Economics Ch. 1 Summative Review

The value of your next best alternative is called

• Economics

• Scarcity

• Opportunity Cost

• Incentive

The knowledge and skills a worker gains through education and experience is known as:

• Labor

• Human Capital

• Allocative Efficiency

• Time

What does it mean when a business is "on the line" of the Production Possibilities Curve (or Frontier)?

• it is inefficient

• impossible

• the company is losing money

• it is efficient

What are the three ways to improve productivity?

• Goods, services, and scarcity

• Natural resources, human resources, and capital resources

• Command resources, traditional resources, and market resources

• Efficiency, Division of Labor, and Specialization

What is a trade-off?

• All of the alternatives you give up when you make a decision

• Your second best option

• A way to buy and sell goods

When an economy’s resources are not fully employed, then it must be true that the:

• production point is located outside and to the right of the production possibilities frontier.
• production point is located along the production possibilities frontier.
• production point is located inside and to the left of the production possibilities frontier.
• production possibilities frontier shifts to the right.

A point outside a production possibilities curve reflects:

• the law of increasing costs.
• the economy cannot attain that point with the given state of technology and number of resources.
• less than full use of resources and technology.
• economic efficiency.

Which of the following would most likely cause the production possibilities curve for DVD players and food to shift outward?

• A choice of more food and more DVD players.
• A choice of more food and fewer DVD players.
• A choice of more DVD players and less food.
• An increase in the quantity of natural resources.

The opportunity cost of increasing production from 7 to 9 trucks is

• Scarcity
• 2 boats
• 2 trucks
• 3 boats

If a natural disaster strikes, the production possibilities curve can shift

• No shift
• To the left
• To the right
• Outward on one axis only