C A government is an example of an economic agent.

1 Copyright © 2022 Pearson Education Ltd.Economics, 3e, Global Edition (Acemoglu/Laibson/List) Chapter 1 The Principles and Practice of Economics

1.1 The Scope of Economics

1) Which of the following statements is TRUE?

• All economic agents are necessarily individuals.
• A worker who shirks work is not an economic agent.
• A government is an example of an economic agent.
• A street gang is not an economic agent.

Answer: C

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Economic Agents and Economic Resources

2) Which of the following best describes scarce resources?

• Resources that most people cannot afford to buy
• Resources that can only be distributed efficiently by the government
• Resources for which the quantity demanded is the same for all economic agents
• Resources for which the quantity that people want exceeds the quantity that is freely available

Answer: D

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Economic Agents and Economic Resources

3) Which of the following is NOT a scarce resource?

• Gold
• Pollution
• Petroleum
• iPhones

Answer: B

Difficulty: Easy

AACSB: Application of Knowledge

TopicEntry: Economic Agents and Economic Resources

4) In economics, scarcity refers to the situation of ________.

• making the best use of limited information
• having more wants than the amount of available resources
• the government rationing available goods and services
• sellers setting the prices of their products too high for people to be able to afford them

Answer: B

Difficulty: Medium

AACSB: Analytical Thinking

TopicEntry: Economic Agents and Economic Resources

(Economics, 3e (Global Edition) By Daron Acemoglu, David Laibson, John List ) (Test Bank, For Complete File, Download link at the end of this File) 1 / 4

2 Copyright © 2022 Pearson Education Ltd.5) Which of the following statements is TRUE?

• Gold is not a scarce resource.
• Both life-saving drugs and ice cream are examples of scarce goods.
• If a scarce resource is given away for free, everyone will be able to consume it.
• Scarcity means that there is an imbalance between unlimited resources and limited wants.

Answer: B

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Economic Agents and Economic Resources

6) What are scarce resources? Why are economic agents concerned with the allocation of these resources?Answer: Scarce resources are resources for which the quantity that agents want exceeds the quantity that is freely available. Economic agents need to satisfy their unlimited wants in a world of limited resources. This makes it important for them to understand how these scarce resources are to be used and distributed in order to optimize allocation.

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Economic Agents and Economic Resources

7) Define economics. Who are economic agents?Answer: Economics is the study of how agents choose to allocate scarce resources and how these choices affect society. An economic agent is an individual or a group that makes choices.

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Economic Agents and Economic Resources

8) Economics is primarily the study of ________.

• the mental functions and behavior of individuals and groups
• the state, nation, government, and politics and policies of governments
• the problems related to the existence and evolution of society
• how agents choose to allocate scarce resources and how these choices affect society

Answer: D

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Definition of Economics

9) Economics is primarily the study of ________.

• the relationship between matter and its motion
• agents' choices and their impact on society
• events of the past and how these events affect present human behavior
• the different types of governments and the impact of their policies on a nation

Answer: B

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Definition of Economics 2 / 4

3 Copyright © 2022 Pearson Education Ltd.

10) ________ is analysis that generates objective descriptions or predictions about the world that can be verified with data.

• Positive economics
• Negative economics
• Microeconomics
• Normative economics

Answer: A

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Positive Economics and Normative Economics

11) Which of the following is an example of a positive economic statement?

• The pricing policies followed in single-producer markets should be strictly supervised.
• Unemployment is more harmful than inflation.
• Higher interest rates will encourage more savings.
• Pollution is one of the most serious economic problems.

Answer: C

Difficulty: Medium

AACSB: Application of Knowledge

TopicEntry: Positive Economics and Normative Economics

12) Which of the following is an example of a positive economic statement?

• The government should ideally work as a welfare state.
• An increase in income causes an increase in savings.
• Economics is the most useful social science.
• Eliminating poverty is more important than reducing inflation.

Answer: B

Difficulty: Medium

AACSB: Application of Knowledge

TopicEntry: Positive Economics and Normative Economics

13) ________ economics prescribes what an individual or society ought to do.

• Positive
• Negative
• Behavioral
• Normative

Answer: D

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Positive Economics and Normative Economics

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4 Copyright © 2022 Pearson Education Ltd.14) Which of the following is an example of a normative economic statement?

• A cut in the tax rate will lead to an increase in consumption.
• Relaxation of import duties will encourage imports.
• An increase in subsidies to farmers will boost agricultural production.
• An increase in social security benefits will increase the welfare of all economic agents.

Answer: D

Difficulty: Medium

AACSB: Application of Knowledge

TopicEntry: Positive Economics and Normative Economics

15) Which of the following is an example of a normative economic statement?

• An increase in government expenditure will lead to an increase in well-being.
• An increase in the money supply will lead to an increase in the inflation rate.
• An increase in income is accompanied by an increase in savings.
• An increase in income is accompanied by an increase in consumption.

Answer: A

Difficulty: Medium

AACSB: Application of Knowledge

TopicEntry: Positive Economics and Normative Economics

16) Which of the following statements is TRUE?

• Positive economics deals with issues that are subjective.
• Normative statements depend on personal preferences.
• Positive economics recommends what people ought to do.
• Normative economic statements can be confirmed or disproven.

Answer: B

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Positive Economics and Normative Economics

17) Which of the following statements correctly differentiates between positive and normative economics?

• Positive economics is descriptive, whereas normative economics is advisory.
• Positive economics describes what people ought to do, whereas normative economics

describes what people actually do.

• Positive economics is based on judgments, whereas normative economics is not.
• Positive economics can only be applied to microeconomics, whereas normative economics

can be applied to both microeconomics and macroeconomics.

Answer: A

Difficulty: Easy

AACSB: Analytical Thinking

TopicEntry: Positive Economics and Normative Economics

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