1 The process by which resources are transformed into useful forms is
A. capitalisation.
B. consumption.
C. allocation.
D. production.
2 The concept of choice would become irrelevant if
A. capital were eliminated.
B. scarcity were eliminated.
C. we were dealing with a very simple, one-person economy.
D. poverty were eliminated.
3 Which of the following is not a resource as the term is used by economists?
A. money.
B. land.
C. buildings.
D. labour.
4 Capital, as economists use the term,
A. is the money the firm spends to hire resources.
B. is money the firm raises from selling stock.
C. refers to the process by which resources are transformed into useful forms.
D. refers to things that have already been produced that are in turn used to produce other goods and services.
5 Opportunity cost, most broadly define, is
A. the additional cost of producing an additional unit of output.
B. what we forgo, or give up, when we make a choice or a decision.
C. a cost that cannot be avoided, regardless of what is done in the future.
D. the additional cost of buying an additional unit of a product.
6 A graph showing all the combinations of goods and services that can be produced if all of society's resources are used efficiently is a
A. demand curve.
B. supply curve
C. production possibility frontier.
D. circular-flow diagram.
7 Periods of “less than full employment” of resources correspond to
A. points on the ppf.
B. points outside the ppf.
C. either points inside or outside the ppf.
D. points inside the ppf.
8 What lies is at the heart of the allocation of goods and services in a free-market economy?
A. Concerns of equity or equal distribution among individuals.
B. The order or command of the ruling government or dictator.
C. The wishes of consumers in the market.
D. The price mechanism.
9 The phrase 'ceteris paribus' is best expressed as
A. 'all else equal.'
B. 'everything affects everything else.'
C. 'scarcity is a fact of life.'
D. 'there is no such thing as a free lunch.'
10 Laboratory (or controlled) experiments cannot be performed in economics because:
A. of resource scarcity.
B. economics is a natural science.
C. of the difficulty of distinguishing between normative and positive statements.
D. economics is a social science.
11 Positive statements are:
A. value judgments
B. verifiable or testable
C. statements in the affirmative
D. good statements
12 The former Soviet Union was an example of:
A. a planned economy
B. free-market/capitalism
C. dictatorship
D. a mixed economy
13. Rational choice or rational decision-making involves
A. comparing the net benefit of a choice with the total net benefit foregone of all the alternatives combined
B. weighing up total costs and total benefits associated with a decision
C. weighing up marginal costs and marginal benefits associated with a decision
D. all of the above.
14 The PPF can be used to illustrate:
A. the principle of opportunity costs and increasing opportunity costs
B. the distinction between micro and macroeconomics
C. efficient, infeasible and inefficient production combinations
D. all of the above
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