Economics Test Prep - Chapter 1
Terms in this set (30)
Which of the following is an entrepreneur?
a computer repair shop owner who opens a second shop across town
Limited quantities of resources to meet unlimited wants is a:
Why are individuals, companies, and governments required to constantly make choices about how to best utilize resources?
There is always a scarcity of resources
Which of the following is NOT a factor of production?
the amount of money required to buy a car
Something such as air, food, or shelter that is necessary for survival is a:
Which of the following is an example of a shortage?
not having enough of one brand of soda in the store on Saturday because of a sale on
Why are scarcity and choice basic to the study of economics?
because there is not an endless supply of all resources
Any human-made resource that is used to create other goods and/or services is:
Physical objects such as clothes or shoes are defined as:
Natural resources that are used to make goods and services are considered:
What are you doing when you make a decision at the margin?
eviewing several options of how to use one additional unit of a resource
An example of an opportunity cost would be:
not being able to afford a family trip because the family buys a computer.
What is something you might use to help you make a choice between two seemingly equal alternatives?
a decision-making grid
An opportunity cost is:
the most desirable alternative given up as the result of a decision.
Deciding whether to do or use one additional unit of some resource is:
thinking at the margin.
A trade-off is:
an alternative that we sacrifice when we make a decision.
Factors of production are:
land, labor, and capital; the three groups of resources that are used to make all goods and services.
A phrase that refers to the trade-offs that nations face when choosing whether to produce more or less military or consumer goods is:
guns or butter.
Which of the following is a guns or butter decision?
A nation decides to produce fewer fighter jets and more bridges.
How are trade-offs and opportunity costs different?
The opportunity cost is the most desirable trade-off.
Using the factors of production to make one product always means that:
fewer resources are left to make something else.
On a production possibilities graph, a point of underutilization would appear:
below or to the left of the production possibilities frontier.
A production possibilities curve is a graph that shows:
alternative ways to use an economy's resources.
What is the name of the law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increases?
the law of increasing costsThis answer is correct.
Why are there always opportunity costs when we shift from making one product to another?
Some resources are better suited for use in making the first product.
Production possibilities graphs are important tools for:
showing ways to use an economy's productive resources.
d. using resources in such a way as to maximize the production of goods and services.
The production possibilities frontier is:
the line on a production possibilities graph that shows the maximum possible output.
Using fewer resources than an economy is capable of using is:
A country's production possibilities depend on:
its technological level and its available resources, its natural resources, its human capital and its physical capital.