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Fundamentals 2

Total questions: 45

Worksheet time: 38mins

Name
Class
Date
1.

Which of the following is NOT a scarce good?

a)

Water

b)

Air

c)

Clothing

d)

Electricity

2.

Ben's marginal benefit of practicing his golf swing for an extra hour is...

a)

the lost time he could have spent hanging out with his friends.

b)

the extra energy he spent by practicing.

c)

the additional wear and tear he put onto his golf clubs.

d)

the additional muscle memory he obtains.

3.

______________ has a multiplier effect on the "labor" resource, allowing it to be more productive.

a)

Entrepreneurship

b)

Human Capital

c)

Consumer Sovereignty

d)

Voluntary Exchange

4.

A __________________ takes risk by responding to consumer sovereignty and combining resources

a)

Command Economy

b)

Market Economy

c)

Entrepreneur

d)

"Productive" Employee

5.

What is the "land" resource when making a pizza?

a)

The Delivery Boy

b)

The Oven

c)

The Pizza Shop Owner

d)

The Dough/ Cheese/ Sauce

6.

By designating positions on a football team (QB, RB, O-Line, etc.) a coach is taking advantage of...

a)

Entrepreneurship

b)

Incentive

c)

Divisions of Labor

d)

Productivity

7.

Tommy decides to go to spend $11 at the movies as opposed to going out to dinner with his friends. What is Tommy's opportunity cost?

a)

the lost enjoyment of spending time with his friends.

b)

the $11 he spent at the movies.

c)

every other use of his time, given up while at the movies

d)

the enjoyment he receives at the movies.

8.

The U.S. Government providing un-employment insurance is an example of which economic goal?

a)

Economic Security

b)

Economic Equity

c)

Economic Efficiency

d)

Economic Freedom

9.

Which of the following is NOT an example of economic freedom?

a)

IHOP decides to stop selling pancakes and start selling hamburgers

b)

NIKE decides to outsource its shoe production to China

c)

Delta begins using a new jet fuel to comply with the EPA

d)

Consumers choosing not to buy a new iPhone b/c the price is too high

10.

Investment in ___________________ leads to long term growth.

a)

Consumer Goods

b)

Human Capital

c)

Capital Goods

d)

Human Capital and Capital Goods

11.

In which of the following economies is there the most consumer sovereignty?

a)

Traditional

b)

Command

c)

Market

d)

Mixed

12.

Which of the following employee/career likely has the MOST human capital?

a)

Teachers

b)

Surgeons

c)

Professional football players

d)

Astronauts

13.

What does point A represent on the Circular flow diagram?

a)

Households

b)

Businesses

c)

Factor Market

d)

Product Market

14.

Where are factors of production (land, labor, etc) exchanged in the circular flow model?

a)

Factor Market

b)

Product Market

c)

Firms

d)

Individuals

15.

Where do factors of production (land, labor, etc) come from in the circular flow model?

a)

Factor Market

b)

Product Market

c)

Firms

d)

Individuals

16.

The delivery of finished products for sale in exchange for revenue is represented in which arrows?

a)

1 and 2

b)

3 and 4

c)

5 and 6

d)

7 and 8

17.

Money exchanged between an individual and a store for a good or service.

a)

Revenue

b)

Wages

c)

Rent

d)

Donation

18.

Money exchanged between businesses and individuals for labor.

a)

wages

b)

revenue

c)

spending

d)

profit

19.
What does point Y represent on the PPC?
a)
Efficiency
b)
Unattainable / impossible
c)
Inefficency
d)
Nothing
20.
What is the production possibilities curve?
a)
a graph that shows how efficient an economy can produce a combination of 2 goods
b)
a graph that shows how much money something is
c)
a graph that shows the opportunity a country has to give up in order to lose something else
d)
a visual representation of how land, labor, capital, entrepreneurs are distributed
21.
The opportunity cost of increasing production from 4 to 7 boats is
a)
1 boat
b)
2 boats
c)
2 trucks
d)
3 trucks
22.

The opportunity cost of increasing production from 4 to 9 trucks is

a)

Scarcity

b)

2 boats

c)

5 trucks

d)

5 boats

23.

The opportunity cost of decreasing production from 9 to 7 boats is

a)

3 boats

b)

2 boats

c)

2 trucks

d)

3 trucks

24.
Based on the table, if the country is currently producing at point B and decides to produce at point C, the opportunity cost for the additional pair of shoes is ____ pizzas.   
a)
26
b)
23
c)
3
d)
2
25.
What is any resources that are made by humans and used to create other goods and services are called?
a)
Services
b)
Production
c)
Capital
d)
Labor
26.
Max is studying for his spelling test.  Unfortunately, his favorite TV program is on right now.  If he studies for the test, he will miss watching the show.  Max decides to study for his test instead of watching TV.  What is the opportunity cost of his decision?
a)
the benefit received from studying for a test
b)
The benefit of the A he may get
c)
the benefit of enjoying his favorite show
d)
the benefit of him spending time with friends at the movies
27.

Desk in a school

a)

land

b)

capital

c)

labor

d)

entrepreneur

28.
If a natural disaster strikes, the production possibilities curve can shift
a)
No shift
b)
To the left
c)
To the right
d)
Outward on one axis only
29.

In this example, spending all of one's time playing video games is represented by point ___.

a)

A

b)

B

c)

C

d)

D

30.

In this example, spending most of one's time studying while playing some video games is represented by point ___.

a)

A

b)

B

c)

C

d)

D

31.
Which of the following is an example of a positive statement?
a)
Unemployment is higher this year than it has been in the last 5 years.
b)
Unemployment benefits help lift people out of poverty.
c)
Free education helps alleviate the problem of unemployment.
d)
The government should provide jobs to those who are unemployed to lower the unemployment rate.
32.

Study of how individuals make choices with limited resources- people, cities, stores.

a)

normative

b)

positive

c)

micro

d)

macro

33.

The rich make too much money

a)

positive

b)

normative

c)

micro

d)

macro

34.
The simplified production possibilities curves for country A and B are shown. Which one of the following statements is correct?
a)
Country A has the comparative advantage in both goods
b)
Country A has the comparative advantage in chairs & Country B has the comparative advantage in shirts
c)
Country B has the absolute advantage in shirts only
d)
Country A has the comparative advantage in shirts & Country B has the comparative advantage in chairs
35.
Based on the table provided, which one of the following statements is correct?
a)
Japan has the absolute advantage in producing cars
b)
Japan has the comparative advantage in producing cars
c)
The United States has the absolute advantage in producing both cars and computers
d)
The opportunity cost of producing a car in Japan is 1/2 a computer
36.
Suppose that in one week Sam can knit 5 sweaters or make 4 blankets and Rob can knit 10 sweaters or make 6 blankets. Which of the following is true?
a)
Sam has an absolute advantage in making blankets
b)
Sam has neither a comparative nor an absolute advantage in knitting sweaters or making blankets
c)
Sam has a comparative advantage in making blankets
d)
Sam has a comparative advantage in knitting sweaters
37.
If nations specialize according to their comparative advantage and engage in trade with each other, each nation can:
a)
Consume outside its production possibilities curve 
b)
Produce outside its production possibilities curve 
c)
Shift its production possibilities curve to the right 
d)
Produce more of all goods 
38.

Alex and Henry are completing group work for class. It takes Henry and Alex 1 hour to complete the worksheets, while Henry needs 2 and Alex 3 hours to finish the essays (see table).

Assuming Alex and Henry decide to specialize and trade essays and worksheets with one another, what would be a terms of trade or exchange price that would satisfy both of them?

a)

Any price where an essay costs less than 2 worksheets

b)

Any price where an essay costs between 2 and 3 worksheets

c)

Any price where an essay costs more than 3 worksheets

d)

We cannot determine a mutually agreeable trading price

e)

Any trading price is possible

39.

Alex and Henry are completing group work for class. It takes Henry and Alex 1 hour to complete the worksheets, while Henry needs 2 and Alex 3 hours to finish the essays (see table).

Who has comparative advantage in producing essays?

a)

Alex

b)

Henry

c)

Neither Henry nor Alex

d)

Both Henry and Alex

e)

We cannot determine who has comparative advantage

40.

Country A and Country B are potential trading partners who can produce boats and umbrellas, as illustrated in the PPCs on the left.

Suppose the terms of trade are one boat for one umbrella.

Who would want to sell boats based on these terms of trade, and who would want to buy boats based on these terms of trade?

a)

Neither country would be willing to buy or sell boats given these terms of trade because the prices of these goods are not given in money.

b)

Country A would want to buy boats,and Country B would want to sell boats.

c)

Country A would want to sell boats, and Country B would want to buy boats.

d)

Both countries would want to sell given these terms of trade, so there will be no exchange.

e)

Neither country would be willing to sell given these terms of trade because neither country has comparative advantage in either good.

41.

Martha and Dave like to make identical tacos and cakes. It takes Martha 10 and Dave 15 minutes to make tacos and Martha 20 and Dave 30 minutes to make cakes (see table on the left).

Which person has an absolute advantage in the production of tacos, and which person has an absolute advantage in the production of cakes?

a)

Martha has an absolute advantage in tacos; Dave has an absolute advantage in cakes.

b)

Martha has an absolute advantage in producing both goods.

c)

Neither Dave nor Martha has an absolute advantage at producing either good.

d)

Dave has an absolute advantage in producing both goods.

e)

Both Martha and Dave have an absolute advantage in producing both goods.

42.

A good is nonexcludable if it is impossible to prevent someone from benefiting from it.

a)

True

b)

False

43.

The fact that Heidi's enjoyment of a sunset on Saint Simon's Island does not preclude Mounette from enjoying the same sunset is an example of

a)

a good that is nonrival and has shared consumption.

b)

a good that is excludable.

c)

a private good.

d)

the rival nature of consumption.

e)

a common resource.

44.

A public good is _______ and _______.

a)

rival; excludable

b)

rival; nonexcludable

c)

nonrival; excludable

d)

nonrival; nonexcludable

e)

cheap; available

45.

Fish in the ocean are rival and nonexcludable.

a)

True

b)

False

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