Which of the following makes trade-offs necessary? (2 points)

Diminishing marginal returns

Diminishing marginal utility

Limited resources and unlimited wants and needs

Different opportunity costs

An excess of supply

2.

(01.01 MC)

Which of the following statements about the factors of production is accurate? (2 points)

They are all scarce because of unlimited wants and needs.

They are not subject to the law of diminishing marginal benefit.

They are categorized into consumer, capital, labor, and entrepreneurship.

Most are scarce, except for non-rival factors.

They are acquired in the product market.

3.

(01.02 MC)

Which of the following questions helps leaders of business firms determine resource allocation? (2 points)

Who consumes the goods?

Which people most need the goods or services?

Is the opportunity cost of resources constant or increasing?

How much money do people have to pay for the goods or services?

Are the resources used to produce the goods scarce?

4.

(01.02 MC)

Country X allows market forces to guide its economy. However, it does regulate some transactions and has set a minimum wage for workers. What kind of economy does this country have? (2 points)

Centralized

Command

Market

Mixed

Private

5.

(01.03 LC)

Which of the following economic models is designed to illustrate trade-offs and production that is efficient, is impossible, or fails to use all available resources? (2 points)

Circular flow diagram

Supply curve

Demand curve

Marginal cost curve

Production possibility curve

On a production possibilities curve (PPC), what does an outward shift imply? (2 points)

There has been an increase in technology and/or resources.

Government intervention has introduced alternative inputs.

Inputs and outputs have balanced out to create an efficient market.

Trade has increased to allow more resources to enter the market.

There has been an increase in both supply and demand.

9.

(01.03 MC)

On a production possibilities curve (PPC), a reduction in productive capacity would signify what type of shift? (2 points)

A shift beyond the vertical axis

A shift beyond the horizontal axis

An inward shift

An outward shift

No shift at all

10.

(01.04 MC)

Country A can produce more apples than any other country when given the same quantity of factors of production. As a result, Country A must have (2 points)

an absolute advantage in apple production

a comparative advantage in apple production

superior weather, which results in higher apple production

an increasing opportunity cost associated with apple production

more factors of production devoted to apple production than any other country

11.

(01.04 HC)

Assume Country Q and Country P can produce only two goods: gadgets and widgets. Country Q has an absolute advantage in widgets and a comparative advantage in gadgets. Assume each country has constant opportunity costs of production. Country P must have (2 points)

an absolute advantage in gadgets

a comparative advantage in widgets

an absolute and comparative advantage in widgets

an absolute and comparative advantage in gadgets

no absolute advantage in either good, but a comparative advantage in widgets

12.

(01.04 MC)

Frank can grow 15 bushels of tomatoes and 5 bushels of corn in one growing season. Mary can grow 15 bushels of tomatoes and 15 bushels of corn. In which crops should Frank and Mary specialize? (2 points)

Specialization would not benefit Mary or Frank.

Neither Frank nor Mary should specialize in tomatoes.

Frank should specialize in tomatoes and Mary in corn.

Mary and Frank should both specialize in tomatoes and corn.

Frank and Mary can benefit equally from specialization in corn.

13.

(01.04 HC)

Country Q can produce 15 pairs of socks and 5 belts in one hour. Country Z can produce 20 pairs of socks and 20 belts in one hour. Which of the following terms of trade would be mutually beneficial to both countries? (2 points)

1 belt for 2 pairs of socks

1 pair of socks for 2 belts

2 belts for 2 pairs of socks

1 belt for 5 pairs of socks

5 pairs of socks for 15 belts

Which of the following considers both explicit and implicit costs? (2 points)

Accounting profit

Economic cost

Accounting cost

Total revenue

Consumer spending

16.

(01.05 LC)

What measure reflects all the benefits to consumers? (2 points)

Total utility

Marginal cost

Total revenue

Marginal utility

Net revenue

17.

(01.05 LC)

Which of the following describes a situation in which total costs and benefits are the only viable evaluation to inform a decision? (2 points)

Some resource costs are unknown.

A good or service cannot be subdivided into increments or additional units.

The opportunity cost is unquantifiable.

There are no implicit benefits.

An accountant identifies steep explicit costs.

18.

(01.05 MC)

Johnson won a free ticket to tour around the world in one year, but he will have to resign from his job. Which of the following is correct if he does cost-benefit analysis? (2 points)

The tour provides only benefits.

The only cost will be paying for food.

There is no opportunity cost to be considered.

The cost of the lost income is equal to the benefit of the free ticket.

The result may lead to a sub-optimal choice if opportunity costs are not considered.

19.

(01.06 LC)

Consumers generally enjoy the last unit consumed of a good less than the first. This describes (2 points)

scarcity

the law of diminishing marginal returns

the principle of constraints

optimal choice

the law of diminishing marginal utility