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5 Written Questions

5 Matching Questions

  1. allocative efficiency
  2. trade-offs
  3. production
  4. economic theory
  5. equity
  1. a production of the combination of goods and services that provides the most net benefit to society. the optimal quantity of a good is achieved when MB=MC of the next unit. This only occurs at one point on the PPF
  2. b fairness of economic outcomes
  3. c the process by which resources are transformed into useful forms
  4. d scarce resources imply that individuals, firms, and governments are constantly faced with difficult choices that involve benefits and costs
  5. e involves building models of behavior, making statements about cause and effect, action and reaction

5 Multiple Choice Questions

  1. the more of a good that is produced, the greater the opportunity cost of producing the next unit of that good
  2. the additional cost incurred from the consumption of the next unit of a good or service
  3. factors of production - include labor, physical capital, land or natural resources, and entrepreneurial ability
  4. when firms focus their resources on production of goods for which they have comparative advantage
  5. the study of how individuals, firms, and societies choose to use their scarce resources to provide for their unlimited material wants

5 True/False Questions

  1. normative economicsstudies economic behavior without making judgements--describes what exists and how it works


  2. theoryfairness of economic outcomes


  3. opportunity costthe best alternative that we forgo, or give up, when we make a choice or a decision


  4. scarcitythe condition in which output is steady or growing, with low inflation and full employment of resources


  5. descriptive economicsinvolves the compilation of data that describes phenomena and facts


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