Download ECON 202 - Quiz One

ECON 202 - Quiz One – KEY
What do economists mean when they state that a good is scarce?
The amount of the good that people would like to have exceeds the supply that is freely available
from nature.
The expression, "There's no such thing as a free lunch" implies that
costs are incurred when resources are used to produce goods and services.
The best example of decision-making at the margin would be
observing the effect that a small change in income has on the amount of income tax owed and
therefore upon after-tax income
The ____________ the opportunity cost of doing something, the ____________ likely it will be done
higher, less
Customarily, economists classify resources into these major groups:
land, labor, capital, and entrepreneurship.
Country C has an economic system that can be described as one with government ownership of non-labor
factors of production, government allocation of resources, centralized decision making, and a major role for
the government in economic activities. Which of the following classifications correctly labels the economic
system of country C?
a command economy
Which of the following might be considered to be a characteristic of a planned economy?
There is no incentive for people to work hard
The basic difference between macroeconomics and microeconomics is that
macroeconomics looks at the forest (aggregate markets), while microeconomics is concerned with
the individual trees (subcomponents).
Which of the following sayings best reflects the concept of opportunity cost?
"Time is money."
If an economy is operating at a point inside the production possibilities curve,
its resources are being wasted.
Does voluntary exchange create wealth (value)?
Yes, trade generally permits the trading partners to gain more of what they value; this is why they
agree to the terms of the exchange.
Which of the following will most likely occur under a system of clearly defined and enforced private property
rights?
Resource owners will gain by discovering and employing their resources in ways that are highly
valued by others.
Market pricing as a kind of automatic signalling system that responds to changes in relative scarcities and
rapidly redirects economic activity is part of
the capitalist vision.
Increasing opportunity cost while moving along a production possibility frontier is due to
the fact that resources are not equally productive in alternative uses.
Entrepreneurship refers to
persons who are risk-taking and who develop new ways of doing things
The “coincidence of wants” problem associated with barter refers to the fact that
for exchange to occur each transactor must have a product which the other transactor wants.
The above graph depicts the mythical country of Sandwichia’s production possibility frontier. Sandwichia
would have to experience significant technological progress or massive saving and investment before
it could feasibly choose to produce at:
point e.
From above graph, the opportunity cost of producing an extra jar of jelly in Sandwichia is highest at:
point d.
Economic capital refers to:
buildings, machinery, and equipment.