Unit I: Basic Economic Concepts

Which of the following is an example of a capital good and a consumer good?

• A factory machine and a smartphone

• A smartphone and a car

• A car and a factory machine

• A factory machine and a car

Which of the following lists correctly describes the four factors of production?

• Land, Labor, Capital, Entrepreneurship

• Land, Labor, Money, Management

• Resources, Labor, Capital, Innovation

• Land, Workforce, Capital, Technology

What does the PPC show?

• The maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently utilized.

• The total cost of production for a given level of output.

• The relationship between the price of a good and the quantity demanded.

• The various combinations of two goods that can be produced with a given set of resources.

When is the production possibilities curve/frontier linear?

• When opportunity costs are constant

• When opportunity costs are increasing

• When resources are not efficiently utilized

• When there is economic growth

When is the production possibilities curve/frontier bowed out?

• When resources are perfectly adaptable for the production of both goods.

• When resources are not perfectly adaptable for the production of both goods.

• When there is no opportunity cost involved in production.

• When the economy is operating at full efficiency.

All points on the PPC/PPF curve represent what type of production?

• Efficient production

• Inefficient production

• Unattainable production

• Random production

A point inside the PPC/PPF represents what type of production?

• Efficient production

• Inefficient production

• Unattainable production

• Optimal production

A point outside of the PPC/PPF represents what type of production?

• Efficient production

• Inefficient production

• Unattainable production

• Optimal production

What must occur for the PPC/PPF to expand?

• Increase in resources or technology

• Decrease in resources or technology

• Increase in demand

• Decrease in demand

What is the law of increasing opportunity cost?

• The law states that as production of one good increases, the opportunity cost of producing an additional unit rises.

• The law states that opportunity costs remain constant regardless of production levels.

• The law states that opportunity costs decrease as more of a good is produced.

• The law states that opportunity costs are irrelevant to production decisions.