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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. What is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets?
(a) Derivative.
(b) Interest.
(c) Subsidy.
(d) Deductible.

2. According to the author in Chapter 1, companies want to profit, and consumers want what?
(a) Safety.
(b) Satisfaction.
(c) Education.
(d) Results.

3. With uniform rules and regulations, the cost of doing business in the private sector is what, according to the author in Chapter 3?
(a) Lowered.
(b) Maintained.
(c) Prohibitive.
(d) Raised.

4. Gary Becker was awarded the Nobel Memorial Prize in Economic Sciences in what year?
(a) 1988.
(b) 1992.
(c) 2003.
(d) 1997.

5. What is a form of tourism involving visiting fragile, pristine, and usually protected areas, intended as a low impact and often small scale alternative to standard commercial tourism?
(a) Hippytourism.
(b) Geotourism.
(c) Ecotourism.
(d) Nativetourism.

Short Answer Questions

1. According to the author, financial markets boil down to four basic simple needs. What is the first discussed in Chapter 7?

2. According to the author, insurance companies want to save money while doctors want to help patients and avoid what?

3. What represents the original capital paid into or invested in the business by its founders?

4. What is a term used in economics that refers to a market process in which "bad" results occur when buyers and sellers have asymmetric information?

5. In what political structure does the government set the price and decide what's on the shelves?

Short Essay Questions

1. How does the author describe the concept of maximizing profits in Chapter 1? What examples does he give?

2. How is the black rhinoceros described in Chapter 2? What are the horns of the animal worth in Yemen, and why?

3. How does human capital relate to productivity? How does this in turn reflect the economic well-being of a nation, according to the author in Chapter 6?

4. What lessons can be learned from a monopoly situation according to the author in Chapter 4?

5. Who wrote the book's Foreword? What does this individual say regarding the perception of economics and economists?

6. How does the author of the Foreword describe the focus the book of "Naked Economics: Undressing the Dismal Science"? Does he find it balanced? Why?

7. What is the basic set of rules put forth by the author for those looking to invest in Chapter 7? How are risk and reward described?

8. How does the author describe the tactics used by OPEC in Chapter 1?

9. What investment tactic is recommended for the average investor without much expertise in the market in Chapter 7?

10. What are the ramifications of decisions made in the world of finance and legislation, according to the author in the Introduction?

(see the answer keys)

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