Fundamentals of Economics 2025

In college, people can major in a wide variety of fields including medicine, journalism, business, and design among others. This is an example of the concept of

• scarcity

• specialization

• elastic demand

• progressive taxation

Investing heavily in new capital equipment and technology is MOST related to

• economic freedom

• supply and demand

• economic growth

• opportunity costs

Economic growth is often tied to investment in machinery, new technology, and education of the population. This is because

• the only way to measure economics growth is to observe changes in these factors

• investment in these items are the sole determinant of output

• all of these items improve capital

• these items lead to a greater productivity of inputs

When two people engage in trade, both sides will benefit if the trade meets which two requirements?

• voluntary and non-fraudulent

• non-voluntary and fraudulent

• free and international

• rational and marginal

In what way does specialization increase productivity?

• Specialization reduces scarcity

• Specialization reduces the costs of production

• Specialization increases the demand for a product

• Specialized workers are generally more highly educated

A headline reads: "High Tech Firms Begin Producing New Generation of Computers." What basic economic question is being addressed in this headline?

• how to produce

• what to produce

• when to produce

• for whom to produce

What causes scarcity?

• specialization and division of labor

• trade-offs and opportunity costs

• limited resources and unlimited wants

• innovation and entrepreneurship

What is an indicator that rational decision making is happening?

• marginal benefit is greater than marginal cost

• marginal cost is greater than marginal benefit

• marginal benefit and marginal cost are equal to each other

• none of the above

What does point A represent on the production possibilities curve?

• the maximum use of resources

• a production impossibility with the given amount of resources

• an inefficient use of resources

• amount of specialization in production

What does point X represent on the production possibilities curve?

• the maximum use of resources

• a production impossibility with the given amount of resources

• an inefficient use of resources

• amount of specialization within production process