Econ Sept. 14 Test

In a capitalistic economy

there is a reliance on the market system

With productive efficiency:

there is production of any particular mix of goods and services in the least costly way

A point on the frontier of the production possibilities curve is:

attainable and the economy is efficient

A point inside the production possibilities curve is

attainable, but he economy is inefficient

In the circular flow model, households:

buy products and sell resources

The opportunity cost of a new public highway is the

other goods and services that must be sacrificed to construct the new highway

The economizing problem of economics is:

that productive resources are scarce relative to the economic wants

The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of:

a market system

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

It would not shift the curve; it would be represented by moving from a point inside the curve toward the curve

When an economy is at full employment and full production, more of any one product:

can be produced only if there is less production of some other products

The individual who brings together economic resources and assumes the risk in a capitalist economy is called the:

entrepreneur

Which term best describes the conditions of allocative and productive efficiency? (production possibilities, pure capitalism, full employment, full production)

full production

Consider a society that is producing inside its production possibilities frontier. This society could best achieve efficiency in its production of output by:

fully employing all available resources

A basic characteristic of a command system is that

government owns most economic resources

As a consequence of the condition of scarcity:

individuals and communities have to make choices from among alternatives

The production possibility curve:

is the boundary between attainable and unattainable outputs

Which is a correct match of an economic resource and payment for that resource? (capital and profit, land and rental income, labor and interest income, entrepreneurial ability and wages)

land and rental income

Which is not considered to be an economic resource? (land, money, labor, tools/machinery)

money

Economic growth may be represented by a:

rightward shift of the production possibilities curve

A nation that devotes more of its resources to capital investment is likely to

shift outward its production possibilities curve

A movement along the production possibilities curve would imply that:

society has chosen a different set of outputs

The law of increasing opportunity costs indicates that

to produce more of one good, society must sacrifice larger and larger amounts of alternative goods

A point outside the production possibilities curve is:

unattainable because of limited resources