Econ - Chap 1

What are the three factors of production? a. Needs, wants, choices b. Workers, management, entrepreneurs c. Land, labor, capital d. Human capital, physical capital, intellectual capital

c. Land, labor, capital

What is the term used to describe a temporary low supply of a good or service? a. need b. scarcity c. shortage d. want

c. shortage

1 Kings 3:9

"So give your servant a discerning heart to govern your people and to distinguish between right and wrong."

What might happen to the cost of a resource as it becomes scarcer?

Since there is still a demand for a product that is slowly running out, the product will become more expensive to buy.

During World War II, many factories were converted from producing consumer goods such as cars to producing munitions.

This is an example of switching from butter to guns. In this situation the need was more important than the want.

Why is there scarcity even in an affluent country like the United States? a. Entrepreneurs are scarce and companies need leaders. b. Resources are limited but wants are unlimited. c. Some people are poor while others are wealthy. d. Wants are limited but needs are unlimited.

b. Resources are limited but wants are unlimited.

In which of these situations would a manufacturer decide to produce more units? a. The marginal cost is greater than the marginal benefit. b. The marginal cost is less than the marginal benefit. c. The marginal benefit is less than the marginal cost. d. The marginal benefit is equal to the marginal cost.

b. The marginal cost is less than the marginal benefit.

Why are entrepreneurs important to the economy? a. They desire profits. b. They promote economic growth. c. They have talent and imagination. d. They are willing to take risks.

b. They promote economic growth.

Why do individuals, businesses, and governments make trade-offs? a. to make more money b. because resources are limited c. because large groups of people cannot easily make decisions d. to promote their values

b. because resources are limited

Someone taking a course in Web design is affecting what factor of production? a. entrepreneurship b. human capital c. land d. physical capital

b. human capital

Because of scarcity, every decision involves a a. cost/benefit analysis. b. trade-off. c. marginal cost. d. marginal benefit.

b. trade-off.

What does the production possibilities curve indicate? 1. Points at which the farm family is underutilizing its resources 2. Points at which the farm family is producing more corn than cattle 3. Points at which the farm family is producing more cattle than corn 4. Points at which the farm family is using all of its resources efficiently

1. Points at which the farm family is underutilizing its resources

Which of the following causes a production possibilities frontier to shift to the right? 1. The economy grows. 2. The economy shrinks. 3. The economy stagnates. 4. The economy destabilizes.

1. The economy grows.

Explain the reason some people more than others enjoy buying a lot of shoes. 1. They believe the marginal benefit of owning more shoes is greater than the marginal cost. 2. They believe the marginal cost of owning more shoes is greater than the marginal benefit. 3. They believe the marginal benefit of owning an additional shoe decreases with each purchase. 4. They believe the marginal cost of owning an additional shoe increases with each purchase.

1. They believe the marginal benefit of owning more shoes is greater than the marginal cost.

Nearly empty shelves of bottled water in a supermarket indicates 1. that there is a shortage of bottled water. 2. that there is a scarcity of water. 3. that water is not an abundant resource. 4. that bottled water is a limited resource.

1. that there is a shortage of bottled water.

What is Bob's opportunity cost if he decides to go out to eat with friends? 1. the money spent on the dinner 2. the money saved by not going out 3. getting exercise

1. the money spent on the dinner

To conduct a cost/benefit analysis, a sensible person would MOST LIKELY 1. compare previous costs to previous benefits. 2. compare marginal costs to marginal benefits. 3. compare known costs to unknown benefits. 4. compare unknown costs to known benefits.

2. compare marginal costs to marginal benefits.

Which of the following would an entrepreneur do first when starting a new venture? 1. borrow money 2. find the necessary land resources 3. identify an unmet want 4. compare prices of competing goods and services

2. find the necessary land resources

Sarah is thinking of buying an MP3 player. What would be the opportunity cost of buying the 64 GB model? 1. having more time to listen to music 2. having some storage 3. saving a significant amount of money 4. having lots of storage

2. having some storage

Which of the following is an example of scarcity rather than shortage? 1. Extremely hot temperatures lead to increased air-conditioner use and power outages. 2. There aren't enough software engineers to fill all the job openings in Silicon Valley. 3. Newly discovered Van Gogh paintings are put up for auction and sell for millions. 4. During the holiday season, an outfitter runs out of skis.

3. Newly discovered Van Gogh paintings are put up for auction and sell for millions.

Which of the following courses of action makes the MOST sense in today's world for manual laborers who have been replaced by robots? 1. Look for work in farming, fishing, or hunting. 2. Write to members of Congress to complain about their former employer. 3. Seek training in the latest technology related to a type of work they enjoy. 4. Open their own manufacturing plant that employs manual laborers, not robots.

3. Seek training in the latest technology related to a type of work they enjoy.

A person is considered an entrepreneur because she 1. has earned millions of dollars. 2. has many employees who work for her. 3. combined resources to create new products. 4. was a woman who succeeded in a male-dominated industry.

3. combined resources to create new products.

"The question remains: How many guns are necessary to maintain a high level of security for the U.S., and how much butter can the nation afford without hurting guns and vice versa?"— David Briceno, "'Guns vs. Butter,' America's Political Dilemma," The Union in the quotation above, "butter" refers to 1. social welfare spending. 2. agricultural spending. 3. commercial spending. 4. defense spending.

3. commercial spending.

In the debate over guns vs. butter, which of the following is an example of butter? 1. military planes 2. commercial planes 3. private factories 4. schools

3. private factories

A country has two main products: hats and grapes. The country decides to start making more and more hats and fewer and fewer grapes. Why does the opportunity cost of making hats increase as more and more hats are produced? 1. Grapes can be grown more efficiently than hats can be manufactured. 2. The best resources for producing grapes are least suited to making hats. 3. Increasing the country's production of hats maximizes its output of goods and services. 4. Producing more hats and fewer grapes shifts the production possibilities frontier to the left.

4. Producing more hats and fewer grapes shifts the production possibilities frontier to the left.

In a cost/benefit analysis, what would be the benefit of taking the Dallas North Tollway instead of Routes 75 and 380? 1. That route would cost less in tolls. 2. That route would cost more in tolls. 3. That route would require more travel time. 4. That route would require less travel time.

4. That route would require less travel time.

In 1991, for a short time, Iraq invaded Kuwait and seized its oil fields. During that time, what impact, if any, did the invasion have on Iraq's production possibilities frontier? 1. The production possibilities frontier remained stable. 2. The production possibilities frontier reached its maximum. 3. The production possibilities frontier shifted to the left. 4. The production possibilities frontier shifted to the right.

4. The production possibilities frontier shifted to the right.

After considering her different options, Amelia decides to buy fat-free ice cream. What is the benefit? 1. a dessert that has no sugar 2. a dessert that is high in calories 3. a dessert that is very healthy 4. a dessert that is relatively low in calories

4. a dessert that is relatively low in calories

To save money, Taylor decided not to go to a concert where her favorite musician was performing. What was the opportunity cost of that decision? 1. having fun at the concert 2. spending time at home 3. having time to study 4. having extra money

4. having extra money

Production possibilities curves are important tools for 1. demonstrating which products will sell better than others. 2. comparing costs and profits of producing goods and services. 3. determining the underutilization of an economy's resources. 4. showing ways to use an economy's productive resources.

4. showing ways to use an economy's productive resources.

What is the opportunity cost of going to college? 1. no student loan debt 2. high unemployment 3. low unemployment 4. significant student loan debt

4. significant student loan debt

Which of the following is an example of a land resource that a person who owns a restaurant would need? 1. the servers who wait on customers 2. the farmer who grows the vegetables served at the restaurant 3. the water used to for drinking and cleaning 4. the building where the restaurant is located

4. the building where the restaurant is located

What explains the reason that only one extra hour of study time is needed to increase a grade from a C to a B, but three extra hours of study time are needed to increase a grade from a B to an A? 1. the law of increasing costs 2. the law of decreasing costs 3. the law of underutilization 4. the law of efficiency

4. the law of efficiency

List some examples of physical capital a restaurant needs to operate.

A restaurant needs things like tables, a dishwasher, a refrigerator, freezer, and a stove.

Give an example of an economic decision you have recently made. Identify what you chose and what your opportunity cost was.

I chose to go to a movie with friends. My opportunity cost was the meal I could not go out to because I had spent my money on the movie instead.

Describe one-way scarcity has had an impact on your life.

I want to buy my favourite computer from this brand but I do not have enough to afford it so I decide to buy an affordable computer from a cheaper brand.

Which of the following is a benefit that a business is likely to attain from purchasing new equipment? a. Increased productivity b. Better entrepreneurial knowledge c. Fewer natural resources required d. Lower costs

a. Increased productivity

What are economists referring to when they say "choosing is refusing"? a. Opportunity cost b. "Guns or butter" c. Marginal cost d. Thinking at the margin

a. Opportunity cost

Which of these would be an alternative use for farmland? a. an amusement park b. farm machinery c. skilled labor d. cash

a. an amusement park

An opportunity cost is a. the best alternative that is given up when a decision is made. b. the worst alternative that is given up when a decision is made. c. a choice that is made when no alternative is very good. d. the cost of making decisions related to producing goods.

a. the best alternative that is given up when a decision is made.

Drawing a production possibilities curve helps a country's economists determine a. which goods the country can produce. b. which resources should be used to produce goods. c. how the production of one good affects the production of another. d. how many factories and how much farmland the country should have.

a. the best alternative that is given up when a decision is made.

The points on a production possibilities frontier all represent a. the efficient use of resources. b. the cost of using resources. c. underutilization of resources. d. different types of resources.

a. the efficient use of resources.

Which of the following is true about scarcity? 1. Scarcity affects all societies. 2. Scarcity exists only in poor countries. 3. Scarce goods lead to lower prices. 4. Scarcity of resources can be eliminated using sound economic policies.

about scarcity? 1. Scarcity affects all societies.

A sales clerk represents which factor of production? a. Entrepreneur b. Capital c. Labor d. Land

c. Labor

Which statement best describes opportunity cost? a. Opportunity cost is the value in dollars of a trade-off. b. Opportunity cost is the best choice in a decision. c. Opportunity cost is the best alternative decision. d. Opportunity cost is all the alternatives not chosen in a decision.

c. Opportunity cost is the best alternative decision.

A basketball coach is performing a cost/benefit analysis in order to determine if more hours of practice would help the team score more points. The coach's action is an example of a. individual trade-offs. b. opportunity cost. c. marginal thinking. d. marginal benefit.

c. marginal thinking.

The phrase "guns or butter" expresses the idea that a. individuals, businesses, and governments all face trade-offs. b. factor resources are limited. c. government decisions involve opportunity cost. d. government decisions involve trade-offs between military and domestic needs.

d. government decisions involve trade-offs between military and domestic needs.