Chapter 1 Econ test
Consumers waiting in long lines for a new product is an example of
scarcity
When a business needs to decide whether a certain action is worth the cost, the most helpful analysis would be a(n)
cost-benefit analysis
How many distinct factors of production do economists recognize?
4
Give an example that illustrates the concept of opportunity cost.
ANY EXAMPLE YOU WANT -------- For example, let's assume you have $15,000 that you could either invest in Company XYZ stock or put toward a graduate degree. You choose the stock. The opportunity cost in this situation is the increased lifetime earnings that may have resulted from getting the graduate degree -- that is, you choose to forgo the increase in earnings when you use the money to buy stock instead.
Give an example of how you might personally participate in a product market.
Give an example of how you might personally participate in a product market.
Which of the following statements best describes the purpose of the production possibilities curve?
It identifies all possible combinations of goods and services an economy can produce.
Which of these do economists use to illustrate combinations of output?
a production possibilities curve
A nation's wealth is determined by its
accumulation of all tangible products
A nation's wealth is made up of
all tangible items
Which of the following would result in a change in the production possibilities frontier in the mythical country Alpha?
an influx of immigrants from other countries, the discovery of an abundant natural resource, and a long drought
Name a similarity and a difference between these factors of production: land and capital.
difference- land is a natural resource, where capital is man made. similarity- ??????????
A car is an example of a
durable good
When a nation's total output increases over time, the nation is experiencing
economic growth
Which of the factors of production involves taking risks and combining resources to produce a good or service?
entrepreneurs
The study of economics involves
explaining how people deal with scarcity.
Economic growth causes the production possibilities frontier to contract.
false
Economic growth usually can be achieved without investing in new resources
false *** Economic growth cannot be achieved without investing in new resources
People's skills, abilities, health, knowledge, and motivation all add up to entrepreneurship.
false *** Entrepreneurship, is when people take risks for profits and do something new w/ exhausting resources.
In all societies, the government decides what to produce.
false *** In SOME societies, the government decides what to produce.
Japan, with an aging population, has had difficulty replacing people with machines.
false *** Japan, with an aging population has not had difficulty replacing people with machines.
People's needs are limited.
false *** People's needs are unlimited
Both goods and services are counted as wealth.
false *** Wealth is the accumulation of goods that are scarce.
Economic growth is most closely associated with an increase in
goods and services
The most comprehensive measure of a nation's wealth is provided by its
gross domestic product
Paradox of value refers to the
high value of a nonessential item and the low value of an essential item
In the mythical country Alpha, an entrepreneur has introduced a new technology that makes manufacturing twice as efficient as before. How is this likely to affect the production possibilities frontier?
it would expand the frontier
A can of soup is an example of a
nondurable good
The efficient use of scarce resources leads to an increase in
productivity
The amount of output in a specific amount of time with a given amount of resources is referred to as
produtivity
Consumers are expected to read the full information about a product before making a purchase. This is an example of a consumer's
responsibilites
Which of the following descriptions best explains the meaning of opportunity cost?
the cost of choosing one alternative over another
Dave gets a job at a grocery store, which pays him an hourly wage in exchange for his labor. Dave is participating in
the factor market
Economics is best defined as the study of how societies deal with
the problem of scarcity
Opportunity cost refers to
the value of the next best alternative.
Consumers are powerful because
they drive decisions about what to produce
When deciding how to use resources, you need to evaluate the costs and benefits of each choice to decide which meets your criteria. These are called
trade-offs
Which of these is most closely associated with opportunity cost?
trade-offs
Scarcity is an economic problem with which all societies are faced.
true
Economic growth is an increase in a nation's output of goods and services over time.
true
Separation of tasks to be performed by different workers is division of labor.
true
Which of the following helps determine something's value?
utility and scarcity
Societies are faced with which three basic questions about production of goods?
what, how and for whom
Division of labor is practiced because
it increases efficiency by ensuring that workers become good at specific tasks.