Quiz 1 Review

In the context of the production possibilities curve/frontier, opportunity cost refers to …

• Growth

• The value of the next best alternative

• efficiency

• the cost of not expanding production

Which of the following is an example of an entrepreneur?

• baseball player

• military personnel

• fireman

• small business owner

Economy A produces only skateboards and bicycles. What would be the opportunity cost of producing more skateboards?

• More skateboards

• more bicycles

• fewer skateboards

• fewer bicycles

Which of the following scenarios would result in underutilization

in an economy?

• invention of a new “gasless” tractor that runs on water

• the government spends twice as much money increasing the military

• labor union strikes shuts down microchip plant for over a year

• new low cost sources of oil are found

Which of the following best illustrates the use of

capital goods (physical)?

• using workers to load a freight car

• using wind to generate electricity

• using marginal utility to measure productivity

• using a tractor to plow a field

Which of the following scenarios would cause growth (PPC curve shift to right) in an economy?

• labor union strike shuts down microchip plants for three months

• a severe drought lingers on in the Midwest

• discovery of a low-cost means of generating and storing solar energy

• the government decides to spend less money

When an economy is operating at the production possibility curve/frontier…

• all workers are used

• all factories and equipment are at full production

• all natural resources are utilized

• all of the answers above

BEST choice for the decision maker; 1st choice for decision maker

• Opportunity Cost

• Rational Choice

• Tradeoffs

• Irrational Choice

ALL the alternatives given up with a choice is made

• Opportunity Cost

• Rational Choice

• Tradeoffs

• Irrational Choice

Attainable with new technology or additional resources (FOP & Human capital)

• Maximum Efficiency

• Underutilization

• Tradeoffs

• Economic Growth