Economics may be defined as the science that explains __________________.

the decisions made by politicians
all human behaviour
the choices that we make as we cope with scarcity
the decisions made by households

Scarcity is a situation in which _______________________.

there is a shortage of something
people are poor
wants exceed the resources available to satisfy them
something is being wasted

Economic choices can be summarized in five big questions. They are ___________________.

why, what, how, when, and where
what, how, when, where, and why
what, how, when, where, and who
what, why, who, where, and who

By remaining in school, you are paying an opportunity cost that includes ___________________.

the money you spend on food and drink
the money you spend on CDs
the wages you could earn if you took a job
the money you spend on clothes

Making a decision at the margin means ___________________.

making an all-or-nothing choice
waiting until the last minute to make a choice
deciding to do a little bit more or a little bit less of an activity
letting someone else choose for you

If the cost of textbooks rises by a large amount, you have an incentive to __________________.

buy more books because they are now more valuable
buy the same number of books
buy fewer books and share with your friends
take a longer vacation

When you buy a can of coke, _________________________.

the seller gains but you lose because you have to pay for the coke
the seller gains but you gain only if it is a hot day
you gain and the seller gains
you gain, but the seller loses if you buy the coke after midnight

When markets are efficient, ___________________.

there is equity
resources are used where they are valued most highly
wages are high
producers make big profits

When production per person increases, ________________.

there are fewer good jobs
prices rise
living standards deteriorate
living standards improve

Macroeconomics is the study of _________________.

multinational businesses
all aspects of scarcity
the decisions of individual businesses and people
the national economy and the global economy as a whole

The task of economic science is to _____________________.

tell us what is good for us
save the earth from the overuse of natural resources
make moral choices about things like drugs
help us to understand how the economic world works

Economists make progress by _______________.

asking people how they feel about things
lobbying politicians for more money
asking people whether they are better off or worse off
building and testing economic models

Ceteris paribus means _____________.

holding everything constant
equal access to public transportation
all things considered
other things being equal

Which statement is an example of the fallacy of composition?

Christmas shopping causes Christmas.
There should be equal access to public transportation.
Hold everything constant except the price of juice.
If one fishing boat limits its catch, more fish will survive.

Economists generally agree that _____________________.

rent ceilings cut the availability of housing
taxes are too low
taxes have no significant effects
taxes are too high

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