Unit 1

Which of the following best defines opportunity cost?

• the money spent purchasing one additional unit of a good or service

• the foregone benefit of the next best alternative

• the total cost of purchasing a good, divided by the quantity produced

• the cost imposed on society above what the individual paid for the good

Which situation best describes diminishing marginal returns?

• Jimena eats 5 donuts and gets a tummy ache

• Sophia hires 6 more workers in her salad shop and sees output lower than before

• A country produces more wine than avocados and starts to see a higher cost of production

• Allan buys a bigger building for his expanding business and sees his cost of production decrease

Which of the following is an example of capital as a factor of production?

• a mountain with large amounts of precious mineral deposits

• a teacher at Basis

• an inventor trying to start a new company

• a shovel for a farmer

Humans have unlimited wants but limited resources to achieve all their wants. This concept is known as ...

• capital

• scarcity

• efficiency

• production

Floydland is a country where all the resource allocation and property are fully controlled by the government. What type of economy is this?

• command

• market

• mixed

• traditional

On a PPC curve if a dot is ON the curve then we are ________

• impossible

• efficient

• inefficient

• exiting the market

In which economic system do individual consumers and producers have the most influence on answering the three basic economic questions?

• free market/capitalism

• command/planned

• traditional

• socialism

An individual making decisions about whether or not to purchase a good or service is known in economics as a _______

• producer

• consumer

• econo

• laborer

When determining causation in an experiment, economists apply a rule for which all variables are held constant except one. This is known as ...

• habeas corpus

• entrepreneurship

• laissez faire

• ceteris paribus

When a producer makes decisions at the margin, it is in their best interest to make a decision as long as their

• marginal benefit is greater than marginal cost

• total benefit is greater than total cost

• marginal cost is greater than marginal benefit