1.Which of the following questions help determine resource allocation in an economy?

How should goods and services be produced?

What percentage of workers should attend college?

Should factories be located in urban or rural areas?

Where can raw materials be acquired to produce goods?

What sort of work should be rewarded with high salaries?

2.At a company's current level of production, the marginal cost is less than the marginal benefit. Based on this, which of the following is true?

A.The firm is operating beyond its production possibilities curve.

B.The firm is operating at a loss.

C.To be efficient, the firm should increase production.

D.To be efficient, the firm should decrease production.

E.The firm is operating at optimal efficiency.

3.Which of the following events correctly describes the outcome in a competitive market?

A.An increase in demand, ceteris paribus, causes a decrease in equilibrium price and quantity.

B.An increase in supply, ceteris paribus, causes a decrease in equilibrium price and an increase in equilibrium quantity.

C.A decrease in demand, ceteris paribus, causes an increase in equilibrium price and quantity.

D.An increase in supply, ceteris paribus, causes an increase in equilibrium price and a decrease in equilibrium quantity.

E.A decrease in demand, ceteris paribus, causes an increase in equilibrium price and a decrease in equilibrium quantity.

4.Where is inefficiency illustrated on the graph of a production possibilities curve (PPC)?

A.Points along the curve

B.Points at the beginning or end of the curve

C.Points inside the curve

D.Points along the horizontal axis

E.Points along the vertical axis

5.Which of the following explains why economic trade-offs are still necessary even in very rich societies?

A.Competition between societies makes trade-offs inevitable.

B.Different laws must be navigated based on economic system.

C.Resources are unlimited, requiring a deliberate exercise of restraint.

D.The production and exchange of goods and services must be efficient.

E.All societies have unlimited wants and desires with limited resources to produce goods.

6.Jasmine owns a farm and sells produce to local restaurants and grocery stores. If her farm is perfectly competitive, what profits and losses can she expect to make in the short and in the long run?

A.Jasmine may earn economic profits or losses in the short run and in the long run.

B.Jasmine may earn zero economic profit in the short run and profits in the long run.

C.Jasmine may earn zero economic profit in the short run and losses in the long run.

D.Jasmine may earn economic profits or losses in the long run but not in the short run.

E.Jasmine may earn economic profits or losses in the short run but not in the long run.

7.The residents in a countryside go fishing at will in the only river that flows through their town. What type of good best describes this river?

A.Public good

B.Private good

C.Survival good

D.Artificially scarce good

E.Common pool resource

8.Assume that all cell phone company workers are more productive because of a new technology. How does this affect the demand for labor in the telecommunications industry?

A.The quantity demanded of labor shifts to the left.

B.The market labor demand curve shifts to the left.

C.The market labor demand curve shifts to the right.

D.The slope of the market labor demand curve increases.

E.The slope of the market labor demand curve decreases.

9.One way that externalities can be eliminated is to

A.increase competition

B.increase transaction costs

C.ensure perfect information

D.properly define property rights

E.relax enforcement of property rights