Ch. 1 Study Guide

Which of the following is NOT an example of the four factors of production?

• A.   Money

• B.    Land

• C.   Physical Capital

• D.   Human Capital

Which production possibilities curve results in a bowed out (Convex)?

• A.   Increasing Opportunity Cost

• B.    Decreasing Opportunity Cost

• C.   Constant Opportunity Cost

• D.   Pizza

What does the term “scarcity” refer to in economics?

• A.   The abundance of resources

• B.    The unlimited wants but limited resources

• C.   The availability of luxury goods

• D.   The efficient allocation of resources

If the marginal benefit of producing an additional unit of a product is $15 and the marginal cost is $16, what should the producer do?

• A.   Produce the additional unit

• B.    Not produce the additional unit

• C.   Produce the unit only if the total cost is less than $15

• D.   Keep everything the same

What is the definition of marginal benefit?

• A.   The total benefit derived from a particular activity or decision

• B.    The additional benefit gained from consuming one more unit of a good or service

• C.   The additional cost incurred from producing one more unit of a good or service

• D.   I don’t know

What is the definition of marginal cost?

• A.   The total cost incurred in producing a certain quantity of goods

• B.    The additional cost incurred from producing one more unit of a good or service

• C.   The money I lose

• D.   The fixed cost of production for a given quantity of goods

Javier is trying to decide how to spend his Saturday morning. He can either spend it playing basketball at the park with his friends or studying for an upcoming economic test. If he chooses to study for his upcoming economic test, what is the trade-off he is facing?

• A. Playing basketball at the park

• B. Studying for an upcoming economic test

• C.   Free time on Saturday

• D. There is no tradeoff

Is the main goal of an entrepreneur to obtain profit?

• A.   True

• B.   False

Positive statements are not based on facts and avoids value judgements?

• A. True

• B. False

What are the factors of production?

• A.   Land, labor, capital, entrepreneurship

• B.    Land, needs, wants, capitals

• C.   Rent, wages, interest, profit

• D.   Land, labor, scarcity, entrepreneurship