Principles of Economics - Test

What is the fundamental problem of economics? 

• How to keep consumers out of debt?
• How to fulfill our unlimited wants and needs with limited resources?
• How to figure out the way to make the most money?
• How do we ensure all people get a college education?

Opportunity Cost is best defined as

• The best rejected alternative you give up when making a decision 
• The price you pay to purchase something 
• The benefit you gain by making a decision 
• The amount of debt you take on by making a decision 

Soil, minerals, air, water, and coal are all examples of

• Fossil fules
• Conservation
• recycling
• natural resources

Johnny has $50 and wants to buy a pair of Nike Shoes that cost $95.  He has to settle for a pair of Sketchers for $45.  In economic terms Johnny is facing the problem of: 

• Shortage
• Scarcity 
• Unemployment 
• Marginal costs

 The difference between a good and a service is that:

• Goods are available in unlimited quantaties and services are not 
• Goods are tangible and services are not 
• Services are available in unlimited quantaties and goods are not 
• goods help satisfy unlimited wants and services do not

What term describes the tools and technology used to make a product?

• capital goods
• human capital
• exports
• imports

What does a production possibility curve show?

• The prices of two types of products being produced
• The quantity of capital and consumer goods that people would like to be produced
• The maximum combination of two types of goods that can be produced with given resources.
• The relative profitability of capital and consumer goods 

What does a point outside the PPC represent?

• A currently unattainable position 
• An inefficient position
• The maximum use of resources 
• Unused resources 

Which of the following moves from one point to another in Exhibit 2.7 would represent an increase in economic efficiency?

• Z to W.

• W to Y.

• Z to X.

• X to W.

Unattainable combination Z shown in Exhibit 2.7:

• may be achieved by investing in research and development.

• can be achieved by using more of the existing resources.

• will never be achieved.

• can easily be achieved by having full employment .