Unit 1: Fundamentals of Economics

The situation in which some necessities have little value while some non-necessities have a much higher value is known as

• Paradox of Value

• Trade-offs

• Opportunity Cost

• Economic Interdependence

Manufactured goods needed to produce other goods and services are called

• nondurable goods

• Gross Domestic Product (GDP)

• capital goods

• consumer goods

To arrive at an economic decision, a decision-making grid may be used to evaluate

• productivity

• alternative choices of action

• only durable goods

• only capital goods

Study the graph. Suppose this nation starts with producing all military goods. It then decides to produce a mix of civilian and military goods represented by point B. What represents the cost in military goods given up?

• the vertical distance between point X and point Y

• the horizontal distance between point Y and point Z

• the horizontal distance between point Z and point E

• the vertical distance from point A to point X

In this production possibilities frontier, what could cause production to move from point "A" to point "E"?

• factories that are available but idle

• the availability of additional resources

• increased productivity

• economic growth

A popular model used to illustrate the concept of opportunity cost is

• Productions Possibilities Frontier

• Paradox of Value

• Entrepreneurship

• Factors of Production

An economy at its production possibilities frontier is operating

• with slow economic growth

• without division of labor

• at efficiency

• as a free enterprise economy

Which of the following choices best describes what this production possibilities frontier is depicting?

• alternative possibilities

• cost of idle resources

• opportunity cost

• economic growth

What factor of production do these images illustrate?

• Labor

• Capital

• Land

• Entrepreneurship

Illustrated in the in the production possibilities curve, the company decides to make 4 gallons of red paint. How many gallons of blue paint would they produce?

• 2

• 6

• 3

• 8