Chapter 1Ten Principles of EconomicsMULTIPLE CHOICE1.The word that comes from the Greek word for “one who manages a household” isa.market.b.consumer.c.producer.d.economy.ANSWER: d.economy.TYPE: M SECTION: 1 DIFFICULTY: 12.The word economy comes from the Greek word fora.“environment.”b.“one who manages a household.”c.“one who participates in a market.”d.“conservation.”ANSWER: b.“one who manages a household.”TYPE: M SECTION: 1 DIFFICULTY: 13.Households and economies have each of the following in common EXCEPT botha.must allocate scarce resources.b.face many decisions.c.must allocate the goods and services they produce.d.must have a central decisionmaker.ANSWER: d.must have a central decisionmaker.TYPE: M SECTION: 1 DIFFICULTY: 24.Economics deals primarily with the concept ofa.scarcity.b.poverty.c.change.d.power.ANSWER: a.scarcity.TYPE: M SECTION: 1 DIFFICULTY: 15.Which of the following is NOT included in the decisions that every society must make?a.what goods will be producedb.who will produce goodsc.what determines consumer preferencesd.who will consume the goodsANSWER: c.what determines consumer preferencesTYPE: M SECTION: 1 DIFFICULTY: 26.Both households and societies face many decisions becausea.resources are scarce.b.populations may increase or decrease over time.c.wages for households and therefore society fluctuate with business cycles.d.people, by nature, tend to disagree.ANSWER: a.resources are scarce.TYPE: M SECTION: 1 DIFFICULTY: 27.A good is considered scarce in a society whena.more output of the good is possible.b.everyone in that society cannot have all they want of the good.c.the government restricts production of the good.d.only the richest people in the economy can buy all they want of the good.ANSWER: b.everyone in that society cannot have all they want of the good.TYPE: M SECTION: 1 DIFFICULTY: 28.Scarcity exists whena.there is less than an infinite amount of a resource or good.b.society can meet the wants of every individual.c.there is less of a good or resource available than people wish to have.d.the government fails to produce goods.ANSWER: c.there is less of a good or resource available than people wish to have.TYPE: M SECTION: 1 DIFFICULTY: 29.Which of the following would NOT be true in a world without scarcity?a.There would be no need for the science of economics.b.Everyone would have all the goods and services they wanted.c.There would have to be an infinite supply of every resource.d.There would be opportunity costs.ANSWER: c.There would have to be an infinite supply of every resource.TYPE: M SECTION: 1 DIFFICULTY: 210.Approximately what percentage of the worlds economies experience scarcity?a.25%b.50%c.75%d.100%ANSWER: d.100%TYPE: M SECTION: 1 DIFFICULTY: 111.When a society cannot produce all the goods and services people wish to have it is said that the economy is experiencinga.scarcity.b.communism.c.externalities.d.market failure.ANSWER: a.scarcity.TYPE: M SECTION: 1 DIFFICULTY: 112.For society, a good is not scarce ifa.at least one individual in society can obtain all he or she wants of the good.b.firms are producing at full capacity.c.all members of society can have all they want of it.d.those who have enough income can buy all they want of the good.ANSWER: c.all members of society can have all they want of it.TYPE: M SECTION: 1 DIFFICULTY: 213.Which product would be considered scarce?a.Nike shoesb.Monet paintingsc.1-carat diamondsd.All of the above are correct.ANSWER: d.All of the above are correct.TYPE: M SECTION: 1 DIFFICULTY: 214.Which of the following goods best meets the definition of scarcity?a.airb.water in the oceanc.water in a cityd.wood in a forestANSWER: c.water in a cityTYPE: M SECTION: 1 DIFFICULTY: 215.Economics is defined as the study ofa.business.b.how society manages its scarce resources.c.central planning.d.government regulation.ANSWER: b.how society manages its scarce resources.TYPE: M SECTION: 1 DIFFICULTY: 116.Economics is the study ofa.how society manages its scarce resources.b.the governments role in society.c.how a market system functions.d.how to increase production.ANSWER: a.how society manages its scarce resources.TYPE: M SECTION: 1 DIFFICULTY: 117.In most societies, resources are allocated bya.a single central planner.b.those who own the resources.c.those firms that use resources to provide goods and services.d.the combined actions of millions of households and firms.ANSWER: d.the combined actions of millions of households and firms.TYPE: M SECTION: 1 DIFFICULTY: 218.Economists study all of the following EXCEPTa.how people make decisio