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.