Econ Chapter 1-6

The fundamental problem of economics is the scarcity of ________________ relative to human ___________________.

resources, wants

In the circular flow diagram, which of the following is true? a. businesses pay wages, rent, interest, and profits to households in return for use of factors of production b. businesses purchase goods and services from households in return for money payments c. households pay wages, rent, interest, and profits to businesses in return for use of factors of production d. the relationship between households and businesses exist only in a traditional society e. the relationship between households and businesses exits only in command economy

a

The law of increasing opportunity cost is reflected in the shape of a. production possibilities curve concave to the origin ("bowed out") b. production possibilities curve convex to the origin ("bowed in") c. horizontal production possibilities curve d. straight-line production possibilities curve e. upward-sloping production possibilities curve

a

In a typical circular flow diagram, there are 1-Product Markets 2-Resources Markets 3-Households 4_Businesses

1, 2, and 3

Which of the following goods would be considered scarce? 1-Education 2-Gold 3-Time

1, 2, and 3

The role of the entrepreneur in an economy is to A. Bring the factors of production together and assume the risk of production B. Work with the government planners to determine what goods are produced C. Arrange bank financing for the owners of new businesses D. Ensure full employment of labor

A. Bring the factors of production together and assume the risk of production

Which of the following is not one of the three core economic issues that must be resolved? A. How to produce the goods and services we select B. What to produce with unlimited resources C. Who should get the good and services we produce D. What to produce with limited resources

B. What to produce with unlimited resources

With respect to factors of production, which of the following statements is not true? A. Factors of production are also known as resources B. In order to produce any good or service, it is necessary to have factors of production C. Factors of production include land, labor, capital, and entrepreneurship D. Only those resources that are privately owned are counted as factors of production

D. Only those resources that are privately owned are counted as factors of production

T/F All output combinations that lie outside a production possibilities curve are attainable with available resources and technology.

False

T/F Demand is elastic if the consumer has only a few substitutes to choose from.

False

Elasticity of supply tells us...

How much sellers will increase production in response to a change in price

The basic factors of production are

Land, labor, capital, and entrepreneurship

Which of the following is true of the concept of increasing opportunity costs? a. it is unimportant in command economies because of central planning b. it suggests that the use of resource to produce a set of goods and services means that as more of one is produced, some of the other must be sacrificed c. it is irrelevant if the production possibilities curve is convex to the origin d. it suggests that unlimited wants can be fulfilled e. it means that resources are plentiful and opportunities to produce greater amounts of goods and services are unlimited

b

Which of the following would cause an outward or rightward shift in the production possibilities curve? a. an increase in unemployment b. an increase in inflation c. an increase in capital equipment d. a decrease in natural resources e. a decrease in the number of workers

c

In which way does a straight-line production possibilities curve differ from a concave production possibilities curve? A straight-line production possibilities curve has a ________________ opportunity cost.

constant

Which does not influence the price elasticity of demand? a. availability of substitutes b. price of item relative to consumers budget c. costs of production d. length of time

costs of production

The crucial problem of economics is a. Establishing a fair tax system b. providing social goods and services c. developing a price mechanism that reflects the relative scarcities of products and resources d. allocating scarce productive resources to satisfy wants e. enacting a set of laws that protects resources from overuse

d

A price decrease will cause total revenue to fall if

demand is INelastic

Firms are ____________ in the product markets and _________________ in the factor markets.

demanders, suppliers

Societal attempts to "solve" the economic problem of scarcity have included which of the following a. tradition based resources allocation solutions b. command based resources allocation solutions c. market based resource allocation solutions d. resources allocation solutions based on a mixture of the above e. all of the above could be considered solutions to the scarcity problem in economics

e

Which of the following would cause a leftward shift of the production possibilities curve? a. an increase in unemployment b. an increase in inflation c. an increase in capital equipment d. a decrease in consumer demand e. a decrease in working-age population

e

The demand will be ___________ if the consumer has more substitute goods to choose from.

elastic

Opportunity cost is defined as the

goods or services that are forgone in order to obtain something else

The demand curve that is completely elastic is __________________.

horizontal

Economists are likely to disagree most often over ___________________ ___________________.

normative statements

Normative statements involve ___________________________ while positive statements involve ________________________.

opinions, facts

When one decision is made, the next best alternative not selected is called _______________________________.

opportunity cost

According the the theory of comparative advantages, a good should be produced where its ____________________ _________________ are least.

opportunity costs

Given that resources are scarce, ________________ ________________ are experienced whenever ________________ are made.

opportunity costs, choices

When the demand is price INelastic, ceteris paribus, an increase in...

price leads to greater total revenue

If a student had literally "nothing else to do" a. What would be the opportunity cost of doing this homework? b. What is the likelilhood of actually having nothing else to do?

the student's time, zero or close to zero