Name Date

CHAPTER CHAPTER 1 TEST Form C

1 The Economic Way of Thinking

CHAPTER 1
Part 1: Main Idea
Choose the letter of the best answer. (4 points each)

1. A supermarket running out of bananas is an example of

a. scarcity c. utilization
b. a shortage d. an opportunity cost

2. Wants are unlimited and

a. constant c. easily fulfilled
b. costly d. ever changing

3. The governments of some nations answer the question of what to produce to

a. enhance free trade
b. control the economy
c. satisfy the consume wants.
d. improve efficiency

4. A country seeking to increase tourism will probably increase the production of

a. tractors c. weapons
b. hotels d. gaskets
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5. A country with a large, relatively unskilled labor force using labor-intensive

methods to grow crops is an example of
a. efficient use of scarce resources
b. inefficient use of scarce resources
c. marginal benefits
d. marginal costs

6. An example of real capital is

a. a college education c. job training
b. a warehouse d. self-improvement courses

7. Deciding to go to a ballgame rather than do your homework is an example of a(n)

a. production possibility c. trade-off
b. marginal cost d. opportunity expense

Economics: Concepts and Choices Chapter Test 59

Chapter 1: The Economic Way of Thinking Unit 1 Resource Book
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CHAPTER 1 TEST C, CONTINUED

8. The benefits and costs of a choice is shown by using a

CHAPTER 1

a. statistical table.
b. decision-making grid.
c. circle graph.
d. line graph

9. Using a PPC can help to increase a company’s

a. efficiency c. incentives
b. underutilization d. costs

10. Harvesting less corn than the land is capable of producing is an example of
a. marginal costs
b. opportunity costs
c. efficiency
d. underutilization

11. Data on DVD sales for three different years can best be compared by using a
a. line graph c. circle graph
b. bar graph d. pie graph

12. A line graph that shows rising and falling profits over several years would have
a(n)

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a. upward slope c. varied slope
b. downward slope d. almost level slope

13. A discussion on whether an economic practice is ethical would likely be found in

an article on
a. microeconomics c. positive economics
b. macroeconomics d. normative economics

14. A macroeconomist would be interested in the

a. general rise of prices c. fluctuation of oil prices
b. decline of cheese prices d. sharp rise of coffee prices

15. Opportunity costs would be increased by

a. increasing the production of a product
b. keeping the production of a product the same
c. decreasing the production of a product
d. switching from producing one product to another

60 Chapter Test Economics: Concepts and Choices

Unit 1 Resource Book Chapter 1: The Economic Way of Thinking
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CHAPTER 1 TEST C, CONTINUED

Part 2: Interpreting Graphs

Using the exhibit, answer the following questions.(4 points each)

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1
Television Sets (in thousands)

10
2
9
7
8
3
7
6
5
6 4
4
3
2
1
5
0 1 2 3 4
Trucks (in thousands)

16. What are the opportunity costs of moving from point 1 to point 4 on the curve?
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17. Why might a society choose to move from point 3 to point 5 on the curve?

18. Point 6 shows underutilization of resources. How many more trucks or TVs need to be
produced to maximize efficiency?

19. How might new technology enable a society to achieve the production possibility
represented by point 7?

Economics: Concepts and Choices Chapter Test 61

Chapter 1: The Economic Way of Thinking Unit 1 Resource Book
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CHAPTER 1 TEST C, CONTINUED

20. What are some possibilities that would cause this PPC to shift to the right? To the left?
CHAPTER 1

Part 3: Extended Response

Answer the following questions on the back of this paper or on a separate sheet of paper.
(10 points each)
21. Imagine that you have $100 dollars to spend. You want to buy lunch. You also want
some new clothes and a video games. You might also go to a concert and do research at
a museum. How would you economize in the use of the money? Discuss the incentives,
utility, and the costs of your decisions.

22. Imagine that a positive economist and a normative economist studied the use of
gambling to raise money. Describe the conclusions of each economist (one paragraph
each). Consider how these conclusions would be different.

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62 Chapter Test Economics: Concepts and Choices

Unit 1 Resource Book Chapter 1: The Economic Way of Thinking