Download Problem Set 1

University of Bahrain
College of Business Administration
Department of Economics and Finance
Econ 140 - Microeconomics
Problem Set 1 (Chapter 1)
AlShawa
1. The most fundamental economic problem is
a. unemployment.
b. inflation.
c. scarcity.
d. health care.
2. The study of economics is primarily concerned with
a. keeping businesses from losing money.
b. demonstrating that capitalistic economies are superior to socialistic economies.
c. choices which are made in seeking to use scarce resources efficiently.
d. determining the most equitable distribution of society's output.
3. "Economics is concerned with using scarce productive resources efficiently in attempting to
satisfy society's material wants." This statement is
a. positive, but incorrect.
b. positive and correct.
c. normative, but incorrect.
d. normative and correct.
4. Microeconomics is concerned with
a. the aggregate level of output, employment, and inflation.
b. studying specific markets which comprise the economy.
c. studying the operation of the whole economy.
d. none of the above.
5. Macroeconomics can best be described as the
a. analysis of how consumer spend their income.
b. study of the aggregates of the economy or the economy as a whole.
c. analysis of how firms maximize profits.
d. study of how supply and demand determine prices in individual markets.
6. When a country builds a highway using few machines and more workers, it is answering the
_____ question.
a. what
b. how
c. where
d. why
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7. Economics involves "marginal analysis" because
a. most economic decisions involve changes in the current situation.
b. marginal benefits always exceed marginal costs.
c. marginal costs always exceed marginal benefits.
d. much economic behaviour is irrational.
8. Which of the following statements is positive?
a. Unemployment is not so important a problem as inflation.
b. Unemployment and inflation are equally important problems.
c. The current unemployment rate is 6%.
d. The government should try harder to fight unemployment.
9. Which of the following statements about economic models is true?
a. An economic model is based on a set of assumptions.
b. An economic model is simpler than the reality it explains.
d. An economic model is used to make predictions.
c. All of the above.
10. The ceterus paribus assumption means
a. the greatest good for all.
b. all other things remain constant.
c. more is always preferred to less
d. choices are made at the margin.