ECON 202 - Quiz 1 - Key
1. Because resources are limited
people must make choices.
2. Scarcity exists when
there is less than an infinite amount of a resource or good.
there is less of a good or resource available than people wish to have.
3. The ____________ the opportunity cost of doing something, the ____________ likely it will be done
4. If an economy is fully utilizing its resources, operating on its production possibility curve, it can produce more of one
product only if it
produces less of another product.
5. Increasing opportunity cost while moving along a production possibility frontier is due to
the fact that resources are not equally productive in alternative uses.
6. Legislature to protect red-cockaded woodpeckers created incentives that resulted in premature harvesting of trees
the woodpeckers like to nest in. This is an example of which of the following?
good intentions have unintended consequences that so not always lead to desired outcomes
7. Entrepreneurship refers to
persons who are risk-taking and who develop new ways of doing things
8. The 3 key economic questions include all of the following EXCEPT
where should these products be produced?
9. The marginal principle implies that an individual will do best by producing or consuming where
marginal benefit equals marginal cost.
10. In an informed and voluntary exchange
both parties receive something they value more than what they give up.
11. If you have $10,000 to start a decorative bottle-cap pin business, the interest rate is 6 percent, your annual cost of
raw materials are $4,000, and the earnings you sacrifice from working at another job are $37,000, your yearly cost of
doing business would be
12. If an economy is operating at a point inside the production possibilities curve,
its resources are being wasted, i.e. it is operating inefficiently.
13. Economics is best defined as the study of
choices made by people faced with scarcity.
14. When referring to "marginal" changes, the economic focus is on
small or incremental changes.
15. 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.
16. If PPF2 is the relevant production possibilities frontier, a significant loss of resources may
move this society to PPF1.
17. If it is discovered that using drugs enhances a person's chance of contracting a lethal disease, the cost of using drugs
18. The opportunity cost of something is
what you sacrifice to get it.
19. Customarily, economists classify resources into these major groups:
land, labor, capital, and entrepreneurship.