Indicate the answer choice that best completes the statement or answers the question.

Chapter 1 - The Role and Method of Economics

Powered by Cognero Page 1

Indicate the answer choice that best completes the statement or answers the question.

1.What is economics most concerned with?

• keeping interest rates low
• making money
• allocating scarce resources to satisfy unlimited wants
• governments’ efficient spending of tax revenues

2.What is the central concern of economics?

• regulating the stock market
• restraining people’s greed
• finding more resources to satisfy everyone's wants
• making the best use of scarce resources to satisfy our unlimited wants

3.Why is there scarcity?

• because marginal costs tend to exceed marginal benefits
• because human wants and needs are limited
• because Canada has too many people living in poverty
• because our unlimited wants exceed our limited resources

4.Why does the problem of scarcity exist?

• because resources are limited, relative to wants
• because governments fail to intervene in the marketplace
• because resources are unlimited, relative to wants
• because the world has many people living in poverty

5.What does scarcity result from?

• government decision making
• people not understanding economics
• wants that exceed the resources necessary to provide them
• an increase in globalization

6.What causes scarcity?

• the allocation of goods by prices
• specialization and division of labour
• unlimited wants and limited resources
• the market mechanism

7.What does economics primarily explore?(Exploring Microeconomics, 5th Canadian Edition, 5e Robert Sexton, Peter Fortura, Colin Kovacs) (Test Bank, Answer at the end of each Chapter) 1 / 4

Name:

Class:

Date:

Chapter 1 - The Role and Method of Economics

Powered by Cognero Page 2

• how the government allocates its budget among competing political interests
• how stock and bond prices fluctuate in response to changes in demand or supply
• how goods and services are produced and distributed in a world with limited resources
• how businesses market products under competitive conditions

8.What does economics primarily study?

• how firms compete for profits in the marketplace
• how limited resources are allocated to satisfy unlimited wants
• how we deal with unemployed resources
• how prices are set in the marketplace

9.What do economists mean when they state that a good is scarce?

• People will want to buy more of the good regardless of price.
• It is impossible to expand the availability of the good.
• Our wants exceed our limited resources.
• There is a shortage of the good at a sale price.

10.Which of the following statements about scarcity is the most accurate?

• It occurs only in centrally planned economies.
• It will likely be eliminated by technological progress.
• It occurs when there are insufficient resources to provide for human wants.
• It exists only in poor nations.

11.According to most economists, what is the fundamental economic problem?

• controlling the stock market
• government intervention into markets
• solving the problem of poverty
• scarcity and how people deal with it

12.What do all economic problems arise from?

• scarcity
• not enough money
• unemployment
• competition

13.As defined by an economist, what does the word scarcity mean?

• Consumers are too poor to purchase the available goods and services.
• Demand exceeds supply at the current market price.
• The desire for goods exceeds our ability to produce them with limited available resources. 2 / 4

Name:

Class:

Date:

Chapter 1 - The Role and Method of Economics

Powered by Cognero Page 3

• Supply exceeds demand at the current market price.

14.Which statement best describes the problem of scarcity?

• Scarcity means that shortages occur at the existing market price.
• It is impossible to satisfy unlimited human wants with limited resources.
• When there is scarcity, individuals do not face trade-offs.
• As a result of scarcity, individuals do not have the ability to make choices.

15.What problem is caused when NOT all human wants can be satisfied through current resources and technology?

• scarcity
• positive economics
• unemployment
• marginal costs

16.What does economics primarily study?

• how to interpret corporate balance sheets and income statements
• how choices are made because of scarcity
• how to make money in the stock market
• how to operate a business

17.What do economists mean when they say goods are scarce?

• Government programs are needed to lift families out of poverty.
• At the current price, consumers are willing to buy more of a good than suppliers are willing to produce.
• Consumers do not have enough money to purchase the goods available.
• The desire for goods and services exceeds our ability to produce them with limited resources.

18.Which statement about scarcity is the most accurate?

• It is a problem that solely exits in the poorest parts of the world.
• It is only a problem in capitalistic economies.
• It is a problem that necessitates making choices and trade-offs.
• It is only a problem in the developed world.

19.Which of the following most accurately describes a scarce good?

• a good for which available resources are insufficient to satisfy unlimited human desires for it
• a good that is always in demand at any price
• a good for which there is a shortage at the current market price
• a good for which it is impossible to increase production any further given the available resources and

technology

• / 4

Name:

Class:

Date:

Chapter 1 - The Role and Method of Economics

Powered by Cognero Page 4

20.Which of the following questions is economics fundamentally concerned with?

• How are limited wants allocated to satisfy limited resources?
• How are limited resources allocated to satisfy unlimited wants?
• How are scarce resources allocated to satisfy limited wants?
• How are limited resources allocated to satisfy scarce wants?

21.Which statement best describes the study of scarcity?

• using limited resources to best satisfy our unlimited desires
• using limited resources to promote full employment and price stability
• using unlimited resources to promote full employment and price stability
• using unlimited resources to best satisfy our unlimited desires

22.What is the primary concern of economics?

• studying limited desires in the face of unlimited resources
• studying problems such as poverty and unemployment
• studying production and distribution of goods in a world of unlimited resources
• studying production and distribution of goods in a world of limited resources

23.Which statement about economics is the most accurate?

• It explores how choices are made between conflicting wants and desires in a world of scarcity.
• It relies entirely upon normative analysis.
• It typically uses controlled experiments to learn about consumer and firm behaviour.
• It uses models that cannot be tested empirically due to the complex nature of the economy.

24.What is the solution to solving the fundamental economic problem?

• to allocate limited resources among competing uses
• to guarantee everyone on the planet a minimum level of food, shelter, and clean water
• to eliminate poverty in the developing world
• to increase the amount of leisure time available to people

25.Which of the following is considered to be our single most precious resource?

• money
• oil
• time
• sleep

26.Which of the following statements about the scope of economics is the most accurate?

• Economics applies only to business situations.
• / 4