Economics Final Exam

What does the Social Science department seek to understand?

• The nature of people and society.

• The laws of physics.

• The structure of the universe.

• The history of mathematics.

Economics is a natural science.

• True

• False

What is a "want"?

• Something that we need to survive

• Something that we desire to have

• Something that is always available

• Something that is produced by resources

What does scarcity mean in economics?

• When resources are unlimited

• When wants are less than resources

• When wants are greater than the resources available to satisfy them

• When resources are not needed

Explain how scarcity affects the choices individuals and societies make.

• Scarcity forces individuals and societies to make choices about how to allocate limited resources to satisfy unlimited wants.

• Scarcity allows everyone to have everything they want.

• Scarcity means there are no choices to be made.

• Scarcity only affects businesses, not individuals or societies.

What is an opportunity cost?

• The most valued opportunity or alternative we give up when we make a choice.

• The total amount of money spent on a decision.

• The least important option available.

• The benefit gained from every choice made.

If you choose to buy a computer, what is the opportunity cost based on the information in the exhibit?

• Reading a book

• Taking a vacation in France

• Watching television

• Going to sleep at 9:00 p.m.

According to the exhibit, what is the opportunity cost of going to sleep at 9:00 p.m. instead of 11:00 p.m.?

• Reading a book

• Watching a two-hour video

• Buying a computer

• Taking a vacation in France

What does the curve formed by graphing combinations A–D represent?

• The demand curve for skis and snowboards

• The production possibilities frontier of the economy

• The supply curve for snowboards

• The unemployment rate in the economy

If the economy is producing at point E in the diagram, what does this indicate about resource use?

• Resources are being used efficiently

• Resources are being underutilized

• The economy is producing more than possible

• The economy is at full employment