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

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Ch 01: Ten Principles of Economics

Powered by Cognero Page 1 Indicate the answer choice that best completes the statement or answers the question.

1.Resources are

• scarce for households but plentiful for economies.
• plentiful for households but scarce for economies.
• scarce for households and scarce for economies.
• plentiful for households and plentiful for economies.

2.Fundamentally, economics deals with

• scarcity.
• money.
• poverty.
• banking.

3.The overriding reason why households and societies face many decisions is that

• resources are scarce.
• goods and services are not scarce.
• incomes fluctuate with business cycles.
• people, by nature, tend to disagree.

4.The phenomenon of scarcity stems from the fact that

• most economies' production methods are not very good.
• in most economies, wealthy people consume disproportionate quantities of goods and services.
• governments restrict production of too many goods and services.
• resources are limited.

5.In most societies, resources are allocated by

• a single central planner.
• a small number of central planners.
• those firms that use resources to provide goods and services.
• the combined actions of millions of households and firms.

6.Coal is considered to be a nonrenewable energy source. Which of the following statements is correct?

• Coal is an unlimited resource.
• Coal is a scarce resource.
• Coal is a nonscarce resource.
• Coal is not a resource.

7.Economics is the study of how society manages its

• limited wants and unlimited resources.
• unlimited wants and unlimited resources.
• limited wants and limited resources.
• unlimited wants and limited resources.

8.What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services Principles of Economics, 10e Gregory Mankiw (Test Bank, 100% Original Verified, A+ Grade) 1 / 4

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Ch 01: Ten Principles of Economics

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people wish to have?

• inefficiency
• inequality
• scarcity
• market failure

• The adage, "There ain't no such thing as a free lunch," means
• even people who receive TANF benefits have to pay for food.
• the cost of living is always increasing.
• people face tradeoffs.
• all costs are included in the price of a product.

• Which of the following statements best represents the principle of the adage, "There ain't no such thing as a free

lunch"?

• Diego can attend the concert only by carpooling with siblings.
• Justin leaves wallet at home and misses lunch.
• Zehra must repair the bike tire before riding it to school.
• Dani must decide between going to Florida or Brazil for spring break.

• Suppose that you plan your activities for a hot summer day. You would like to go to the local swimming pool and see

the latest blockbuster movie. However, the only available ticket is for the same time that the pool is open. So you can only choose one activity. This illustrates the basic principle that

• people respond to incentives.
• rational people think at the margin.
• people face tradeoffs.
• improvements in efficiency sometimes come at the expense of equality.

• While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the

regulations come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that

• trade can make everyone better off.
• rational people think at the margin.
• people face tradeoffs.
• people respond to incentives.

• When society requires that firms reduce pollution, there is
• a tradeoff because of reduced incomes to the firms' owners and workers.
• a tradeoff only if some firms are forced to close.
• no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements.
• no tradeoff, since everyone benefits from reduced pollution.

• Efficiency means that
• society is conserving resources in order to save them for the future.
• society's goods and services are distributed equally among society's members.
• society's goods and services are distributed fairly, though not necessarily equally, among society's members. 2 / 4

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• society is getting the most it can from its scarce resources.

• The property of society getting the most it can from its scarce resources is called
• efficiency.
• equality.
• externality.
• productivity.

• Efficiency
• and equality both refer to how much a society can produce with its resources.
• and equality both refer to how fairly the benefits from using resources are distributed between members of a

society.

• refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from

using resources are distributed among members of society.

• refers to how evenly the benefits from using resources are distributed between members of society. Equality

refers to how much a society can produce with its resources.

• The terms equality and efficiency are similar in that they both refer to benefits to society. However, they are different

in that

• equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from

scarce resources.

• equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of

those benefits.

• equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the

benefits.

• equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical

tradeoffs.

• When society gets the most it can from its scarce resources, then the outcome is called
• equitable.
• efficient.
• normal.
• marginal.

• A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to

distribute the benefits of those resources to the members of the society in a fair manner. However, redistributing income from rich to poor reduces the reward for working hard. Therefore, society faces a tradeoff between

• guns and butter.
• efficiency and equality.
• inflation and unemployment.
• work and leisure.

• Which of the following is true?
• Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.
• Government policies usually improve upon both equality and efficiency.
• As long as the economic pie continually gets larger, no one will have to go hungry. 3 / 4

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Ch 01: Ten Principles of Economics

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• Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.

• When the government redistributes income from individuals in the top one percent of income to individuals in the

lowest income decile,

• efficiency is improved, but equality is not.
• individuals with both high levels of income and low levels of income benefit directly.
• people work less and produce fewer goods and services.
• the government collects more revenue in total.

• When the government implements programs such as progressive income tax rates, which of the following is likely to

occur?

• Equality is increased and efficiency is increased.
• Equality is increased and efficiency is decreased.
• Equality is decreased and efficiency is increased.
• Equality is decreased and efficiency is decreased.

• Senator Jackson argues that replacing the federal income tax with a national sales tax would increase the level of

output. Senator Feldman objects that this policy would benefit individuals in the top one percent of income at the expense of individuals in the lowest income category.

• Both senators' arguments are primarily about equality.
• Both senators' arguments are primarily about efficiency.
• Senator Jackson's argument is primarily about equality, while Senator Feldman's argument is primarily about

efficiency.

• Senator Jackson's argument is primarily about efficiency, while Senator Feldman's argument is primarily about

equality.

• Suppose the government taxes the wealthy at a higher rate than it taxes low-income individuals and then develops

programs to redistribute the tax revenue from the wealthy to low-income individuals. This redistribution of wealth

• is more efficient and more equal for society.
• is more efficient but less equal for society.
• is more equal but less efficient for society.
• is less equal and less efficient for society.

• The opportunity cost of an item is
• the number of hours needed to earn money to buy the item.
• what you give up to get that item.
• usually less than the dollar value of the item.
• the dollar value of the item.

• Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank

account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

• $0.
• $15.
• $305.
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