Economics Questions (Objective Type)
March 8, 2018 1 Comment
1. Economics
- studies human behavior when scarcity exists and choices must be made
- provides the only reasonable explanation of how people make decisions
- can accurately explain all human behavior since it is based on the assumption of rationality
- is better at showing the way things ought to be than the other social sciences are
2. The expression “There’s no such thing as a free lunch” means
- that even if the lunch is free, we pay for it in extra calories
- that resources used up in producing the lunch are not available to satisfy other wants
- the same thing as “The best things in life are free”
- you have to work before you can eat
3. To say that people make marginal decisions means that
- they usually wait until the last minute before making a decision to buy
- they weigh the additional costs and additional benefits of various activities before they make a decision
- most people just barely get by on the incomes they earn and live from day to day on the very edge of subsistence
- given a choice, most people would prefer to make their own decisions concerning the things that affect their lives
4. Economic theories are
- useful because they are as exact as theories in the physical sciences
- useless because they are based on abstractions
- useful because they allow us to make predictions
- too complex to understand because they include all of reality
5. Economists believe that individuals respond in a predictable way to changes in costs and benefits. The term that best describes this belief is
- rational behavior
- scarcity
- demand
- supply
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