ways
b. that is understood only by economists
c. that makes a model simpler without affecting any of its important conclusions
d. with negative implications for a process or outcome
e. that is critically unreasonable

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8. Which of the following is the study of what "should be" rather than the study of what "is"?
a. positive economics
b. law and economics
c. microeconomics
d. development economics
e. normative economics
9. An economic model
a. uses equations to understand normative economic phenomena
b. often omits crucial elements
c. simplifies reality in order to focus on crucial elements
d. produces poor predictions if it includes unrealistic assumptions
e. cannot be proven wrong

Excercise 1.1
Answer Section
MULTIPLE CHOICE
1. ANS:
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2. ANS:
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3. ANS:
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4. ANS:
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5. ANS:
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9. ANS:
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C
PTS: 1
DIF: 1
financial theories, analysis, reporting, and markets
Scarcity, tradeoffs, and opportunity cost
A
PTS: 1
DIF: 2
financial theories, analysis, reporting, and markets
Scarcity, tradeoffs, and opportunity cost
E
PTS: 1
DIF: 2
financial theories, analysis, reporting, and markets
Economics | Scarcity and Choice
D
PTS: 1
DIF: 2
financial theories, analysis, reporting, and markets
Microeconomics and Macroeconomics
A
PTS: 1
DIF: 2
financial theories, analysis, reporting, and markets
Positive and Normative Economics
D
PTS: 1
DIF: 2
financial theories, analysis, reporting, and markets
Positive and Normative Economics
A
PTS: 1
DIF: 2
financial theories, analysis, reporting, and markets
The Methods of Economics
E
PTS: 1
DIF: 1
financial theories, analysis, reporting, and markets
Positive and Normative Economics
C
PTS: 1
DIF: 2
financial theories, analysis, reporting, and markets
The Methods of Economics

TOP: Economics | Scarcity and Choice

TOP: Economics | Scarcity and Choice
LOC: The study of economics
LOC: The study of economics
LOC: The study of economics
LOC: The study of economics
LOC: The study of economics
LOC: The study of economics
LOC: The study of economics