| ECO 232 – Principles of Economics |
FALL 2022 |
| Opportunity Cost and Scarcity UNIT Exam |
| Indicate the answer choice that best completes the statement or answers the question. |
| 1. Entrepreneurship is |
| a. the talent for organizing the use of land, labor and capital, among other things. |
| b. skill in influencing government regulators and legislators. |
| c. accumulated technical knowledge in using labor and capital. |
| d. knowledge of the particular natural resources to be found in a given area. |
| 2. The opportunity cost of attending college is |
| a. the money one spends on college tuition, books, and so forth. |
| b. the highest valued alternative one forfeits to attend college. |
| c. the least valued alternative one forfeits to attend college. |
| d. equal to the salary one will earn when one graduates from |
| college. |
| 3. Here are three things you could do if you do not attend your economics class: watch television with some friends (you |
| value this at $25), read a good book (you value this at $17), or go to work (you could earn $20 during the economics |
| class). The opportunity cost of going to your economics class is |
| a. $20, because this is the only alternative of the three where you would actually receive a monetary |
| payment. |
| b. $17, because this is the lowest valued alternative forfeited. |
| c. $25, because this is the highest valued alternative forfeited. |
| d. $62, because this is the total dollar sum of the three forfeited alternatives. |
| 4. The condition in an economy that makes a "rationing device" a necessity is: |
| a. the economy is organized around free markets. |
| b. the economy is centrally planned by the government. |
| c. scarcity exists. |
| d. there are fewer types of goods than there are people in the economy. |
| 5. Economists believe that people's wants are |
| a. finite. |
| b. infinite. |
| c. irrational. |
| d. unimportant because needs are more important than |
| wants. |
| 6. Decision making "at the margin" means making a choice based on __________ of a decision. |
| a. the total benefits |
| b. the total costs |
| c. comparing the total benefits and costs |
| d. comparing the additional benefits and |
| costs |
