Suggested Homework Assignment #1B
Chapters 1 & 2
Instructions: The following questions come from material covered in Chapters 1 & 2. Pick the best answer for each question.
1. The economizing problem is essentially one of deciding how to make the best use of:
A.
limited resources to satisfy limited wants.
B.
unlimited resources to satisfy limited wants.
C.
limited resources to satisfy virtually unlimited wants.
D.
virtually unlimited resources to satisfy virtually unlimited wants.
E.
None of the above.
2. In economics, capital is defined as:
A.
the willingness of business owners to take risks.
B.
human creations used in the production process.
C.
money and other financial assets.
D.
the natural, unskilled abilities of people.
E.
natural resources, such as water, oil, and iron ore.
3. Which of the following would economists classify as capital?
A.
a bauxite mine in Jamaica.
B.
a credit card.
C.
a $50 bill.
D.
100 shares of IBM stock.
E.
a lawyer's word processor.
4. Capital includes which of the following?
A.
pizza ovens
B.
bulldozers
C.
a college education
D.
All of the above.
E.
Only A and B.
5. A resource is something that:
A.
is used to produce goods and services.
B.
is provided by nature, not made by society.
C.
exists in unlimited quantities.
D.
must be produced by a firm.
E.
Both A and B.
6. The difference between a good and a service is that:
A.
goods are available in unlimited quantities; services are not.
B.
goods are tangible; services are not.
C.
services are available in unlimited quantities; goods are not.
D.
services help satisfy unlimited wants; goods do not.
E.
goods help satisfy unlimited wants; services do not.
7. Which one of the following statements is true?
A.
The resource category called land consists of plots of land and other natural resources used to produce goods and services.
B.
The resource category called labor consists of the physical and mental efforts of humans to produce goods and services.
C.
Entrepreneurial ability, another resource category, consists of managerial and organizational skills combined with the willingness to take risks.
D.
All of the above.
E.
None of the above.
8. Which of the following statements is true?
A.
Wages is the payment that resource owners receive for the use of their land.
B.
Rent is the payment that resource owners receive for use of their labor.
C.
Interest is the payment that resource owners receive for their entrepreneurial ability, while profits is the payment resource owners receive for the use of their capital.
D.
All of the above.
E.
None of the above.
9. A market:
A.
might not have well-defined geographical limits.
B.
facilitates exchanges between buyers and sellers.
C.
typically involves monetary transactions.
D.
All of the above.
E.
Only B and C.
10. A rational decision maker will take only those actions for which the marginal benefit:
A.
is positive.
B.
is at its maximum level.
C.
is less than marginal cost.
D.
exactly equals the expected marginal cost.
E.
is greater than or equal to the expected marginal cost.
Score =
Correct answers: