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Fundamentals of Economics
Fundamentals of Economics
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Micro Unit 1: Fundamentals of Economics
Flashcards
25 cards
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Practice quiz
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Questions
25
Answers
1
Does money flow from businesses to households in the resource market or product market?
Product market
Resource market
2
Which type of economy features the most government intervention?
Market
Traditional
Command
Mixed
3
Which of the following does NOT describe the concept of opportunity cost?
What you miss out on when you make a trade-off
The next-best alternative
The money you lose when you buy one thing over another
4
Which of the following is NOT one of the four factors of production
Natural resources
Land
Labor
Capital
5
Why does scarcity exit?
Because resources are controlled by the government
Because resources are limited and human wants are not
Because resources are limited as are human wants
Because there is always poverty in the world
6
Which of the following is an example of entrepreneurship?
Earning a wage in return for working at a restaurant
Mining for precious metals
Finding a new way to produce smartphones more efficiently
Putting together parts of a car in a factory
7
What does the Circular Flow model help us explain?
How money, goods and services are exchanged in the economy
What the best way to produce goods and services
Where to allocate resources during a crisis
Why some people might buy one good over another
8
Zack has $10 to buy a $7 sandwich or $5 smoothie. He chooses the smoothie. Opportunity cost?
The sandwich
The smoothie
$3
$5
9
What is the opportunity cost in the following PACED model?
Swimming
Sleep
Basketball
Fishing
10
How would you describe a point outside the PPC?
Efficient
Unattainable
Inefficient
11
Which type of economy is least likely to undergo a lot of growth?
Mixed
Market
Traditional
Command
12
What type of opportunity cost does the PPC indicate?
Decreasing
Increasing
Constant
13
Which of the following is NOT an example of land?
A steamroller
Natural gas
Air
Iron ore
14
In what form do households make money payments to the government?
Wages
Taxes
Purchases
15
What is a weakness of the market economy
Supply and demand creates inefficiency
People can become unhealthy
The poor often struggle to afford goods/services they need
16
How would you describe a point on the PPC?
Inefficient
Efficient
Unattainable
17
What does Adam Smith criticize about the command economy?
The even distribution of wealth means it is equitable
The lack of incentives results in inefficiency
Offering free social services provides people with security
18
Households sell in which of the following markets?
The production market
The electronics market
The consumer goods market
The resource market
19
What type of opportunity cost does the PPC indicate?
Increasing
Decreasing
Constant
20
How would you describe the opportunity cost for pizzas?
Decreasing
Constant
Increasing
21
The economic reasononing for why a doctor earns more money than a factory worker is that
A doctor's skill set is more scarce
Factory work is less time-consuming
A doctor is more productive
Economic security is more important than economic growth
22
Which broad social goal would a market economy better address than a command economy?
Economic Equity
Economic Freedom
Economic Security
23
How would you describe the opportunity cost for computers?
Increasing
Constant
Decreasing
24
What might cause the following shift in PPC?
A natural disaster kills a portion of the workforce
Breakdown in machines producing Consumer Goods
Unemployment
Shortage of productive resources for Capital Goods
25
Utility is a measure of
How efficient a resource is
How productive a resource is
How much satisfaction a good/service provides
How expensive a good/service is
