Econ Ch 1 Quiz

The study of economics is primarily concerned with

• managing money and financial assets

• promoting economic equality and creating a just society

• developing free markets and limiting the role of the government

• allocating scarce resources to meet society's needs and wants

• enacting laws to protect the environment

For the production possibilities above, the opportunity cost of moving from combination D to combination C is...

• 1 hat

• 2 hats

• 10 shoes

• 15 shoes

• 3 hats

The next best alternative given up when a decision is made is called

• a scarce resource

• an opportunity cost

• a trade off

• comparative advantage

• an indifference alternative

What is the difference between physical and human capital?

• Physical capital is money while human capital is labor done by workers

• Physical capital is used in the modern production process while human capital is no longer used in most modern economies

• Physical capital can only be used in market economies

• Physical capital cannot be improved while human capital can be improved in the long run

• Physical capital are tangible resources used to produce good and service while human capital is intangible knowledge and skills

Which of the following is true if the individual with these production possibilities above was producing 20 shoes and two hats?

• They would maximize their sales and profits

• Their scarce resources would not be used efficiently

• They would be producing beyond their production possibilities

• They would be producing too many shoes

A point outside the production possibilities frontier (curve) represents

• future output if producers become more proficient

• an unattainable combination

• an efficient use of resources

• full employment in an economy

• an inefficient use of resources

Which of the following is true if a production possibilities curve for two goods is straight rather than bowed outward?

• Resources are not scarce

• Resources are not equally suited for the production of both goods

• Economic growth is occurring in the economy

• Resources are being inefficiently used in the economy

• Resources are equally suited for the production of either good

A bowed out PPC shows

• increasing opportunity costs because resources are not easily adaptable when producing two goods

• increasing opportunity costs because resources are easily adaptable when producing two goods

• decreasing opportunity costs because resources are not easily adaptable when producing two goods

• resources are being used inefficiently

• constant opportunity costs because resources are not easily adaptable when producing two goods

Which of the following will NOT result in an outward (rightward) shift of a PPC?

• an improvement in the quality of a nation's human capital

• a decrease in unemployment

• a increase in the quantity of a society's resources

• a technological breakthrough that improves productivity

• a decrease in the working age

Which of the following statements is true?

• Combination E is attainable and undesirable

• Combination C is inefficient

• Producing combination B will result in greater future growth than producing combination A

• The entire curve will shift inward if this economy become more efficient

• An increase in the demand for consumer goods will shift the curve outward toward point E in the short run