Multiple Choice Questions 1
1. Scarcity exists in every society because there are
(a) limited wants and abundant resources,
(b) limited resources and unlimited production capabilities,
(c) limited resources and unlimited wants, id) limited production capabilities and an unlimited quantity of economic resources.
2. The word economic refers to something that
(c) commands a price,
3. In economics the term opportunity cost refers to
(a) the monetary cost of a good or service,
(b) the money cost of hiring an economic resource,
(c) the value of a good or service forgone, id) the money cost of providing a good or service.
4. The production-possibility frontier depicts
(a) the maximum amount of alternative combinations of two goods that an economy can produce at a point in time,
(b) the limited amount of resources that an economy has at a point in time,
(c) the alternative combination of capital and labor inputs used in producing goods and services over time,
(d) the economy's employment level at a point in time.
5. A point inside the production-possibility curve indicates
(a) inefficiency,
(b) unemployed resources,
(c) that existing resources can produce at a higher level of output,
6. The production-possibility curve shifts outward when
(a) there is an increase in the opportunity cost of a good,
(b) increased drug use decreases the skills of the labor force,
(c) there is a technological advance,
(d) unemployed resources are called back to work.
7. Increasing costs indicate that
(a) all resources are equally efficient,
(b) all resources are equally inefficient,
(c) the output of a good can be increased only by giving up larger and larger quantities of alternative goods,
(d) the output of a good can be increased only by using more economic resources.
8. The economic problem of what to produce refers to the decision of
(a) which goods and services and how much of each are to be produced,
(b) which goods are good for society,
(c) which goods and services to produce to maximize the rate of economic growth,
(d) what combination of resources and production techniques to use.
9. The economic problem of how to produce refers to the decision of
(a) who should be given the authority to produce goods and services,
(b) how many people in the population are to be employed,
(c) how much of current production should go toward consumption rather than saving,
(d) which of the production techniques is to be used.
10. The economic problem of for whom to produce refers to the decision of {a) how to allocate economic resources,
(b) how many of the wants of various members of society are to be satisfied,
(c) how much to produce for import or export,
(d) how much saving should go on in the economy.
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