econ quiz
Country A can produce 1 cello by giving up the production of 5 guitars. Country B can produce 1 guitar
guitars
A country that has an absolute advantage in producing all goods will ________. *not on quiz*
have a comparative advantage in some goods but not all
microeconomics is the study of
how households and firms make choices
In economics, the accumulated skills and training that workers have is known as
human capital
If society decides it wants more of one good and all resources are fully utilized, then
it has to give up some of another good and incur some opportunity costs.
economists reason that the optimal decision is to continue any activity up to the point where the
marginal benefit equals marginal cost
Resource use is allocatively efficient if the
marginal cost of what the resource produces is equal to the marginal benefit of what is produced.
The highest valued alternative that must be given up to engage in an activity is the definition of
opportunity cost
The machines workers have to work with are considered
physical capital
By specialization and trade, two individuals can
produce and consume at a point beyond their individual production possibilities frontiers.
Any point on a production possibilities frontier (PPF) itself is
production efficient
The marginal benefit of a good or service
remains constant as more is consumed.
Because of the existence of comparative advantage, the total output of goods is higher when each producer
specializes in the production of one good or a few goods.
Which of the following is an example of an activity undertaken by an entrepreneur?
starting your own pet sitting business
Marginal cost is the opportunity cost
that arises from producing one more unit of a good or service.
by definition economics is the study of
the choices people make to attain their goals given their scarce resources
The production possibilities frontier itself illustrates
the combination of two goods or services that can be produced efficiently
Opportunity cost is best defined as
the highest-valued alternative that is forgone when choosing among various alternatives
scarcity can best be defined as a situation in which
the resources we use to produce goods and services are limited
Any production point outside the production possibilities frontier is
unattainable.
the three fundamental questions that any economy must address are:
What goods and services to produce; how will these goods and services be produced; and who receives them?
Which of the following is a positive economic statement?
If the price of iPhones falls, a larger quantity of iPhones will be purchased.
In the figure above, the marginal cost of the fifth computer is
20 television sets per computer.
In the figure above, the marginal cost of the second computer is
5 television sets per computer
A situation in which some resources are NOT fully utilized is represented in a production possibilities frontier diagram by
a point inside the production possibilities frontier.
Economic growth
allows us to increase our consumption in the present and in the future.
Opportunity cost is illustrated in a production possibilities frontier (PPF) by a movement
along the PPF where to gain more of one good it is necessary to give some of another good.
economics assume that individuals
are rational and respond to incentives
A person has a comparative advantage in producing a particular good if that person
can produce it at lower opportunity cost than anyone else can.
The decision about what goods and services will be produced made in a market economy is made by
consumers and firms choosing which goods and services to buy or produce.