PFL-Eco Unit 1-2 Review

Which statement is incorrect?

• Economics deals with the problem of unlimited wants and limited resources.

• Scarcity is a problem associated only with the poor nations of the world.

• Giving up one thing to get something else is called a trade-off.

• What one has to give up when making a choice is an opportunity cost.

Economics is a study of consumer

• Choices

• Demand

• Availability

• Supply

Which most clearly shows the concept of opportunity cost?

• A student decides to read a book instead of going to a movie

• A child is paid a weekly allowance for doing household chores

• A teenager receives a wage increase from her employer

• A youngster loses the money he had been saving for six weeks

The basic difference between consumer goods and capital goods is that

• Consumer goods satisfy wants directly; capital goods satisfy wants indirectly

• The production of capital goods is not subject to the law of increasing costs

• An economy that uses a large part of its resources to make capital goods must accept a lower growth rate

• Consumer goods are produced (made) in the private sector and capital goods are produced by government

If resources are scarce, it means that:

• they cannot provide enough goods or services to satisfy human material wants and needs

• it is impossible to create a supply of, and a demand for, these resources

• they have no opportunity cost

• they have an unlimited supply

Points on the graph represents a combination of Robots and corn that:

• is impossible for this country to produce with its existing resources.

• can be produced only if all resources are used fully and efficiently.

• can be produced without using all of the country’s resources.

• can be produced only if a technological advance occurs.

The production possibilities curve illustrates that

• The economy will automatically end up at full employment

• In a perfect world there is no scarcity

• If all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced

• Economic production possibilities have no limit

Unemployment and/or inefficient use of resources

• can both be illustrated by a point inside (to the left of) the PPC

• can exist at any point on a PPC

• causes the PPC to shift to the left

• can both be illustrated by a point outside (to the right of) the PPC

Technological improvement is represented by a

• shift inward (to the left) in the PPC

• shift outward (to the right) in the PPC

• movement along the PPC from one point to another

• a point below (inside) the curve

Assume an economy is operating at some point on its PPC which shows civilian (non-military) and military goods. If the output of military goods is increased, the output of civilian goods

• must also be increased

• must be decreased

• may be either increased or decreased

• will remain unchanged