Topic 1 Review

1. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

• direct, inverse

• inverse, direct

• inverse, inverse

• direct, direct

• strong, weak

Oil is this type of scarce resource.

• Human Capital
• Land/Natural 
• Labor
• Physical Capital

Columbia and Mexico both produce wine and cars under conditions of constant opportunity costs. Columbia will have a comparative advantage in car production if:

• it can produce more cars than Mexico.
• the opportunity cost of car production is lower in Columbia than in Mexico.
• its labor productivity in car production is greater than Mexico's.
• it can produce more wine than Mexico.

A company that makes baseball caps is underutilizing its resources. What does this mean?

• The company is running more efficiently than its competitors.
• The company is paying its employees less than it should be.
• The company is making caps when it could be making t-shirts instead.
• The company is producing fewer caps than it could be.

What can cause a production possibilities frontier to shift away from the origin?

• Thousands of people move out of the country.
• A new technology used in production.
• An epidemic kills thousands .
• The population is growing increasingly old.

A country’s production possibilities increase because the available workers become more skilled at their jobs. This is an example of growth caused by

• Land
• Labor
• Capital
• Entrepreneurship

Both nations will gain from trade when 1 tire trades for:

• 1/3 radio.
• 1/2 radio.
• 1 1/2 radios
• 2 radios

A decrease in the price of eggs will result in a(n):

• increase in the demand for eggs.
• increase in the supply of eggs.
• decrease in the supply of eggs.
• downward movement along the supply curve of eggs.

Economics is the study of...

• how businesses produce goods and services
• the efficient use of scarce resources
• the equitable distribution of wealth
• the printing and circulation of money

The production of more goods, the development of new technology, and the development of a higher standard of living are associated with what economic goal

• Economic Equity
• Economic Efficiency
• Full Employment
• Economic Growth