Review Questions on the Fundamentals of Economics

Question 1

A command economy is especially good at fulfilling which broad economic and social goals?

Accepted Answer

Security and Equity

Question 2

A market failure can result from the formation of a monopoly.

Accepted Answer

true

Question 3

A measure of the amount of outputs produced by a given amount of inputs is the definition of

Accepted Answer

productivity

Question 4

What does the word allocate mean?

Accepted Answer

to distribute

Question 5

Point B on the following production possibilities graph is considered...

Accepted Answer

maximum efficiency with given resources

Question 6

Consumer sovereignty is illustrated by which of the following?

Accepted Answer

Apple creating more iphones due to consumer demand.

Question 7

Which is an example of a positive incentive?

Accepted Answer

Earning points for the class, Earning a dress down day for good behavior

Question 8

A assembly line uses division of labor. What does "division of labor" mean?

Accepted Answer

Specialized workers

Question 9

To turn unskilled labor into skilled labor a company will invest in its

Accepted Answer

human capital

Question 10

The value of NEXT best alternative given up when you make a decision is called. . .

Accepted Answer

opportunity cost

Question 11

Wheat, water, gold, trees, and iron ore would be considered which factor of production?

Accepted Answer

land

Question 12

If the marginal revenue exceeds the marginal cost...

Accepted Answer

the firm should produce the extra unit.

Question 13

Which of the following is an example of a public good or service?

Accepted Answer

a national highway

Question 14

What could the movement from curve 1 to curve 2 show?

Accepted Answer

greater production from an increase in a productive resource

Question 15

Which of the following describes an economic system with very little government involvement?

Accepted Answer

(free) market

Question 16

Unlimited needs and desires meeting limited resources is the definition of. . .

Accepted Answer

scarcity

Question 17

The study of how individuals, firms, and nations can best allocate their resources is called

Accepted Answer

economics

Question 18

What does NOT push the Production Possibility Curve outwards?

Accepted Answer

uneducated workforce

Question 19

A consequence of government regulation is

Accepted Answer

decrease in production costs for the regulated business, less competitveness in the global markets

Question 20

One disadvantages of a free enterprise system is that it...

Accepted Answer

cannot guarantee security and equity for all

Question 21

The most common method of allocation of resources, goods, and services in a market economy is

Accepted Answer

price

Question 22

Which is NOT one of the three basic economic questions?

Accepted Answer

where to produce?

Question 23

Sending employees to school or a training program is an example of a company investing in...

Accepted Answer

human capital

Question 24

Which of the following describes a command economy?

Accepted Answer

the government makes all economic decisions

Question 25

Any point along the PPC means......?

Accepted Answer

The production of goods is being done most efficiently

Question 26

If a factory owner uses some of her profits to purchase new machinery she is investing in

Accepted Answer

capital goods

Question 27

Making a choice based on a comparison of benefits and costs is called

Accepted Answer

a rational decision

Question 28

When society invests in education, it improves its standard of living by increasing its

Accepted Answer

human capital

Question 29

A factory's warehouse would be considered which of the following productive resources?

Accepted Answer

capital good

Question 30

Which of the following is considered a Negative Incentive?

Accepted Answer

a speeding ticket you got for going 90 mph in a 60 mph zone

Question 31

How do you define productivity?

Accepted Answer

The effectiveness of a productive effort, The rate of output per unit of input

Question 32

Why is specialization important?

Accepted Answer

It leads to higher productivity and efficiency

Question 33

Which of the following motivates entrepreneurs to start new businesses?

Accepted Answer

profit

Question 34

Which of the following is an economic safety net provided by the government in a mixed economy?

Accepted Answer

food stamps

Question 35

A NEGATIVE consequence of the government's regulation of businesses and industry is

Accepted Answer

decreased competitveness of regulated firms

Question 36

Adam Smith is well known for promoting the ideas of....

Accepted Answer

all of these

Question 37

What does voluntary exchange mean?

Accepted Answer

Both the buyer and seller benefit from trading.

Question 38

Why would a county want to increase their productivity?

Accepted Answer

increase their standard of living

Question 39

Market Failure is when a market fails to allocate resources fairly or when...

Accepted Answer

people serving their own interests hurts society

Question 40

Which is NOT one of the main economic roles the government plays in our mixed market economy?

Accepted Answer

Funding deep space exploration and searching for alien life

Review Questions on the Fundamentals of Economics

Questions 40

Review Questions on the Fundamentals of Economics

Questions 40