Test Bank for Macroeconomics in Modules, 3e

Test Bank for Macroeconomics in Modules, 3e Paul Krugman, Robin Wells (All Chapters)

Chapter 1

1. Scarcity in economics means:

*a. we do not have sufficient resources to produce all the goods and services we want.

• the wants of people are limited.
• there must be poor people in rich countries.
• shortages exist in nearly all markets.

2. If resources are “scarce,” it means that they:

*a. cannot provide enough goods or services to satisfy all human material wants and needs.

• have no opportunity cost.
• are probably not valued by consumers.
• have an unlimited supply.

3. A key theme fundamental to all of economics is that:

• there are limited wants.
• we are a rich country but are simply not aware of it.

*c. people have unlimited wants but face limited means to satisfy them.

• there are unlimited resources.

4. The problem of scarcity is confronted by:

• industrialized societies only.
• preindustrialized societies only.
• societies governed by communist philosophies onl y.

*d. all societies.

5. When we are forced to make choices, we are facing the concept of:

• human capital.
• inflation.

*c. scarcity.

• economic aggregates.

• We are forced to make choices because of: 1 / 4

• exploitation.
• efficiency.

*c. scarcity.

• the margin.

7. Scarcity exists when:

• making choices among two or more alt ernatives is not

necessary.

• individuals can have more of any good without giving up

anything.*c. individuals can have more of one good but only by giving up something else.

• resources are unlimited.

8. Scarcity in economics means:

*a. we do not have sufficient resources to produce all of the goods and services we want.

• the wants of people are limited.
• there must be poor people in rich count ries.
• economists are clearly not doing their jobs.

9. Although fresh water is very abundant in most places, it is scarce because:

• it has no alternative uses.

*b. there is not enough of it to meet all needs.

• it is a free good.
• scarce goods in general are not all that costly.

10. Fresh water is considered a scarce good because:

*a. not enough of it is available for all needs.

• it does not have any uses.
• scarce goods are less expensive.
• not enough of it is available for all needs and because it is

less expensive.

11. The problem of determining what goods and services society should produce:

• exists because we can produce more than we need or want.

*b. exists because there are not enough resources to provide all of the goods and services that people want to purchase.

• would not exist if all goods and services were scarce.
• would not exist if government owned all of the resources.

• / 4

• In China, which would NOT be a resource in the production of rice?

• fertile land
• labor
• capital equipment

*d. money

13. A resource is anything that:

*a. can be used in production.

• for which you pay.
• is in scarce supply.
• can be consumed.

14. We have to make choices because:

• we have unlimited inco me.

*b. resources are scarce.

• resources are infinite.
• with good planning, trade -offs can be avoided.

• When a chef creates a dinner plate of food for a customer, which represents

physical capital?

• the chef

*b. the oven

• the food ingredients
• the chef's training and experience I think this may be a

redundant answer to “A”

• Manny is attending college and majoring in economics. By doing so, Manny is

primarily improving his:

• land.
• labor.
• capital.

*d. human capital.

• Which is not an example of a resource?

• land
• labor
• capital

*d. production

• / 4

• Which can best be considered the resources used in the production of

computers?

• money from investors
• wages of computer engineers

*c. computer engineers

• taxes paid on the profits from the sale of the computers

• Corner offices in high-rise office buildings usually cost more to rent than other

offices. This best illustrates the economic principle of:

• normative economics.

*b. scarce resources.

• resources being used as efficiently as possible to achieve

society's goals.

• opportunity costs.

• In Ventura County, California, strawberry production is limited by the number of

acres available for agriculture production. The statement that best represents this

economic concept is:

*a. resources are scarce.

• the cost of somet hing is what you give up to get it.
• normative economics describes how the economy should work.
• resources should be used as efficiently as possible to a chieve

society's goals.

• You like to read Vogue and Sports Illustrated. You have only $5 to spend, so

you only buy Sports Illustrated. The statement that best represents this economic

concept is:

*a. resources are scarce.

• the real cost of someth ing is what you must give up to get it.
• positive economics explains how the economy actually works.
• economic models are used to answer “what if” questions.

• Intel finds it difficult to hire enough skilled computer engineers. The statement

that best represents this economic concept is:

*a. resources are scarce.

• the real cost of some thing is what you must give up to get it.
• economists may disagree due to differences in their political

views.

• economic models are simplified represent ations of reality.

• / 4