Econ Unit 1 FA Dummy 2, 2025-26

A country can produce either computers or wheat. A new report shows that producing more computers means producing less wheat. This trade-off is best represented using a:

• Supply and demand graph

• Production Possibilities Curve

• Business cycle diagram

• Equilibrium price chart

A policymaker is examining how reallocating military spending to education would affect national production. Which model would be most useful in evaluating the efficiency of that trade-off?

• The Phillips Curve

• The Production Possibilities Curve

• The Lorenz Curve

• The GDP deflator

A study finds that shifting resources from one good to another results in increasing opportunity costs. This relationship is shown on a bowed-out:

• Market demand curve

• Production Possibilities Curve

• Supply elasticity curve

• Trade surplus chart

A manager compares the trade-offs between producing energy drinks or bottled water with current factory capacity. Which economic model would help in making this production decision?

• Total cost function

• Production Possibilities Curve

• Income-expenditure model

• Utility maximization graph

A student compares two economies—one specializing in steel and the other in cars—and examines how each economy balances between the two goods. The most appropriate model for this analysis is the:

• Circular flow diagram

• Consumption function

• Production Possibilities Curve

• Price index model

What term refers to when an individual can produce a good at a lower opportunity cost than someone else?

• Absolute Advantage

• Marginal Utility

• Comparative Advantage

• Specialization

The ability to produce a good or service at a lower opportunity cost than another person or nation is known as:

• Opportunity Cost

• Comparative Advantage

• Economies of Scale

• Market Equilibrium

Comparative Advantage is best defined as:

• When a country can produce more of a good using the same resources

• When a country has a lower opportunity cost in producing a good

• When a country produces goods using fewer inputs

• When a country increases output due to increased investment

Which concept explains why two individuals or nations can benefit from trade even if one is more efficient at producing everything?

• Law of Supply

• Marginal Benefit

• Comparative Advantage

• Diminishing Returns

Which of the following best describes a situation where a person or country gives up less to produce a particular good?

• Opportunity Cost

• Comparative Advantage

• Market Failure

• Price Ceiling