Test Bank For Microeconomics 9th Edition by William Boye
MULTIPLE CHOICE
1.Given that resources can be allocated by the government, the market, a random process, or on a first-come first-serve basis, which of the following statements is true?
a.
The market system is not entirely fair but it creates incentives to increase supplies and improve standards of living.
b.
The random process of allocation allows individuals to acquire purchasing power and enhances the value of the resources that they own.
c.
Since the government system does not distinguish between those who have income and those that do not, government allocation of resources is the most efficient.
d.
There will be no shortages under the first-come first-serve basis of allocation.
e.
A random process of allocation is fair in the sense that everyone gains and there are no losers.
ANS: A DIF: Moderate REF: 1.b OBJ: ch. 03, 1
NAT:Analytic | The Role of IncentivesTOP:Allocation Systems
MSC: Knowledge
2.In a country that depends on the government to decide the allocation of resources,
a.
social efficiency is maximized and resources are allocated to where they are most highly-valued.
b.
individuals are incentivized to acquire higher skills and education.
c.
the allocation system is fair in the sense that everyone gets an equal opportunity.
d.
individuals aspire to join the ranks of the government.
e.
there is hardly any shortage or scarcity of goods.
ANS: D DIF: Moderate REF: 1.b OBJ: ch. 03, 1
NAT:Analytic | The Role of IncentivesTOP:Allocation Systems
MSC: Knowledge
3.If a society’s scarce resources are allocated by the government, which of the following is most likely to result?
a.
Only those who circumvent the government’s rules will prosper.
b.
Under a government allocation, no one will have to do without.
c.
It provides an incentive to be a member of government and thus help determine the allocation rules.
d.
Under a government allocation, some will have to do without, but the government guarantees that resource allocations are fair.
e.
Government allocation provides incentives to increase production and efficiency and to create value.
ANS: C DIF: Easy REF: Ch 3, 1.c OBJ: ch. 03, 1
NAT:Analytic | The Role of IncentivesTOP:Allocation Systems
MSC: Knowledge
4.Which of the following statements is not true about a market system?
a.
The market system provides an incentive to consumers to acquire purchasing ability.
b.
The market system magnifies the problem of scarcity of goods and services.
c.
The market system provides an incentive for allocating resources.
d.
The market system provides an incentive to improve the quality of goods produced.
e.
The market system provides everything everyone wants to consume.
ANS: B DIF: Easy REF: 1.b OBJ: ch. 03, 1
NAT:Analytic | The Role of IncentivesTOP:Allocation Systems
MSC: Knowledge
5._______ ensure that resources are allocated to where they are most highly valued.
a.
Communist governments
b.
Consumers
c.
Suppliers
d.
Non-governmental organizations
e.
Markets
ANS: E DIF: Easy REF: 2 OBJ: ch. 03, 1
NAT:Analytic | The Role of IncentivesTOP:Allocation Systems
MSC: Knowledge
6.Margaret can use her quarterly savings to buy a teakwood study table for her room or spend it on a small Christmas party with her family. The _____ cost of her enjoyment at the Christmas party would then equal the forgone utility of the study table.
a.
transaction
b.
exchange
c.
opportunity
d.
direct
e.
sunk
ANS: C DIF: Easy REF: 2 OBJ: ch. 03, 1
NAT: Reflective Thinking | The Role of Incentives TOP: Allocation Systems
MSC: Application
7.Money exchanges are more efficient than barter because:
a.
money exchanges do not require a double coincidence of wants.
b.
the government guarantees the value of money.
c.
money usually has an intrinsic value.
d.
money is backed by a physical commodity.
e.
opportunity costs are higher with barter trades.
ANS: A DIF: Easy REF: Ch 3, 2.a OBJ: ch. 03, 1
NAT:Analytic | The Role of MoneyTOP:Markets and Money
MSC: Knowledge
8.Most markets involve the use of money for transactions because:
a.
goods and services can be exchanged more easily with money than without it.
b.
goods and services cannot be exchanged without money.
c.
using money requires a double coincidence of wants.
d.
the transaction costs of using money are very high.
e.
the value of money remains same across countries over time.
ANS: A DIF: Moderate REF: 2.a OBJ: ch. 03, 1
NAT:Analytic | The Role of MoneyTOP:Markets and Money
MSC: Knowledge
9.Barter can best be defined as:
a.
the direct exchange of one good for money.
b.
the direct exchange of money for a good.
c.
the direct exchange of goods and services without the use of money.
d.
the direct exchange of labor services for wages.
e.
the payment of interest on a savings account.
ANS: C DIF: Easy REF: 2.a OBJ: ch. 03, 1
NAT:Analytic | The Role of MoneyTOP:Markets and Money
MSC: Knowledge
10.The term barter refers to exchanges made:
a.
only with the use of money.
b.
without the use of money.
c.
outside the U.S. economy.
d.
only in underdeveloped countries.
e.
within countries in a monetary union.
ANS: B DIF: Easy REF: 2.a OBJ: ch. 03, 1
NAT:Analytic | The Role of MoneyTOP:Markets and Money
MSC: Knowledge
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