Principles of Microeconomics 9th Edition By Karl E. Case – Test Bank

Principles of Microeconomics 9th Edition By Karl E. Case – Test Bank

Principles of Microeconomics, 9e – (Case/Fair/Oster)

Chapter 1 The Scope and Method of Economics

1.1 Why Study Economics?

Multiple Choice

The reasons to study economics include which of the following?

to be an informed voter

to understand society and global affairs

to learn a way of thinking

all of the above

Answer: D

Diff: 1

Topic: Why Study Economics?

Skill: Fact

Marginalism is

the best alternative that we forego when making a decision.

the study of how societies choose to use scarce resources.

a market situation in which profit opportunities are eliminated almost instantaneously.

the process of analyzing the additional costs or benefits arising from a decision. Answer: D

Diff: 1

Topic: Why Study Economics?

Skill: Definition

Economics is best defined as the study of

financial decision–making.

how consumers make purchasing decisions.

choices made by people faced with scarcity.

inflation, unemployment, and economic growth.

Answer: C

Diff: 2

Topic: Why Study Economics?

Skill: Definition

The Industrial Revolution refers to the rise of the modern factory system in ________ during the late eighteenth and early nineteenth centuries.

the United States

England

France

Germany

Answer: B

Diff: 1

Topic: Why Study Economics?

Skill: Fact

1

Which of the following statements is correct?

Economics is a natural science.

In large measure, economics is the study of how people make choices.

If poverty was eliminated there would be no reason to study economics.

Economic analysis can be used to explain how societies, but not individuals, make decisions.

Answer: B

Diff: 1

Topic: Why Study Economics?

Skill: Fact

1. Economics is the study of
   1. 1.1.how to invest in the stock market.
   2. 1.2.how society uses limited resources.
   3. 1.3.the role of money in markets.

1. 1. 1.4.how government officials decide which goods and services are produced. Answer: B

Diff: 2

Topic: Why Study Economics?

Skill: Definition

1. Costs that cannot be avoided, because they have already been incurred are known as
   1. 2.1.differential costs.
   2. 2.2.marginal costs.
   3. 2.3.opportunity costs.
   4. 2.4.sunk costs.

Answer: D

Diff: 2

Topic: Why Study Economics?

Skill: Definition

Suppose that two weeks ago you purchased a ticket to the symphony for $40. Last week someone invited you to go camping on the same night as the symphony concert. You would much rather go camping than go to the symphony. You have tried unsuccessfully to sell the symphony concert ticket. Which of the following statements regarding this situation is correct?

The $40 symphony ticket should be irrelevant in your decision making, because it represents the marginal cost of going camping.

The $40 you paid for the symphony ticket should be irrelevant in your decision making, because it is a sunk cost.

The $40 you paid for the symphony ticket is relevant to the decision, as this represents the opportunity cost of going camping.

You should base your decision on whether or not going camping will provide you with

more than $40 in satisfaction.

Answer: B

Diff: 2

Topic: Why Study Economics?

Skill: Conceptual

AACSB: Reflective Thinking

2

You have decided that you want to attend a renaissance fair as King Henry VIII. You estimate that it will cost $80 to assemble your costume. After spending $80 on the costume, you realize that the additional pieces you need will cost you $20 more. The marginal cost of completing the costume is

$20.

$60.

$80.

$100.

Answer: A

Diff: 2

Topic: Why Study Economics?

Skill: Analytic

AACSB: Analytic Skills

The concept of opportunity cost can be applied to the analysis of ________ decision–making processes.

only economy–wide

only global

only–small–scale

any

Answer: D

Diff: 2

Topic: Why Study Economics?

Skill: Conceptual

AACSB: Reflective Thinking

That which we forgo, or give up, when we make a choice or a decision is known as

equity.

causation.

correlation.

opportunity cost.

Answer: D

Diff: 2

Topic: Why Study Economics?

Skill: Definition

Scarce resources give rise to the concept of

efficient markets.

opportunity costs.

laissez–faire.

positive economics.

Answer: B

Diff: 1

Topic: Why Study Economics?

Skill: Fact