Pretest 1

The diagram shows the production possibilities curve for Country Y. Which of the following statements is true?

• If Country Y is producing at point C, it is using all its resources efficiently

• The opportunity cost of producing more machines is constant

• Country Y cannot produce at point E

• The most efficient point of production is point D

Which of the following constitute the fundamental questions every economic system must answer?

• I, III, V only
• I, II, and IV only
• I, II, and V only
• II, IV, and V only

There are four types of economic systems. Most economies are _____.

• Traditional

• Command

• Market

• Mixed

Johnny has $50 and wants to buy a pair of Nike Shoes that cost $95.  He has to settle for a pair of Sketchers for $45.  In economic terms Johnny is facing the problem of: 

• Shortage
• Scarcity 
• Unemployment 
• Marginal costs

He is the founding father of economics

• John Maynard Keynes

• Adam Smith

• David Ricardo

• Joseph Schumpeter

The opportunity cost of building a new library is the:

• cost of building the skate park now as opposed to building the library later.

• next best alternative goods or services that must be given up to build the library.

• monetary cost of the new library.

• cost of supervising library activities.

Basic economics concepts

• Scarcity, choice & wants

• Scarcity, choice & second best alternative to let go

• Scarcity, overhead cost & choice

• Scarcity, choice & needs

The Welch family has saved some money.  They can spend it on a vacation to the Grand Canyon or build a swimming pool in their back yard.  They decide to spend the money on a swimming pool.  What is the opportunity cost of their decision?

• vacation 
• swimming pool 

What is the fundamental problem of economics? 

• How to keep consumers out of debt?
• How to fulfill our unlimited wants and needs with limited resources?
• How to figure out the way to make the most money?
• How do we ensure all people get a college education?

how much of a good or service consumers want

• demand

• spending

• producer

• scarcity