Question 1

Which of the following best describes the concept of scarcity in economics?

Accepted Answer

Scarcity exists because resources are limited and human wants are unlimited.

Question 2

A city government decides to allocate tickets to a popular concert by lottery rather than by price. According to economic principles, what is this an example of?

Accepted Answer

Rationing scarce goods by a non-price mechanism.

Question 3

Which of the following is NOT considered a scarce resource according to the study materials?

Accepted Answer

Sunlight in a desert region

Question 4

Suppose a student spends an hour studying economics instead of working at a part-time job that pays $15 per hour. What is the opportunity cost of studying for that hour?

Accepted Answer

$15, the wage the student could have earned.

Question 5

Which of the following statements is an example of positive economics?

Accepted Answer

"An increase in the minimum wage will lead to higher unemployment among teenagers."

Question 6

A country has to decide how to allocate its limited resources between national defense and education. This is an example of:

Accepted Answer

Scarcity forcing choices among competing uses.

Question 7

Which of the following is a pitfall to avoid in economic thinking?

Accepted Answer

Assuming that association is the same as causation.

Question 8

If a new technology increases the productivity of workers, what is the most likely effect on scarcity?

Accepted Answer

Scarcity will still exist because human wants remain unlimited.

Question 9

Which of the following best illustrates the economic way of thinking?

Accepted Answer

Comparing the additional benefits and costs of a decision before acting.

Question 10

A government uses a first-come, first-served system to allocate scarce COVID-19 vaccines. What is a likely consequence of this rationing method?

Accepted Answer

People may spend excessive time waiting in line, which is a non-monetary cost.

Question 11

Which of the following is a normative economic statement?

Accepted Answer

"The government should provide free college education to all citizens."

Question 12

Suppose a country has the following production possibilities for two goods, A and B. If the country is currently producing at a point inside its production possibilities frontier (PPF), what does this indicate?

Accepted Answer

Resources are not being used efficiently.

Question 13

Which of the following is an example of a real-world opportunity cost?

Accepted Answer

A doctor choosing to attend a medical conference instead of seeing patients, thus forgoing the income from patient visits.

Question 14

If the price of a scarce good increases, what is the most likely economic outcome?

Accepted Answer

The good will be allocated to those willing to give up more to obtain it.

Question 15

Which of the following best explains why competition arises in an economy?

Accepted Answer

Scarcity of resources forces individuals to compete for limited goods.

Question 16

A student claims, "Because two events happened together, one must have caused the other." Which economic pitfall does this illustrate?

Accepted Answer

Confusing association with causation.

Question 17

Suppose a new law requires all companies to provide more pleasant working conditions. According to the concept of scarcity, what is a likely result?

Accepted Answer

Resources will need to be reallocated from other uses to improve working conditions.

Question 18

Which of the following best describes the difference between positive and normative economics?

Accepted Answer

Positive economics deals with what is, while normative economics deals with what ought to be.

Question 19

A company must choose between investing in new machinery or increasing employee training. According to economic principles, what is the opportunity cost of choosing new machinery?

Accepted Answer

The benefits that would have been gained from increased employee training.

Question 20

Which of the following equations best represents the concept of opportunity cost?

Accepted Answer

$$Opportunity\ Cost = Value\ of\ Next\ Best\ Alternative\ Forgone$$

Chapter 1: The Economic Approach – Scarcity, Choice, and Economic Thinking

Study Guide - Practice Questions

Study Guide - Flashcards