TEST 1 DCQ10272 - PRINCIPLES OF ECONOMICS

What does the Production Possibility Curve (PPC) illustrate?

• A) Unlimited resources

• B) The concept of scarcity and opportunity cost

• C) The law of diminishing returns

• D) The elasticity of demand

A point inside the PPC represents:

• A) Full employment of resources

• B) Efficient production

• C) Underutilization of resources

• D) An unattainable production level

A shift outward of the PPC indicates:

• A) Economic recession

• B) Economic growth

• C) A decrease in resources

• D) A higher opportunity cost

If an economy moves from one point to another on the PPC, what is the opportunity cost?

• A) The resources used

• B) The additional production of one good

• C) The goods that must be given up

• D) The market price of the product

A straight-line PPC suggests:

• A) Increasing opportunity cost

• B) Constant opportunity cost

• C) Decreasing opportunity cost

• D) No opportunity cost

Which of the following is NOT a factor of production?

• A) Land
  

• B) Capital

• C) Entrepreneurship

• D) Money

Land as a factor of production includes:

• A) Buildings and machines

• B) Natural resources

• C) Human skills

• D) Bank loans

The reward for entrepreneurship is:

• A) Interest

• B) Profit

• C) Wages

• D) Rent

Which factor of production refers to human effort, both physical and mental?

• A) Capital

• B) Land

• C) Labor

• D) Entrepreneurship

Capital goods are:

• A) Used to produce consumer goods

• B) Finished goods for immediate consumption

• C) Free resources

• D) Not essential for production