Basics, PPC, and Absolute/Comparative Review
1. The fundamental problem of economics is:A. to establish an equitable system of personal and business taxation.
B. to establish a democratic political framework for the provision of social goods and services.
**C. the scarcity of factors of production relative to the unlimited wants of humans.
D. to achieve a more equitable distribution of money income in order to mitigate poverty.
2. Which of the following is an example of an investment in human capital?
A. A company builds a new factory.
B. A state puts in a new highway.
**C. A business trains a new employee.
D. A country builds new bridges.
3. On Wednesday afternoon, Sophie stopped by the store on her way home from work. She got a parking spot near the door, she paid $1.50 for a large drink, and bought a lottery ticket for $1.00. Later that evening, Sophie found out she won $10,000 in the lottery. The allocation strategies associated with Sophie on Wednesday include:
A. authority, price, and personal characteristic
**B. first come/first served, price, and random selection
C. price, random selection, and personal characteristic
D. personal characteristic, random selection, and authority
4. The opportunity cost associated with going to college instead of taking a full-time job for $20,000 per year includes:
A. The alternative use of the money used to buy books.
B. The alternative use of the money used to pay tuition
**C. $80,000 of income while attending college for four years.
D. All of the above.
5. In the graph to the left, point C represents:
A Unemployment
B Inefficiency
C Unattainable
**D Efficient Production
6. In the graph to the left, point E is:
A Unemployment
B Inefficiency
**C Unattainable
D Efficient Production
The opportunity cost of mo
A 7 units of computers
B 39 units of textbooks
C 4 units of computers
D 26 units of textbooks*
9. An assembly line can increase a factory’s productivity because it allows workers toA. diversify their skills
**B. focus on a specific task
C. put in overtime hours on the job
D. use a wide range of knowledge
10. Alex and Dylan mow and trim lawns. Currently, each man mows and trims a lawn by himself,
but the process takes a long time. They would MOST likely improve their efficiency if
A. Alex and Dylan mow a lawn and then trim it together
**B. Alex mows a lawn while Dylan trims the same lawn
C. Alex trims Dylan’s lawn while Dylan trims Alex’s lawn
D Alex and Dylan reduce the number of lawns they mow and trim
11. A headline reads: "Consumers demand new cell phones with greater functionality."
What basic economic question is being addressed in this headline?
A. for whom to produce
B. how to produce
**C. what to produce
D. when to produce
12. When a country’s businesses invest heavily in new capital goods and new technology, which of the following is most
likely to occur?
A. supply and demand.
B. opportunity costs.
**C. economic growth.
D. economic freedom.
13. The BEST explanation of why there will always be scarcity is because
A) people and their tools are inefficient.
B) natural disasters create frequent shortages.
C) governments create scarcity to keep people wanting more.
**D) while peoples' wants are unlimited, resources are limited.
14. The economic term “scarcity” relates MOST directly to a situation in which
A) individuals lack money needed to purchase goods
B) businesses lack customers needed to make a profit
C) employees lack experience needed to earn a promotion
**D) manufacturers lack raw materials needed to satisfy demand
15. During the time when she took a quiz, Sara could instead have practiced her guitar or completed her calculus homework. She thinks that if she hadn't taken the quiz, she would have completed her calculus homework. Her opportunity cost of taking the quiz is the value of what?
A) practicing her guitar
**B) completing her calculus homework
C) the time it took her to do the quiz
D) practicing her guitar and doing her calculus homework
16. Labracorp is looking to hire an unknown number of workers. Jim wants to be one of those workers. What information would Labracorp need in order to make a rational economic decision regarding Jim's employment?
A) if Labracorp's total cost is less than its total revenue
B) if Labracorp's total revenue is less than its total cost
C) if Jim's marginal cost is greater than his marginal revenue
**D) if Jim's marginal revenue is greater than his marginal cost
17. Over 80% of the people living in the Apac District in Uganda are farmers. However, profits are minimal due to the high costs of farming with poor tools and manual labor.
Apac would benefit from a stimulation of which type of resource?
**A) capital B) human C) entrepreneurial D) natural
18. Which BEST describes entrepreneurship?
A. person who uses land, labor, and capital in their job
**B. person willing to take a risk by combining resources to produce a good
C. the ability of a person to work more efficiently than another person
D. the physical and mental talents of workers
19. Which statement correctly describes the relationship between investment in personal education and standard of living?
**A. The higher the education level, the higher the salary they are likely to make
B. The higher the education level, the more likely they are to be unemployed
C. The higher the education level, the lower the salary they are likely to make
D. The higher the education level, the less likely they are to increase productivity
20. A good example of the effect of education on income would be that
A. employees who learn to perform high risk jobs always get paid more.
**B. people with college degrees usually earn more than those with less education.
C. workers who learn to make high demand products are well paid.
D. only job applicants with high school diplomas get job interviews
23. Specialization increases efficiency by:
A) Increasing amount of labor **C) letting workers become experts at 1 task
B) Giving workers more breaks D) Working employees longer hours
24. Marta and Shanika open their own computer repair shop and agree to share the decision making, the profits, and the risks. Marta will manage their parts inventory and all the accounting duties. Shanika will work out front and meet customers when they drop off and pick up their computers. Marta will work on desktop computers and Shanika will work on laptops. This arrangement is an example of
A. competition **B. specialization C. incorporation D. scarcity
25. An assembly line can increase a factory's productivity because it allows workers to
A. put in overtime hours C. use a wide range of knowledge
B. diversify their skills **D. focus on a specific task
Use the following chart to answer the question:
The chart below shows the number of minutes it takes to make one unit of each good.
Muffins Doughnuts
Islandia 1 minute 2 minutes
Territoria 2 minutes 6 minutes
26. Which of the following statements about the data from the countries is TRUE?
A. Territoria has an absolute advantage in muffins and doughnuts.
B. Territoria has an absolute advantage in doughnuts.
**C. Islandia has an absolute advantage in muffins and doughnuts.
D. Islandia has an absolute advantage in doughnuts.
JAPAN U.S.A.
Cars 25 60
Computers 100 45
27. Which statement is true concerning absolute advantage?
**A. Japan has absolute advantage in computers C. Japan has no absolute advantage.
B. Japan has absolute advantage in cars. D. Japan has absolute advantage in both
28. US has absolute advantage over Guam in all goods. Which trade possibility is true?
A. The terms of trade will be based on the United States’ absolute advantage.
B. Guam could benefit from a trade with the US, but the US would not benefit.
** C. They will trade if each focuses on a good which they have comparative advantage.
D. Since US has absolute advantage in all goods, it’s unwise to trade.