1. Which of the following is a reason to study economics? a. Economic analysis explains daily events. b. It helps us understand why people, firms and government behave in a certain way. c. We need to understand relevant economic applications and policy issues. d. It provides useful logic for solving complex problems. e. All of these 2. According to the text, why are some countries rich and others very poor? a. Some countries have no oil. b. People have no property rights. c. Access to education is very limited. d. High tariffs prevent international trade. e. All of these. 3.The primary reason to explain why some nations are rich and others poor is a. A democratic government b. A strong judicial system c. Access to education d. Private ownership e. A stable currency 5.Private property rights are important because a. they create incentives for people to improve their standard of living. b. the Constitution says so. c. they allow students to choose their major field of study in college. d. an economy cannot grow without them. e. all of these 7.Overfishing, and in some cases extinction of species result from: a. scarcity b. greedy fishermen who cheat and take more than their fair share c. no one has an incentive to take care of it d. lack of laws to control the amount of fish taken e. all of these 8.Sonia works at a restaurant where tips are pooled and divided equally. Anna works at a different restaurant where she keeps the tips her customers leave for her. Which of the following is true? a. Both work equally hard because their hourly wage from the employer is low, and they can make up for this with tips b. Sonia works harder, because she receives the same amount of tips as other workers. c. Anna works harder, because she works at an expensive restaurant. d. Anna works harder because her tips are her private property. e. It's impossible to say without more information. 9.The main reason villagers in Xiaogang produced more rice than those in surrounding villages was a. they had better farmland. b. they were given better seeds. c. they were able to keep the output they produced individually. d. they made each family responsible for a certain, higher quota 12.Economic freedom is a. the right to own property. b. not having to pay taxes. c. exists only in some countries. d. affects only poor people. e. the ability to engage in voluntary trade. 14.Scarcity a. ensures people become satisfied with less than they want. b. exists only during a recession. c. exists only in some countries. d. affects only poor people. e. requires people to make choices. Chapter 2—Markets and the Market Process 1.____ is an example of an allocation mechanism. a. Market b. First-come, first-served c. Government dictate d. Random e. All of these are examples of allocation mechanisms. 4.Which of the following mechanisms is unfair? a. Market. b. First-come, first-served. c. Government d. Random e. All of these are unfair in a sense; it depends on the incentives each creates. 7.What incentives are created under a first come, first served allocation mechanism? a. Fairness b. Equality for all c. To be first d. To produce the most e. To acquire purchasing ability (to obtain income and wealth) 8. What incentives are created under a government allocation scheme? a. Fairness b. Equality for all c. To be first d. To be in favor with or match up with government's rules e. To acquire purchasing ability (to obtain income and wealth) 9. What incentives are created under a random allocation scheme? a. Fairness b. Equal results for all c. To be first d. To be in favor with or match up with government's rules e. No incentives are created Chapter 3—Applications of Demand and Supply 1. A change in consumer tastes for low-carb food and a decrease in their preferences for low-fat meals does not lead to which of the following? a. An inward shift of the demand curve for low-fat meals b. An outward shift of the demand curve for low-carb food c. An increase in the amount of resources used to produce low-carb food d. A decrease in the amount of resources used to produce low-fat meals e. A reduction in the value of resources used in low-carb food

Read less