Fundamentals of Economics

what are the factors of production?

• Land, Labor, Capital, and Entreprenuer

• Needs, Wants, and choices

• workers, management, and entrepreneurs

• human capital, physical capital, and financial capital

Which of the following is the most likely benefit that a business is likely to attain from purchasing new equipment?

• Increased productivity

• Better entrepreneurial knowledge

• fewer natural resources required

• lower costs

Why are entrepreneurs important to the economy?

• they desire profits

• They promote economic growth

• they have talent and imagination

• they are willing to take risks

A sales clerk represents which factor of production?

• Entrepreneur

• Capital

• Labor

• Land

Why is there scarcity even in an affluent country like the United States?

• Entrepreneurs are scarce and companies need leaders.

• Resources are limited but wants are unlimited.

• Some people are poor while others are wealthy.

• Wants are limited but needs are unlimited.

What are economists referring to when they say "choosing is refusing"?

• Opportunity cost

• "Guns or butter"

• Marginal cost

• Thinking at the margin

Because of scarcity, every decision involves a

• cost/benefit analysis.

• trade-off.

• marginal cost.

• marginal benefit.

A basketball coach is performing a cost/benefit analysis in order to determine if more hours of practice would help the team score more points. The coach's action is an example of

• individual trade-offs.

• opportunity cost.

• marginal thinking.

• marginal benefit.

The phrase "guns or butter" expresses the idea that

• individuals, businesses, and governments all face trade-offs.

• factor resources are limited.

• government decisions involve opportunity cost.

• government decisions involve trade-offs between military and domestic needs.

An opportunity cost is

• the best alternative that is given up when a decision is made.

• the worst alternative that is given up when a decision is made.

• a choice that is made when no alternative is very good.

• the cost of making decisions related to producing goods.