Economics Quiz

A rational decision maker takes an action only if the

• marginal benefit is less than the marginal cost.

• marginal benefit is greater than the marginal cost.

• average benefit is greater than the average cost.

• marginal benefit is greater than both the average cost and the marginal cost.

When computing the opportunity cost of attending a concert you should include

• the price you pay for the ticket and the value of your time.

• the price you pay for the ticket, but not the value of your time.

• the value of your time, but not the price you pay for the ticket.

• neither the price of the ticket nor the value of your time.

Economics is the study of

• production methods.

• how society manages its scarce resources.

• how households decide who performs which tasks.

• the interaction of business and government.

In the circular-flow diagram, which of the following is not a factor of production?

• labor

• land

• capital

• money

Which of these terms are used interchangeably?

• "goods and services" and "inputs"

• "goods and services" and "factors of production"

• "inputs" and "factors of production"

• "land, labor, and capital" and "goods and services"

The two loops in the circular-flow diagram represent

• the flow of goods and the flow of services.

• the flow of dollars and the flow of financial assets.

• the flow of inputs into production processes and the flow of outputs from production processes.

• the flows of inputs and outputs and the flow of dollars.

Production is efficient if the economy is producing at a point

• on the production possibilities frontier.

• outside the production possibilities frontier.

• on or inside the production possibilities frontier.

• inside the production possibilities frontier.

Positive statements are

• prescriptive.

• claims about how the world should be.

• claims about how the world is.

• made by economists speaking as policy advisers.

Normative statements are

• descriptive.

• claims about how the world should be.

• claims about how the world is.

• made by economists speaking as scientists.

Where can an economy not produce?

• inside its production possibilities frontier

• on its production possibilities frontier

• outside its production possibilities frontier

• at the endpoints of its production possibilities frontier