Econ Study Guide 1

Topics: Economics, Free market, Market economy Pages: 3 (757 words) Published: February 5, 2015
1. Using resources in such a way as to maximize the production of goods and services is called CORRECT: efficiency.

2. The purpose of a production possibilities graph is to
CORRECT: show alternative ways to use an economy's resources.

3. Countries often have to choose between producing military or consumer goods, a trade-off economists call CORRECT: guns and butter.

4. The skills and knowledge gained by a worker through education and experience are CORRECT: human capital.

5. The resources used to make goods and services are called
CORRECT: factors of production.

6. Economists refer to land, labor, and capital as the factors of production. "Land" in this context refers to natural resources. Given this definition, which of the items below is NOT "land"? CORRECT: highways

7. Which of the following is NOT a factor of production?
CORRECT: the children whom the woman supports with her labor

8. Thinking at the margins means deciding about
CORRECT: adding or subtracting one additional unit of some resource.

9. Giving up one alternative for another is called
CORRECT: a trade-off.

10. Which of the following decisions can NOT be made at the margin? CORRECT: whether to move to Boston from Chicago

11. All the goods and services we produce are
CORRECT: scarce.

12. Shortages occur when
CORRECT: people have trouble supplying the goods and services at current prices.

13. A country's production possibilities will grow if it
CORRECT: increases its resources.

14. Scarcity always exists because
CORRECT: our needs and wants are not limited, but our resources are limited.

15. Which is NOT capital?
CORRECT: the person whose photograph is snapped by the candid photographer

16. Entrepreneurs are people who
CORRECT: put together land, labor, and capital to create new businesses.

17. Each point on a production possibilities curve shows
CORRECT: efficient utilization of resources.

18. Which is NOT an example of...
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