AP Econ 1.1 and 1.2 quiz

Which of the following would best explain an inward shift of the production possibilities curve?

A decrease in the quality of human capital

Which of the following would shift a country's production possibilities curve inward?

A reduction in the size of the country's labor force

Which of the following concepts can be illustrated using the production possibilities curve? I. Choice II. Scarcity III. Price level IV. Opportunity cost

I, II, and IV only

economics

The study of how people seek to satisfy their needs and wants by making choices off of scarcity

Which of the following describes scarcity?

Wants exceed resources

When an economy producing two goods is operating efficiently and at full employment, increasing the production of one good will result in

a decrease in the amount of the other good that can be produced

Any point inside the possibilities curve is

associated with inefficient use or unemployment of some resources

Scarcity exists because

human wants exceed the productive capacity of the economy

If a certain combination of goods or services lies outside the production possibilities curve of an economy, which of the following is true?

resources are not available to achieve that combination of goods or services

comparative advantage

the ability of an individual, a firm, or a country to produce a good or service more efficiently than than another activity

The concept of opportunity cost would no longer be relevant if

the supply of all resources were unlimited

The opportunity cost of an activity is

the value of the forgone benefit of the next best alternative

opportunity cost

whatever must be given up to obtain some item

constant opportunity cost

when the opportunity cost stays the same as you increase your production of one good

Assume an economy produces two goods, capital goods and consumer goods. If the production of capital goods increases in the current period, which of the following will occur for the current and future production possibilities curve (PPC) for consumer goods and capital goods?

A movement along the current PPC and a rightward shift of the future PPC

An economy is operating at a point inside its production possibilities curve (PPC). What will most likely cause the economy to move toward the current PPC in the short run?

An increase in employment

Which of the following is an example of a factor of production?

Capital

For an economy that is operating inside its production possibilities curve, which of the following is true?

It can increase the production of both goods.

What is always true of an economy operating on its production possibilities frontier?

Its resources are fully employed.

All societies face a trade-off for every decision for which of the following reasons?

Resources are scarce.

Which of the following is the most fundamental issue that economics addresses?

Use of scarce resources

If producing each additional unit of good X required giving up ever-increasing amounts of good Y, the production possibilities curve between X and Y would be

bowed outward

A production possibilities curve that is concave to the origin (bowed out) implies that as more of a good is produced, the opportunity cost

increases

What are the 3 factors of production?

land, labor, capital

equality

the property of distributing economic prosperity uniformly among the members of society

efficiency

the property of society getting the most it can from its scarce resources