Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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1.
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Any resources that are made by humans and used to create other goods and
services are called
a. | services. | c. | capital. | b. | production. | d. | labor. |
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2.
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An example of a shortage is limited amounts of
a. | water available for irrigating a crop because it is used for other
crops. | b. | labor available because the workers have other jobs. | c. | food available
because the trucks carrying it are on strike. | d. | food available because few people want to buy
it. |
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3.
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The resources used to make all goods and services are the
a. | production possibilities. | c. | production
trade-offs. | b. | factors of production. | d. | opportunity costs. |
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4.
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All of the following are types of decisions that can be made at the margin
EXCEPT
a. | whether to grow beans or corn on a large farm. | b. | whether or not to
hire 100 new workers. | c. | whether to leave early in the morning or late
in the day for a trip. | d. | whether or not to go on a
vacation. |
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5.
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The purpose of a production possibilities graph is to
a. | enable a country to mobilize to win a war. | b. | keep an economy from
having nonproductive workers. | c. | show alternative ways to use an economy’s
resources. | d. | make it possible to increase an economy’s
output. |
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6.
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An efficient economy is one that
a. | has very few people who do not work for a living. | b. | makes the best use
of all its goods and services. | c. | uses its resources to make the most goods and
services. | d. | makes the least costly use of its resources. |
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7.
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The law of increasing costs means that when an economy increases the production
of one item
a. | the opportunity cost goes up. | b. | the actual cost of making the item goes
down. | c. | the actual cost goes up but the opportunity cost goes down. | d. | the production costs
will increase also. |
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8.
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The government of a country must make a decision between increasing military
spending and subsidizing wheat farmers. This kind of decision is a
a. | guns or butter issue. | c. | global trade-off. | b. | decision at the margin. | d. | basic economic
decision. |
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9.
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The opportunity cost of a decision can be examined by using a
a. | production possibilities graph. | c. | global trade-off
grid. | b. | factors of production chart. | d. | graph of increasing
costs. |
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10.
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Production possibilities frontiers curve when they are charted on a graph
because they show
a. | the underutilization of resources. | b. | the maximum output of goods and
services. | c. | the increasing costs resulting in increasingly less output. | d. | the technological
level of the economy’s productivity. |
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11.
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Why are all goods and services scarce?
a. | Some goods cost more than others. | b. | All resources are scarce. | c. | Some things are
needs and others are wants. | d. | Some people want to have more goods than
others. |
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12.
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What is the opportunity cost of a decision?
a. | the series of alternative decisions that could have been made | b. | the best possible
way the question could have been decided | c. | the different ways that a different person
might have made the decision | d. | the most desirable alternative given up for the
decision |
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13.
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Which of the following is the kind of decision that can be made at the
margin?
a. | whether or not to hire new workers | b. | whether or not to go on a
vacation | c. | whether or not to build an extra room on a home | d. | whether to have a
dog or a cat as a pet |
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14.
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What is a factory building an example of?
a. | human capital | c. | an economic trade-off | b. | physical
capital | d. | technology |
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15.
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The government of a country must make a decision between spending money on a
hospital or spending the same amount on border security. What kind of decision is this?
a. | guns or butter | c. | global trade-off | b. | decision at the margin | d. | production efficiency
decision |
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16.
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How would you describe an economy that uses its resources to make the greatest
possible number of goods and services?
a. | efficient | c. | globally aware | b. | using opportunity cost well | d. | underutilized |
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17.
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What does a production possibilities frontier show?
a. | scarce and less scarce resources | b. | global trade-offs and costs of doing
business | c. | an economy that is producing but not at the maximum | d. | the maximum amount
that an economy can produce |
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18.
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You bought two new CDs with the last $30 in your checking account, and your next
payday is on Monday. What is the opportunity cost of these CDs?
a. | the difference between the cost to produce the CDs and the price you paid for
them | b. | $30 | c. | dinner and a movie with your friends this
Saturday night | d. | knowing you are the first of your friends to have these
CDs |
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19.
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A nation’s automakers install new robotic machinery to build cars. Now,
cars take only a day to make, and the factories can produce many more cars than before. This is an
example of growth caused by
a. | land and natural resources. | c. | technology. | b. | human
capital. | d. | production
possibility curves. |
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20.
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What can a decision-making grid do?
a. | tell you the right course of action | b. | show you every possible consequence of your
decision | c. | help you determine some of the opportunity costs for your
decision | d. | show you every possible benefit of your decision |
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21.
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Which of the following lists would an economist consider to be
land?
a. | factories, office buildings, assembly lines, workers | b. | farm fields,
tractors, pesticides, fertilizers | c. | dams, bridges, rock quarries, oil
wells | d. | iron ore, natural gas, fertile soil, water |
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22.
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The community of Desertville traditionally produces a large number of tires and
a small amount of kiwi fruit. Kiwis are become increasingly popular, and Desertville has decided to
expand kiwi cultivation and decrease tire manufacturing. According to the law of increasing
costs,
a. | the cost of producing tires will decrease while the cost of producing kiwis will
increase. | b. | the cost of producing kiwis will increase. | c. | the cost of
producing tires will decrease. | d. | the cost of producing kiwis will decrease while
the cost of producing tires will increase. |
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23.
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A company that makes baseball caps is underutilizing its resources. What does
this mean?
a. | The company is running more efficiently than its competitors. | b. | The company is
paying its employees less than it should be. | c. | The company is making caps when it could be
making t-shirts instead. | d. | The company is producing fewer caps than it
could be. |
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Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | efficiency | g. | shortage | b. | goods | h. | opportunity cost | c. | trade-off | i. | underutilization | d. | production
possibilities graph | j. | labor | e. | scarcity | k. | factors of production | f. | services |
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24.
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most desirable alternative given up when people choose one course of action
over another
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25.
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representation of alternative ways to use an economy’s resources
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26.
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use of resources in a way that maximizes output of goods and services
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Identifying Key Terms
Match each term with the correct
statement below. a. | factors of production | g. | growth | b. | production
possibilities frontier | h. | opportunity cost | c. | production possibilities
graph | i. | underutilization | d. | trade-offs | j. | efficiency | e. | shortage | k. | services | f. | scarcity |
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27.
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greatest output of goods and services through the best use of resources
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28.
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temporary lack of one or more goods
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29.
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all the possible alternatives that are rejected when a choice is made
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