Basic Concepts Quiz

Economics is the study of

• the government’s role in society.

• how society manages its scarce resources.

• how to operate a profitable business.

• successful stock market investing.

Scarcity exists when

• the price of a good rises.

• society can meet the wants of every individual.

  there is less of

• there is less of a good or resource available than people wish to have.

• there is less than an infinite amount of a resource or good.

Ryan spends an hour studying instead of going for a bike ride. The opportunity cost to him of studying is

• the improvement in his grades from studying for the hour.

• the enjoyment and exercise he would have received had he gone for a bike ride.

• the difference between the improvement in his grades from studying minus the enjoyment of a bike ride.

• zero. Since Ryan chose to study rather than to ride his bike, the value of studying must have been greater than the value of the bike ride.

On the production possibilities frontier shown, which point or points are possible for this economy to produce?

• A, B, C, D

• A, B, C, F

• A, B, C, D, E, F

• D

On the production possibilities frontier shown, which point or points are inefficient?

• A, B, C

• E, F

• B

• D

In the production possibilities frontier shown, the shift of the frontier from A to B was most likely caused by which of the following?

• more capital available in the economy

• more labor available in the economy

• a general technological breakthrough

• technological improvement in the production of clothing

In the production possibilities frontier shown, what is the opportunity cost to society of the movement from point D to point B?

• 600 pretzels

• 800 pretzels

• 250 pretzels

• 100 pretzels

In the production possibilities frontier shown, the movement from point C to point E was most likely caused by

• an increase in society’s preference for pretzels.

• a decrease in society’s preference for potato chips.

• unemployment.

• a and b

In a simple two-sector circular-flow diagram,

• firms are sellers in the resource market and the product market.

• households are sellers in the resource market.

• firms are buyers in the product market.

• households are buyers in both the resource market and the product market.

In a simple two-sector circular-flow diagram,

• spending on goods and services flow from firms to households.

• goods and services flow from households to firms.

• factors of production flow from firms to households.

• income from factors of production flows from firms to households.