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A) a government can buy unlimited military and civilian goods if it is rich enough.
B) a company must decide whether to manufacture guns or butter.
C) a person can spend money on either sports equipment or food.
D) a government must decide to produce more or less military or consumer goods.
Making a decision at the margin is possible only in situations where...
A) there are differences in the amount of time each alternative will consume.
B) the available alternatives can be divided into increments.
C) the available opportunity costs are unclear or complicated.
D) there are more than three different types of alternatives to consider.
Increasing the number of laborers in an economy generally causes a(n)...
A) decrease in the production possibilities curve.
B) increase in the opportunity cost of production.
C) decrease in the opportunity cost of production.D) increase in the production possibilities curve.
A factory building is an example of which factor of production?
A) human capital
D) physical capital
You bought two new CDs with the last $30 in your checking account, and your next payday is on Monday. What is the opportunity cost of these CDs?
A) the night out with your friends that you miss because you can’t afford it now
B) the difference between the cost to produce the CDs and the price you paid for them
C) the satisfaction of knowing you are the first of your friends to have these CDs
D) the $30 check that you wrote for the CDs
A) working 2 hours
B) working 4 hours
C) working 1 hour
D) working 5 hours
The diagram shows money flowing to the government from firms and households in a mixed economy. How would you label points a and c on the diagram?
A) government purchases
D) government-owned factors
Which would a company do to increase its human capital?
A) hire more part-time workers
B) pay for employees’ education
C) lease cars for employees
D) build a company cafeteria
Which of the following are all considered to be land?
A) natural gas, coal, trees, water
B) factories, buildings, workers, bees
C) dams, bridges, gravel pits, oil wells
D) corn fields, tractors, computers, rakes
The town of Riverton makes many tires. The town also grows a small amount of strawberries. Strawberries are becoming more popular. Riverton decides to grow more strawberries and make fewer tires. According to the law of increasing costs, what will happen?
A) The opportunity cost of growing strawberries will increase.
B) The opportunity cost of making tires will decrease.
C) The opportunity cost of making tires will increase.
D) The opportunity cost of growing strawberries will decrease.
A French economist named Jean-Baptiste Say thought that there should be four factors of production. Which of the following did he suggest as the fourth factor?
Which of these terms could you use in place of the phrase “human capital”?
Traditional economies are usually....
A) large, widespread communities that welcome change and new technology.
B) small, close communities that avoid change and new technology.
C) large, widespread communities that are able to deal effectively with environmental disaster.
D) small, close communities that welcome change and new technology.
The ways in which factors of production are combined determines the answer to which economic question?
A) What will be produced?
B) Who will consume goods?
C) How will goods be produced?
D) How can we provide a safety net?
Why are free market economies able to attain economic growth?
A) Consumers can purchase all the goods they need, which causes firms to produce more.
B) Everyone is acting in their own self-interest, which motivates market growth.
C) Competition encourages innovation, which causes growth.
D) Firms keep producing incentives to encourage households to purchase more goods.
How did heavy industry in the Soviet Union avoid the competition that drives a free market economy?
A) The government discouraged competition by determining prices, wages, and products.
B) The government banned the production of consumer goods.
C) The government used profit as an incentive to entrepreneurs.D) Farms were not in direct competition with heavy industry
Government intervention in a modern economy is useful because...
A) governments are more able to meet some needs and wants of modern society.
B) free market principles do not encourage growth.
C) the needs and wants of a modern society are always met by the marketplace.
D) the marketplace has many incentives to create public works such as parks.
Which of the following is a summary of the three key economic questions?
A) Who will buy which goods and services, and how much will they pay?
B) When, where, and by whom should goods and services be produced?
C) What goods and services should be produced, how, and for whom?
D) How, when, and from whom should consumers get what they want?
A) a and d
B) a and b
A) a and b
C) a and d
Which of the following is a characteristic of a traditional economy?
A) It is usually based on light industrial production.
B) It revolves around the family unit.
C) It has a high standard of living.
D) It encourages innovation and change.
Which of the following is a summary of the basic economic questions?
A) What goods and services should be produced, how, and for whom?
B) How, when, and from whom should consumers get what they want?
C) Who will buy which goods and services, and how much will they pay?
D) When, where, and by whom should goods and services be produced?
Which of the following is the main incentive for a manufacturer to sell a product?
A) putting others out of business
B) pleasing the consumer
C) making profits on sales
D) helping the economy grow
The following lists are nations with mixed economies. In which list is the free market most dominant?
A) Cuba, Greece, China, United States
B) United States, United Kingdom, Singapore, Hong Kong
C) France, Canada, South Africa, United Kingdom
D) Russia, Peru, France, Canada
Innovation often leads to which economic goal?
A) economic freedom
B) full employment
C) economic growth
D) economic equity
Which of these statements is a relevant detail that supports this passage in the text: Each choice comes with some kind of trade-off.
A) Protecting national industries may be among a nation’s economic goals.
B) Protecting the environment may limit economic freedom.
C) Economic goals conflict with one another.
D) All nations must determine their own economic goals.
Unlike a free market system, a centrally planned economy _____ innovation.
Which of these is present in a centrally planned economy?
C) consumer sovereignty
D) government planners
A) voluntary exchanges
B) factor markets
C) product markets
D) business regulations
Which group lists the key principles of the free enterprise system?
A) profit motive, private property, eminent domain, voluntary exchange
B) private property, taxation, public interest, patriotism
C) profit motive, legal equality, consumer protection, public interest
D) profit motive, legal equality, private property, voluntary exchange
If a student volunteers at a nursing home after school, which of the following might be a negative externality?
A) A student would feel good about herself.
B) A student might volunteer to spend more time with the residents.
C) A student might learn a new skill.
D) A student might be unable to work at her part-time job on that afternoon.
What is one way government could limit negative externalities of a new highway?
A) limit the number of vehicles
B) charge higher tolls
C) increase the speed limit
D) build noise barriers nearby
When did the nation’s welfare system begin?
A) during World War I
B) during the War on Poverty
C) during the Great DepressionD) during the Civil War
In a free enterprise system, what is the most common way that consumers make their desires known to businesses?
A) e-mailing or texting the companies
B) hiring lobbyists to speak for them
C) protesting and boycotting products
D) buying or not buying products
A) Making all lawyers obtain the same education will ensure competent legal representation for businesses.
B) Protecting legal equality makes sure that all people may decide what legal agreements they want to enter into.
C) Guaranteeing all people the same legal rights will maximize human capital on the free market.
D) Ensuring that all businesses have the same legal rights will create competition in the marketplace.
Which of the following is the best example of a public good?
A) a highway system
B) a movie theater
C) a country club
D) a shopping mall
Which of the following programs was President Roosevelt establishing when he spoke these words?
A) The New Deal
B) War on Poverty
C) Social Security
D) Temporary Assistance for Needy Families
A) cash transfers
B) Medicaid and Medicare
C) in-kind benefits
D) federal grants
Private company Big Road Inc. is put in charge of building and running a state’s entire road system. The company charges high fees to use its roads and only maintains them in heavily populated areas. Big Road is an example of a...
A) market failure.
B) positive externality.
C) public good.
D) negative externality.
Each payday, some of your pay is withheld for Social Security. What happens to this money?
A) It is put into an account under your name to earn interest until you retire.
B) It is redistributed as cash transfers to workers who are injured on the job.
C) It is redistributed as cash transfers to retired and disabled people.
D) It is used to provide medical benefits to Americans over 65.
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