Chapter 1 - TEST

Paradox of value refers to the

• high value of an essential item and the low value of a nonessential item.
• high value of a nonessential item and the low value of an essential item.
• contradiction of what consumers want and what they need.
• contradiction between gross domestic product and market value.

A nation’s wealth is determined by its

• accumulation of all tangible and intangible resources.
• natural resources.
• accumulation of all tangible products.
• product possibilities frontier.

The most comprehensive measure of a nation’s wealth is provided by its

• gross domestic product.
• product possibilities curve.
• TINSTAAFL rating.
• capital goods.

Which of the following statements best describes the purpose of the production possibilities curve?

• It predicts the future production of a nation.
• It identifies trends in production.
• It shows which products are most profitable.
• It identifies all possible combinations of goods and services an economy can produce.

Which of the following descriptions best explains the meaning of opportunity cost?

• the initial cost of starting a new business
• the cost of business failure
• the cost of choosing one alternative over another
• the risk associated with producing a new item

Consumers waiting in long lines for a new product is an example of

• consumerism.
• consumer rights.
• consumer responsibilities.
• scarcity.

When a nation’s total output increases over time, the nation is experiencing

• a decrease in gross domestic product.
• economic growth.
• economic interdependence
• an expansion of the possibilities curve.

The efficient use of scarce resources leads to an increase in

• productivity.
• investment.
• scarcity.
• capital.

When a business needs to decide whether a certain action is worth the cost, the most helpful analysis would be a(n)

• production possibility comparison
• cost-benefit analysis.
• economic model.
• needs assessment.

The study of economics involves

• explaining how people deal with scarcity.
• studying how things are made, bought, sold, and used.
• explaining how incomes are earned and how jobs are created.
• certain steps to get rich quick.