Chapter 1 - Economic Problem

_what is the definition of command economy?

• economic system combining private and public enterprise.

• an economy in which decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.

• An economy in which production, investment, prices, and incomes are determined centrally by a government.

• Economic system reliant on traditional methods of acquiring resources as well as producing and distributing goods and services.

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 

What factor of production's function is to make decisions and take risks?

• Capital

• Enterprise

• Land

• Labour

What type of factor of production is a road?

• Capital
• Enterprise
• Labour
• Land 

What is meant by opportunity cost?

• The next best alternative foregone
• The cost of the item selected
• The cost of exploring business opportunities
• The labour used in producing the product 

Which is the following is a free good?

• A vaccination provided by the state without charge 
• Prizes of food items given away by a supermarket 
• Recycled paper
• Wind coming from the sea

What does a production possibility curve show?

• The prices of two types of products being produced
• The quantity of capital and consumer goods that people would like to be produced
• The maximum combination of two types of goods that can be produced with given resources.
• The relative profitability of capital and consumer goods 

Why will scarcity continue to be a problem in the future?

• Prices will rise
• Resources will always be finite 
• Needs will decrease in the future 
• World population will fall 

This type of government typically goes with the Command Economy.  

• Democracy
• Dictatorship
• Autocracy
• Communism

Which basic economic question addresses the issue of using finite resources with productive efficiency?

• What to produce?

• How to produce?

• When to produce?

• For whom to produce?