The two general types of economic systems that exist today are

Market systems & command systems

Which of the following would cause a leftward (inward) shift of the PPC?

A decrease in captial equipment

A recurring theme in economics is

People face limited resources with unlimited wants

Unemployment and/or productive inefficiencies

are both illustrated by a point inside the PPC

TINSTAAFL refers to the theory that

There is no such thing as a free lunch

Economics is characterized as a Social Science instead of a "hard" science because it

Studies individuals & their decision making processes

Which of the following lists includes only capital resources (no labor or land resources)?

rental cars, compters at the car rental agency, shuttle vans

The study of economics is primarily concerned with which of the following?

Allocation of scarce resources, given unlimited wants

A rational decision maker will choose to act only if

Marginal benefit ≥ marginal cost of the action

Which of the following is true of the concept of increasing opportunity costs?

making more of 1 good means other resources are sacrificed

Which of the following is one of the Four Fundamental Questions?

What goods and services will be produced?

For the data in the table below, increasing opportunity costs is reflected in the fact that

Constant amt. of capital gds. are lost to incr. consumer gds

The assertion that "There is no free lunch" means that

all prod. uses scarce resources & sacrifices alt. goods

Which of the following violates the economic concept of matching MB with MC in test taking?

Most grades are B-; I will only study Econ where I have an A

Which of the following is true if the PPC is concave to the origin?

As more of 1 is made, more & more of the other is given up

The term laissez faire suggests that

Govt. should not interfere with the operation of the economy

The division of labor means that

workers specialize in various production tasks

According to the theory of comparative advantage, a good should be produced where

Its opportunity costs are least

Which of the following is a distinguishing feature of a market system?

Wide-spread private ownership of capital

Which of the following statements about the PPC is true?

Relative poisition of C & D reflect production alternatives

If an economy produces its most wanted goods but uses outdated production methods, it is

not achieving productive efficiency

How might point E be attained?

If improve. in tech occurred in computer OR farm sectors

Which of the following would cause an outward or rightward shift of the PPC?

An increase in capital equipment

Even though local newspapers are inexpensive, people rarely buy more than 1 per day. This fact:

Implies that the MB of reading a 2nd newspaper < the MC

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Review of Microeconomics

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Introductory Microeconomics AP review of vocabulary.

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Questions 48

Answers

1
UTK inherited a large mansion and plans to use it for faculty parties. The cost to UTK is:
Upkeep, maintenance, utilities, etc.
Both B and C
How much UTK would get if mansion is rented or sold
Zero, it was a gift
2
The two general types of economic systems that exist today are
Market systems & command systems
Laissez faire systems & pure command systems
Socialism & central planning
Market systems & capitalism
3
Which of the following is an example of capital?
A share of IBM stock
A construction crane
A pair of stockings
A savings account
4
Which of the following would cause a leftward (inward) shift of the PPC?
A decrease in captial equipment
An increase in technolgoy
An increase in unemployment from 5% to 8%
A decrease in inflation
5
A recurring theme in economics is
People have unlimited wants in face of unlimited resources
People face limited resources with unlimited wants
There are more resources than wants
People have limited wants in face of unlimited resources
6
Unemployment and/or productive inefficiencies
are both illustrated by a point outside the PPC
can exist at any point on a PPC
cause the PPC to shift outward
are both illustrated by a point inside the PPC
7
TINSTAAFL refers to the theory that
All are true
There is no such thing as a fun life
There is no such thing as a free lunch
There is no such thing as free living
8
Economics is characterized as a Social Science instead of a "hard" science because it
Investigates fiscal & monetary policy
Does not use the scientific method
Studies money & decision making of financial institutions
Studies individuals & their decision making processes
9
Which of the following lists includes only capital resources (no labor or land resources)?
ice arena, pro hockey player, hockey uniforms
rental cars, compters at the car rental agency, shuttle vans
owner of a startup firm, chemistry lab, a researcher
hydroelectric dam, water behind the dam, power lines
10
Now that Bob only packages burgers and Sue the fries, they can serve twice as many. This is
Command Economy
Traditional Economy
Scarcity
Comparative Advantage
11
The study of economics is primarily concerned with which of the following?
Provision of conclusive answer to public policy issues
Allocation of scarce resources, given unlimited wants
Fair & equal treatment of all households
Testing of hypotheses under controlled conditions
12
Important characteristics of the Market Economy include
I, II, III, IV
I, II, III only
I, II only
I, II, IV only
13
A rational decision maker will choose to act only if
Marginal benefit ≥ marginal cost of the action
Marginal benefit < average cost of the action
Average benefit < average cost of the action
Marginal benefit > average cost of the action
14
Which of the following is true of the concept of increasing opportunity costs?
Unlimited wants can be fulfilled
Unimportant in command economies due to central planning
Irrelevant if PPC is convex to the origin
making more of 1 good means other resources are sacrificed
15
Which of the following is one of the Four Fundamental Questions?
What goods and services will be produced?
Which products will be scarce and which in excess supply?
How much should the society save?
Who should appoint the head of the central bank?
16
If the country is producing at Point C, it can produce more computers by:
Moving to point A
Moving to point D
Moving to point E
Moving to point B
17
The PPC of the country would most likely shift to the right if current production was at
Point A
Point B
Point E
Point C
18
For the data in the table below, increasing opportunity costs is reflected in the fact that
Must lose consumer gds. to get more capital gds.
Constant amt. of capital gds. are lost to incr. consumer gds
Economy's resources are presumed to be scarce
The graph would be a straight down-sloping line
19
The assertion that "There is no free lunch" means that
there are always tradeoffs between economic goals
choices need not be made if behavior is rational
marginal analysis is not used in economic reasoning
all prod. uses scarce resources & sacrifices alt. goods
20
In the table below, a total output of 6 units of capital goods and 4 units of consumer goods:
II and IV only
I only
I and III only
II only
21
The term ceteris paribus means:
I only
III & IV only
III only
I & II only
22
Which of the following problems do all economic systems face?
I, IV only
I only
I, II, III only
I, II, III, IV
23
An opportunity cost is entailed in which of the following situations?
I, II, & III
III only
I only
II only
24
Economists measure the true cost of a good or service by its
Value
Intrinsic value
Opportunity cost
Dollar price
25
The output of an economic system is commonly divided into what 2 categories?
Wants & desires
Money & wealth
Goods & services
Wants & needs
26
Which of the following is a distinguishing feature of a command system?
Heavy reliance on markets
Central planning
Wide-spread dispersion of economic power
Private ownership of all capital
27
Which of the following violates the economic concept of matching MB with MC in test taking?
I have an A, final is optional, not going to take it!
Most grades are B-; I will only study Econ where I have an A
All violate the concept of matching MB with MC
I have a B-, final counts 50%, going to study more for this
28
Which of the following is true if the PPC is concave to the origin?
As more of 1 is made, more & more of the other is given up
The price of the two products is the same
Both products are equally able to satisfy consumer wants
It's possible to produce more of both goods.
29
The term laissez faire suggests that
Natural resources be privately owned; capital publicly owned
Govt. should not interfere with the operation of the economy
Natural resources publicly owned; capital privately owned
Govt. action necessary for economy to reach full production
30
In the Circular Flow Diagram, the 2 basic markets shown are
Households & government
Free & controlled
Product & factor
Capital goods & consumer goods
31
The division of labor means that
unskilled workers outnumber skilled workers
labor markets are geographically segmented
each worker performs a large number of tasks
workers specialize in various production tasks
32
The value of the best alternative forgone when a decision is made defines
Scarcity
Tradeoff
Economic Good
Opportunity Cost
33
Examples of command economies are
Sweden & Norway
The United States & Japan
Cuba & North Korea
Mexico & Brazil
34
Which of the following would not be considered one of society's economic resources?
Labor
Capital
Land
Money
35
According to the theory of comparative advantage, a good should be produced where
The cost of real resources used is least
Its explicit costs are least
Its opportunity costs are least
Production can occur with the lowest increase in employment
36
Which of the following is a distinguishing feature of a market system?
Central planning
Public ownership of all capital
A circular flow of goods, resources, and money
Wide-spread private ownership of capital
37
Command economy characteristics include
I, II only
I, II, III only
I only
I, II, III, IV
38
Which of the following statements about the PPC is true?
Full employment will move the PPC to the right closer to E
Point D is not attainable given the society's resources
Relative poisition of C & D reflect production alternatives
Point A is not attainable in a developed society
39
Which of the following is NOT a factor of production?
Capital
Land
Labor
Free Goods
40
If an economy produces its most wanted goods but uses outdated production methods, it is
achieving both productive & allocative efficiency
engaged in "roundabout" production
productively efficient but not allocatively efficient
not achieving productive efficiency
41
Which of the following equations best defines the economic problem of scarcity?
Wants = Resources
Wants < Resources
Wants > Resources
Resources > Wants
42
Which of the following is a land resource?
A machine for detecting earthquakes
A farmer
An oil drilling rig
Natural gas
43
How might point E be attained?
If improve. in tech occurred in computer OR farm sectors
If country's resources were more fully employed
If more scarce resources were used to produce farm products
If firms decreased their output of computers
44
Which of the following would cause an outward or rightward shift of the PPC?
A decrease in natual resources
A decrease in the number of workers
An increase in capital equipment
An increase in unployment
45
Of the three economic systems, this system allows people more freedom and choice:
III & IV only
II and III only
I and II only
IV & V only
46
To be considered scarce, an economic resource must be
Desirable, Free, and useful
Desirable, and useful only
Useful, desirable, and limited
Desirable & Limited only
47
Adam Smith's economic theory is called
Absolute Advantage
Demographic Transition
Supply Side Economics
The Invisible Hand
48
Even though local newspapers are inexpensive, people rarely buy more than 1 per day. This fact:
Contradicts the economic perspective
Implies that the MB of reading a 2nd newspaper < the MC
Is an example of irrational behavior.
Implies reading should be taught through phonics

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