Archive for June 2018

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. In other words, the society faces a tradeoff between

Naim 23:11

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. In other words, the society faces a tradeoff between




a. guns and butter.
b. efficiency and equality.
c. inflation and unemployment.
d. work and leisure.


Answer: b

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

Naim 23:11

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



a. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.
b. equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits.
c. equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits.
d. equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.


Answer: a

Efficiency means that

Naim 23:10

Efficiency means that



a. society is conserving resources in order to save them for the future.
b. society's goods and services are distributed equally among society's members.
c. society's goods and services are distributed fairly, though not necessarily equally, among society's members.
d. society is getting the maximum benefits from its scarce resources.


Answer: d

Economists use the word equality to describe a situation in which

Naim 23:10

Economists use the word equality to describe a situation in which



a. each member of society has the same income.
b. each member of society has access to abundant quantities of goods and services, regardless of his or her income.
c. society is getting the maximum benefits from its scarce resources.
d. society's resources are used efficiently.


Answer: a

When society requires that firms reduce pollution, there is

Naim 23:10

When society requires that firms reduce pollution, there is



a. a tradeoff because of reduced incomes to the firms' owners and workers.
b. a tradeoff only if some firms are forced to close.
c. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements.
d. no trade off, since everyone benefits from reduced pollution.


Answer: a

A tradeoff exists between a clean environment and a higher level of income in that

Naim 23:09

A tradeoff exists between a clean environment and a higher level of income in that



a. studies show that individuals with higher levels of income pollute less than low-income individuals.
b. efforts to reduce pollution typically are not completely successful.
c. laws that reduce pollution raise costs of production and reduce incomes.
d. employing individuals to clean up pollution causes increases in employment and income.


Answer: c

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that

Naim 23:09

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that




a. trade can make everyone better off.
b. people face trade-offs
c. rational people think at the margin.
d. people respond to incentives.


Answer: b

Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that

Naim 23:09

Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that



a. people respond to incentives.
b. rational people think at the margin.
c. people face trad eoffs.
d. improvements in efficiency sometimes come at the expense of equality.


Answer: c

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?

Naim 23:08

Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"?



a. Melissa can attend the concert only if she takes her sister with her.
b. Greg is hungry and homeless.
c. Brian must repair the tire on his bike before he can ride it to class.
d. Kendra must decide between going to Colorado or Cancun for spring break.


Answer: d

The adage, "There is no such thing as a free lunch," means

Naim 23:07

The adage, "There is no such thing as a free lunch," means



a. even people on welfare have to pay for food.
b. the cost of living is always increasing.
c. people face trade offs.
d. all costs are included in the price of a product.


Answer: c

In most societies, resources are allocated by

Naim 23:07

In most societies, resources are allocated by



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


Answer: d

Economics is the study of

Naim 23:07

Economics is the study of



a. production methods.
b. how society manages its scarce resources.
c. how households decide who performs which tasks.
d. the interaction of business and government.


Answer: b

The phenomenon of scarcity stems from the fact that

Naim 23:06

The phenomenon of scarcity stems from the fact that 



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


Answer: d

Which of the following is correct?

Naim 23:05

Which of the following is correct?



a. The word economy comes from the Greek word for "rational thinker."
b. Economists study the management of scarce resources.
c. Because economists believe that people pursue their best interests, they are not interested in how people interact.
d. All of the above are correct.


Answer: a

Which of the following is correct?

Naim 23:05

Which of the following is correct?



a. The word economy comes from the Greek word for "rational thinker."
b. Economists study the management of scarce resources.
c. Because economists believe that people pursue their best interests, they are not interested in how people interact.
d. All of the above are correct.


Answer: b

Resources are

Naim 23:04

Resources are 



a. scarce for households but plentiful for economies.
b. plentiful for households but scarce for economies.
c. scarce for households and scarce for economies.
d. plentiful for households and plentiful for economies.


Answer: c
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