Intro to Economic Models #1

SELECT ALL: Which of these is an example of a scarce resource?

• Land

• Spaceships

• Chairs

• Money

Economists use models to simplify complicated real-world situations and demonstrate relationships between values.

• True

• False

This is an example of an economic model called a______________

• Production Possibilities Curve

• Supply & Demand

• Laffer Curve

• Circular Flow Model

SELECT ALL: The Production Possibilities Curve (PPC) represents:

• The alternative ways to use an economy's productive resources

• The effects of scarcity, efficiency, and opportunity cost.

• An economy that only produces 2 goods

• Full, fixed resources & technology

The slope of a PPC represents opportunity cost:

• True

• False

Points B, D, and C represent __________ use of resources

• Efficient

• Inefficient

• Unfeasible

• Impossible

Point X represents an amount of production which is __________.

• Efficient

• Inefficient

• Unfeasible

• Impossible

Point A represents an __________ use of resources.

• Efficient

• Inefficient

• Unfeasible

• Impossible

Which factors could cause an increase the productive capacity of the PPC?

• Adding land, labor, and capital

• Losing land, labor, and capital

• Shifting supply & demand curve

• Decreasing GDP during a recession

Which factors could cause a decrease in the productive capacity of the PPC?

• Adding land, labor, and capital

• Losing land, labor, and capital

• Shifting supply & demand curve

• Decreasing GDP during a recession