Fundamentals of Economics Quiz

What is the production possibilities curve?

• a graph that shows how much an economy can produce between 2 goods
• how much money something is
• the opportunity one has to give up in order to gain something else
• land, labor, capital, entrepreneurs

What is the fundamental problem of every society?

• labor costs
• scarcity
• economic interdependence
• market fluctuation

Opportunity Cost is best defined as

• the value of the next best alternative that is given up due to the choice you made 
• The price you pay to purchase something 
• The benefit you gain by making a decision 
• The amount of debt you take on by making a decision 

Any resources that are made by humans and used to create other goods and services are called

• Services
• Production
• Capital
• Labor

Land, Labor, Capital, and Entrepreneurship 

• Diversification
• Deductions
• Portfolio
• Factors of Production 

Max is studying for his spelling test.  Unfortunately, his favorite TV program is on right now.  If he studies for the test, he will miss watching the show.  Max decides to study for his test instead of watching TV.  What is the opportunity cost of his decision?

• studying for a test
• watching TV 
• Passing his test
• Talking to his friends

If a point lies on the curve this means the company is being efficient. If a point lies inside the curve, this tells the company what?

• They are being over efficient
• They are not efficient
• It is impossible
• None of the above

What does point B represent?

• Production at greater than the country's minimum potential
• Production is less than the country's minimum potential
• Production is greater than the country's maximum potential
• Production at the country's maximum potential

What does point Y represent on the PPC?

• Efficiency
• Unattainable / impossible
• Inefficency
• Nothing

In a command economy, who holds power over the economy?

• The people
• The government 
• Beyonce
• The traditions of your ancesetors