Quiz on Free Enterprise Capitalism

Economic growth is most closely associated with an increase in:

• goods and services.

• economic interdependence.

• opportunity cost.

• capital and labor

The amount of output in a specific amount of time with a given amount of resources is referred to as

• productivity.

• human capital.

• efficiency.

• investment risk.

Division of labor is practiced because

• companies do not want workers to talk to one another.

• it increases efficiency by ensuring that all workers become good at every task.

• it increases efficiency by ensuring that workers become good at specific tasks.

• it prevents specialization.

Which of the following would result in a change in the production possibilities frontier in the mythical country Alpha?

• an influx of immigrants from other countries

• the discovery of an abundant natural resource

• a long drought

• all of the above

In the mythical country Alpha, an entrepreneur has introduced a new technology that makes manufacturing twice as efficient as before. How is this likely to affect the production possibilities frontier?

• It would not change the frontier.

• It would make the frontier smaller.

• It would expand the frontier.

• It would change the shape of the frontier.

Dave gets a job at a grocery store, which pays him an hourly wage in exchange for his labor. Dave is participating in

• entrepreneurship.

• human capital.

• the product market.

• the factor market.

Which of the following statements best describes the purpose of the production possibilities curve?

• It predicts the future production of a nation.

• It identifies trends in production.

• It shows which products are most profitable.

• It identifies all possible combinations of goods and services an economy can produce.

Which of these do economists use to illustrate combinations of output?

• a division of labor

• a factor of production

• a production possibilities curve

• a cost-benefit analysis

The study of economics involves

• explaining how people deal with scarcity.

• studying how things are made, bought, sold, and used.

• explaining how incomes are earned and how jobs are created.

• all of the above.

Economics is best defined as the study of how societies deal with

• the factors of production.

• the problem of scarcity.

• the paradox of wealth.

• the division of labor.