Test Bank for Economics: Private and Public Choice, 16th Edition, William A. McEachern

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1. Adam Smith believed that if people were free to pursue their own interests,
a. public interest would be served quite well.
b. less would be produced than if altruism were the guiding principle.
c. they would generally apply their talents to unproductive activities that would generate little
value to society.
d. they would have little incentive to undertake productive activities.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 7/27/2016 10:01 PM
2. Modern economics as a field of study is usually thought to have begun with
a. Adam Smith and the writing of The Wealth of Nations.
b. David Ricardo and the writing of The Principles of Political Economy and Taxation.
c. Aristotle and the writing of Politics and Ethics.
d. Moses and the Ten Commandments.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
3. Which of the following was a key belief of Adam Smith?
a. he felt that human goodness would provide adequate goods and services to everyone.
b. he stressed that limited exchange and command economies would prevent the exploitation of
the poor.
c. he believed that individuals pursuing their own interests would direct economic activity in the
most advantageous way.
d. he lectured about the importance of gold and silver in providing a stable monetary system.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
OTHER: On-line Practice
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
4. According to Adam Smith, individual self-interest
a. is a powerful force for economic progress when it is directed by competitive markets.
b. is a powerful force for economic progress when individuals are wisely directed by a strong
central government.
c. is a major factor in retarding the economic progress of humankind.
d. could be either a positive or negative force for economic progress, depending on the moral
influences of political leaders.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
5. The basic ingredients in any economic decision are
a. scarcity and choice.
b. surpluses and shortages.
c. market prices and the use of efficient production methods.
d. needs and wants.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
6. Economic choice and competitive behavior are the result of
a. scarcity.
b. poverty.
c. public ownership of resources.
d. private ownership of resources.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
7. For the typical student, taking an introductory course in economics should
a. turn the student into an economist.
b. teach the student solutions to most social problems.
c. teach the student how to answer complex social questions.
d. help the student learn to rationally analyze social problems.
e. All of the above are correct.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Comprehension
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
8. When a society cannot produce all the goods and services people wish to have, it is said that the
economy is experiencing
a. scarcity.
b. shortages.
c. inefficiencies.
d. inequities.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
9. Which of the following is the best definition of economics?
a. An investigation of the quantities and prices of the various goods produced by the nations of
the world.
b. A study of why inflation and unemployment periodically plague the U.S. economy.
c. An analysis of how individuals and societies deal with the problem of scarcity.
d. An examination of the role that money plays in the economy.
e. A study of how goods and services are distributed throughout the world.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
10. Economics is primarily the study of
a. how to make money in the stock market.
b. how to operate a business successfully.
c. the allocation of scarce resources in an effort to satisfy wants that are virtually unlimited.
d. the methods business firms use to reduce their costs of production.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge

11. Some individuals or families can become completely saturated with a service such as television. This
suggests that
a. wants are limited
b. desires for a single commodity can be satisfied but then the focus will switch to other goods
and services
c. a highly productive economy may someday be able to satisfy all human desires
d. resources are not truly fixed in supply as we generally assume
e. scarcity does not exist
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Comprehension
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
12. In economics, the term “scarcity” refers to the fact that
a. everything really worthwhile costs money.
b. even in wealthy countries like the United States, some people are poor.
c. no society can produce enough to satisfy fully the desires of people for goods and services.
d. sometimes shortages of a good arise when its price is set below the market equilibrium.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
13. When economists say a good is scarce, they mean
a. there are only a limited number of consumers who would be interested in purchasing the good.
b. the human desire for the good exceeds the amount freely available from nature.
c. most people in poorer countries do not have enough of the good.
d. the production of the good has no opportunity cost for society.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
14. When economists say goods are scarce, they mean
a. consumers are too poor to afford the goods and services available.
b. consumers are unwilling to buy goods unless they have very low prices.
c. goods are generally freely available from nature in most countries.
d. the desire for goods and services exceeds our ability to produce them with the limited resources
available.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
15. If scarcity were eliminated,
a. all goods would be free.
b. no one would have to make any choices.
c. everyone could have all they want at no cost.
d. all of the above are true.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
16. If a good is scarce,
a. there will be shortages of it if the good is rationed by markets.
b. the good will have a price in a market setting.
c. there will be enough of the good freely available from nature to satisfy the human desire for it.
d. all of the above are true.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
17. Criteria for rationing goods and resources must be established because of
a. the law of comparative advantage.
b. the use of capitalism as a form of economic organization.
c. the inability of politicians to develop efficient forms of economic organization.
d. scarcity imposed by nature.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
18. Every economy must ration goods in some way because of
a. overpopulation.
b. poorly-performing markets.
c. the income gap between rich and poor.
d. scarcity.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
19. Which of the following is true of resources?
a. Resources are inputs used to produce goods and services.
b. Human resources reflect the skills and productive knowledge of human beings.
c. With the passage of time, investment activities can increase the availability of resources.
d. All of the above are true.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Knowledge
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM
20. Ex-London School of Economics student Mick Jagger sang, “You can’t always get what you want, but
if you try sometime, you just might find you can get what you need.” Another statement of the basic
economic principle expressed in this lyric is that
a. rational decisions are not always possible.
b. you can allocate your resources to what gives you the highest value.
c. you can create the supply to meet your own demand.
d. you can maximize social welfare by making optimal decisions.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
NATIONAL STANDARDS: United States – BUSPROG: Analytic – BUSPROG: Analytic
STATE STANDARDS: United States – AK – DISC: Scarcity, tradeoffs, and o – DISC: Scarcity,
tradeoffs, and opportunity cost
TOPICS: What is Economics About?
KEYWORDS: Bloom’s: Application
DATE CREATED: 5/19/2016 3:03 PM
DATE MODIFIED: 5/19/2016 3:03 PM