Chapter 1
Ten Principles of Economics
Multiple Choice
1. The word that comes from the Greek word for \a. market. b. consumer. c. producer. d. economy. ANS: D DIF: 1 REF: 1-0 TOP: Economy MSC: Definitional
2. The word “economy” comes from the Greek word oikonomos, which means a. “environment.” b. “production.”
c. “one who manages a household.” d. “one who makes decisions.” ANS: C DIF: 1 REF: 1-0 TOP: Economy MSC: Definitional
3. 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. ANS: C DIF: 1 REF: 1-0 TOP: Resources, Scarcity MSC: Interpretive
4. Economics deals primarily with the concept of
a. scarcity. b. poverty. c. change. d. power. ANS: A DIF: 1 REF: 1-0 TOP: Scarcity MSC: Definitional
5. Which of the following questions is not answered by the decisions that every society must make? a. What determines consumer preferences? b. What goods will be produced? c. Who will produce the goods? d. Who will consume the goods? ANS: A DIF: 2 REF: 1-0 TOP: Economies MSC: Interpretive
6. The overriding reason as to why households and societies face many decisions is that a. resources are scarce.
b. goods and services are not scarce.
c. incomes fluctuate with business cycles. d. people, by nature, tend to disagree. ANS: A DIF: 2 REF: 1-0 TOP: Scarcity MSC: Interpretive
7. 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.