Final Exam

Jack is about to graduate from high school. His parents have saved $45,000 for him. They plan on giving it to him after graduation. Jack has to decide what to do with the money and is torn between buying a new car or paying for college. which option reflects Jack engaging in a rational decision-making process?

• He impulsively decides to pay for half of college and spend the rest on a new car.
• He immediately goes out to buy a new car.
• He does not know what to do with the money so he puts it in the bank.
• He thinks about the two alternative options, decides what is most important to him, evaluates the alternatives, and makes the rational decision to pay for college with the money

Actions in one part of the country or world that have an economic impact on what happens elsewhere are examples of

• specialization.
• opportunity costs.
• economic interdependence.
• trade-offs.

If a desired item is in such short supply that there is not enough to meet demand, then that item is said to be what?

• rare
• renewable
• scarce
• affordable

In the time period covered by the production possibilities curve, the company decides to make 4 gallons of red paint. How many gallons of blue paint can the company make with the available time and resources?

• 3
• 2
• 8
• 6

What is the central problem with which the study of economics is concerned?

• scarcity
• monetary policy
• excess
• inflation

The cost of the next best alternative use of money, time, or resources when one choice is made rather than another is called the ___________.

• wealth
• capital
• opportunity cost
• market

Which of the following provides the BEST definition of a trade-off?

• the value of the best alternative not chosen
• the exchange of goods
• the act of giving up one thing to obtain another
• giving up something for an item of lesser value

Which factor of production do these images illustrate?

• capital
• land
• entrepreneurship
• labor

The study of economics is important because it enables us to

• increase our consumption of consumer goods.
• become better decision makers.
• determine what goods ought to be produced.
• describe our standard of living.

What factor of production do these images illustrate?

• entrepreneurship
• land
• labor
• capital