CH 1&2- Week 2 Quiz

In economics, choices must be made because we live in a world of: unemployment scarcity greed unlimited resources

Scarcity

Economists assume that individuals: behave in unpredictable ways will never take actions to help others prefer to live in a society that values fairness above all else are rational and respond to incentives

are rational and respond to incentives

Comparative advantage means the ability to produce a good or service: at a lower selling price than any other producer at a lower opportunity cost than any other producer of a higher quality than any other producer at a higher profit level than any other producer

at a lower opportunity cost than any other producer

An outward shift of a nation's production possibilities frontier represents economic growth rising prices of the goods on the production possibilities frontier model an impossible situation a situation in which a country produces more of one good and less of another

economic growth

In economics, the term __________ means "additional" or "extra." allocative marginal equity optimal

marginal

Economists reason that the optimal decision is to continue any activity up the point where the: marginal benefit is zero marginal benefit is greater than the marginal cost marginal cost is zero marginal benefit equals the marginal cost

marginal benefit equals the marginal cost

In economics, the term __________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade. collective cooperative market trade-off

market

The production possibilities frontier shows the __________ combinations of two products that can be produced in a particular time period with available resources. minimum attainable maximum attainable only equitable

maximum attainable

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all the following except: engage in mutually beneficial trade with other nations increase the variety of products that it can consume with no increase in resources consume a combination of goods that lies outside its own production possibilities frontier produce a combination of goods that lies outside its own production possibilities frontier

produce a combination of goods that lies outside its own production possibilities frontier

The concept of opportunity cost is that: in a market economy, taking advantage of profitable opportunities involves some money cost the economic cost of using a factor of production is the alternative use of that factor that is given up. taking advantage of investment opportunities involves costs. the cost of production varies depending on the opportunity for technological application.

the economic cost of using a factor of production is the alternative use of that factor that is given up.

Without an increase in the supply of the factors of production, how can a nation achieve economic growth? by producing more high-value goods and a fewer low-value goods through technological advancement which enables more output with the same quantity of resources by lowering the prices of factors of production by increasing the prices of factors of production

through technological advancement which enables more output with the same quantity of resources

Economists assume that rational people do all of the following except: use all available information as they act to achieve their goals. undertake activities that benefit others and hurt themselves weigh the benefits and costs of all possible alternative actions respond to economic incentives

undertake activities that benefit others and hurt themselves

Making optimal decisions "at the margin" requires: making decisions according to one's whims and fancies. making consistently irrational decisions weighing the costs and benefits of a decision before deciding if it should be pursued making borderline decisions

weighing the costs and benefits of a decision before deciding if it should be pursued

The production possibilities frontier model shows that: if consumers decide to buy more of a product, its price will increase a market economy is more efficient in producing goods and services than is a centrally planned economy economic growth can only be achieved by free market economies if all resources are full and efficiently utilized, more of one good can be produced only by producing less of another good

if all resources are full and efficiently utilized, more of one good can be produced only by producing less of another good

Which of the following statements about scarcity is true? scarcity refers to the situation in which unlimited wants exceed limited resources Scarcity is not a problem for the wealthy scarcity is only a problem when a country has too large a population scarcity only arises when there is a wide disparity in income distribution

scarcity refers to the situation in which unlimited wants exceed limited resources

By definition, economics is the study of: how to make money in the stock market how to make money in a market economy the choices people make to attain their goals, given their scarce resources supply and demand

the choices people make to attain their goals, given their scarce resources