Deck 2: Production, Economic Growth, and Trade

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Question
The "what" question primarily refers to:

A) the mix of goods and services that are produced.
B) production efficiency.
C) whether the goods and services are produced under a communist system or a democratic system.
D) who gets the goods and services.
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Question
Which of these questions would NOT be considered one of the basic economic questions?

A) Should Brazil continue to produce ethanol?
B) What production method should be used to make batteries for plug-in cars?
C) When will the new high-speed train in California be completed?
D) To whom will the production of solar panels be sold to?
Question
Which of these would be least likely to increase economic growth?

A) An increase in investment in infrastructure such as new roads and rail lines.
B) An increase in tariffs to protect domestic industries from foreign competition.
C) An expansion of financial aid options to college students.
D) Protecting intellectual property rights (such as patents) to provide incentives for innovation.
Question
The main reason why a production possibilities frontier would have a concave shape is:

A) because of decreasing opportunity costs
B) because the rate at which one good can be substituted for another is fixed.
C) because as a country specializes in one product, it must give up more of the other.
D) because consumers face diminishing marginal returns in consumption.
Question
Suppose that Costa Rica is able to produce 50,000 pounds of coffee or 10,000 medical devices per day; Vietnam is able to produce 40,000 pounds of coffee or 5,000 medical devices per day. Which statement is TRUE?

A) Costa Rica has an absolute advantage in medical device production, while Vietnam has an absolute advantage in coffee production.
B) Costa Rica has a comparative advantage in the production of both coffee and medical devices.
C) Costa Rica has a comparative advantage in coffee production, while Vietnam has a comparative advantage in the production of medical devices.
D) Costa Rica has a comparative advantage in the production of medical devices, while Vietnam has a comparative advantage in coffee production.
Question
For a country to have a comparative advantage in a good, it must have:

A) more labor to produce that good
B) more capital to produce that good
C) an ability to produce more of that good than another country has
D) a lower opportunity cost of producing that good
Question
(Figure) The area between which two points on the production possibilities frontier could represent an improvement in productive efficiency? <strong>(Figure) The area between which two points on the production possibilities frontier could represent an improvement in productive efficiency?  </strong> A) from A to B B) from B to C C) from C to B D) from D to B <div style=padding-top: 35px>

A) from A to B
B) from B to C
C) from C to B
D) from D to B
Question
What does the term "laissez-faire" mean in economics?

A) Government plays a major role regulating businesses to protect consumers.
B) Government does not intervene in personal decisions but it controls economic decisions.
C) The market economy requires intervention to ensure efficiency.
D) The role of government should be as minimal as possible.
Question
Which of the following is not possible for two countries who trade computers and automobiles with one another?

A) One of the countries has an absolute advantage in the production of both products.
B) One of the countries has a comparative advantage in the production of both products.
C) One country has an absolute advantage in one product and a comparative advantage in the other product.
D) One country does not have an absolute advantage in either product but has a comparative advantage in one product.
Question
Which is NOT one of the three basic economic questions that each society must answer?

A) What goods and services are to be produced?
B) How are the goods and services to be produced?
C) Who decides what goods and services are in demand?
D) Who will receive the goods and services?
Question
(Figure) The area between which two points on the PPF could represent an improvement in allocative efficiency? <strong>(Figure) The area between which two points on the PPF could represent an improvement in allocative efficiency?  </strong> A) from A to B B) from A to C C) from B to C D) from B to D <div style=padding-top: 35px>

A) from A to B
B) from A to C
C) from B to C
D) from B to D
Question
To answer the question of how goods and services are to be produced, society must decide:

A) what products businesses want to produce.
B) how to combine its scarce resources to produce the desired products.
C) what products the government wants.
D) what products to export.
Question
Which of these would NOT be considered a factor of production?

A) mineral deposits
B) a large copy machine at the office
C) college graduates seeking a job
D) a bank loan used to start a new business
Question
Which is NOT considered a basic economic question?

A) How will the system accommodate change?
B) What goods and services will be produced?
C) Who will receive the goods and services?
D) How will these goods and services be produced?
Question
China produces many products at the lowest cost possible, even though Chinese consumers do not desire many of these products (e.g., football helmets). China is achieving:

A) production efficiency only
B) allocative efficiency only
C) both production efficiency and allocative efficiency
D) neither production efficiency nor allocative efficiency
Question
Why is entrepreneurial ability considered a factor of production?

A) because it is a physical input such as land, labor, and capital
B) because entrepreneurs assume the risk of producing output, an important part of the production process
C) because entrepreneurs work very long hours and demand large profits for the work that they accomplish
D) because it is an input that can be used by itself to produce many goods and services desired by society
Question
Trade is:

A) a way for rich countries to take advantage of poorer countries.
B) good for rich countries and bad for poorer countries.
C) something that slows down the economies of the trading countries.
D) a driver of economic growth.
Question
(Figure) What would be a reason why an economy is operating at point D? <strong>(Figure) What would be a reason why an economy is operating at point D?  </strong> A) A reduction in business investment causes unemployment to increase. B) There is a new technological breakthrough in the production of energy-efficient airplanes. C) An economy uses all of its inputs efficiently but changes the ratio of the goods produced. D) An economy experiences an influx of immigrants seeking jobs. <div style=padding-top: 35px>

A) A reduction in business investment causes unemployment to increase.
B) There is a new technological breakthrough in the production of energy-efficient airplanes.
C) An economy uses all of its inputs efficiently but changes the ratio of the goods produced.
D) An economy experiences an influx of immigrants seeking jobs.
Question
If a farmer can grow 100 tubs of grapefruit or 250 tubs of oranges per acre of land, what is the opportunity cost of growing one orange?

A) 0.4 of an orange
B) 0.4 of a grapefruit
C) 2.5 oranges
D) 2.5 grapefruits
Question
Using the productivity rates for Spain and Portugal, which statement is TRUE? <strong>Using the productivity rates for Spain and Portugal, which statement is TRUE?  </strong> A) Spain has a comparative advantage in olives. B) Portugal has a comparative advantage in olives. C) Both Portugal and Spain have a comparative advantage in oranges. D) Both Spain and Portugal have a comparative advantage in olives. <div style=padding-top: 35px>

A) Spain has a comparative advantage in olives.
B) Portugal has a comparative advantage in olives.
C) Both Portugal and Spain have a comparative advantage in oranges.
D) Both Spain and Portugal have a comparative advantage in olives.
Question
Which of these is NOT an economic factor of production?

A) land
B) entrepreneurial ability
C) money
D) labor
Question
In a _____ economy, individuals and firms own most resources, and in a _____ economy, the government controls most resources.

A) market; planned
B) planned; socialist
C) planned; market
D) socialist; planned
Question
In a market economy, product prices do NOT help to determine how:

A) consumers decide whether to buy or not buy.
B) firms employ their resources.
C) firms decide which production technology to use.
D) governments allocate their resources.
Question
_____ refers to the way an economy allocates goods and services to consumers.

A) Production
B) Capital
C) Distribution
D) Absolute advantage
Question
The conversion of resources to satisfy wants is described as:

A) consumption.
B) distribution.
C) production.
D) conservation.
Question
Which is NOT one of the basic economic questions that each society must answer?

A) What goods and services are to be produced?
B) How are these goods and services to be produced?
C) How much do we pay those who produce the goods and services?
D) Who will receive these goods and services?
Question
Which of the following is part of a planned economy?

A) Private individuals and firms own most resources.
B) Product prices are primarily determined by the interaction of demand and supply.
C) Most of the productive resources are owned by the state.
D) Consumers are free to decide what goods and services to purchase.
Question
In a communist state, the _____ decide(s) what a society wants, but in a capitalist economy, the _____ decide what products they want.

A) government; producers
B) consumers; producers
C) government; consumers
D) producers; consumers
Question
The Scandinavian countries of Europe:

A) have economies coordinate solely by markets.
B) allow a large role for government services.
C) have no barriers to the market.
D) do not protect property rights.
Question
Planned economies rely heavily on _____ to make most economic decisions.

A) consumers
B) producers
C) the government
D) corporations
Question
Which statement is NOT part of a market economy?

A) Most economic decisions are made by central governments.
B) Product prices are the principal mechanism for communicating information in the system.
C) Consumers are free to decide what goods and services to purchase.
D) The government plays a primary role in protecting private property rights.
Question
The way an economy allocates output to consumers is called:

A) distribution.
B) efficiency.
C) government allocation.
D) output maximization.
Question
A laissez-faire approach to the question of "how to produce" would be found in a:

A) socialist economy.
B) communist economy.
C) market economy.
D) planned economy.
Question
Which is NOT a basic economic question that societies must answer?

A) What goods and services are to be produced?
B) How are the goods and services to be produced?
C) Why are these goods and services being produced?
D) For whom are the goods and services being produced?
Question
Capital, which includes all manufactured products that are used to produce other goods and services, earns:

A) profit.
B) wages.
C) interest.
D) rent.
Question
In a planned economy, most of the productive resources are owned by:

A) households.
B) business firms.
C) the government.
D) foreign countries.
Question
A market economy is also known as a _____ economy, and decisions are made by _____.

A) capitalist; the government
B) capitalist; private individuals
C) socialist; the government
D) socialist; private individuals
Question
In a capitalist economy, the answer to the question "What should be produced?" is determined by:

A) the government.
B) consumers' demands for specific goods and services.
C) producers.
D) government and producers acting together.
Question
What are the three basic economic questions each society must answer?

A) what to produce; how to produce; for whom to produce
B) how much to produce; what quality to produce; what price to sell at
C) what to produce; how to much to produce, how to consume
D) how much goes to government; how much goes to consumers; how much is exported
Question
In a pure market economy, the government's primary roles do NOT include:

A) protecting property rights.
B) enforcing contracts between private parties.
C) providing public goods, such as national defense.
D) reallocating resources across the economy.
Question
The resource known as "labor" includes:

A) physical labor only.
B) physical and mental skills and talents.
C) people willing to do physical and difficult work.
D) the work of legal workers.
Question
The payment to entrepreneurship is called:

A) rent.
B) wages.
C) interest.
D) profit.
Question
Natural resources in the production process are called _____, and their payment is called _____.

A) capital; rent
B) labor; interest
C) land; rent
D) land; wages
Question
Which of the following is NOT an example of an improvement to human capital?

A) students taking a course in economics
B) increasing the number of machines available to workers
C) an intensive internship program
D) an employee learning to use Microsoft Access
Question
Economists refer to "rent" as a payment to:

A) housing.
B) land.
C) capital.
D) labor.
Question
What is considered a labor resource?

A) a sewing machine
B) a trainee
C) mineral deposits
D) a copier
Question
Which is considered a land resource?

A) a sewing machine
B) an apprentice
C) mineral deposits
D) a copier
Question
Natural resources such as copper deposits are:

A) capital.
B) land.
C) labor.
D) investment capital.
Question
Land as a productive resource does NOT include:

A) mineral deposits.
B) oil.
C) water.
D) computers.
Question
Economists refer to the payment to land as:

A) rent.
B) wages.
C) interest.
D) profit.
Question
Entrepreneurs receive profits for their efforts primarily because they:

A) combine land, labor, and capital to produce goods and services.
B) combine land, labor, and capital to produce goods and services and assume the risks associated with business.
C) assume the risks associated with business.
D) have the best ideas.
Question
Land:

A) is not a scarce resource.
B) earns rent.
C) earns interest.
D) is only agricultural.
Question
The payment to land is called:

A) rent.
B) wages.
C) interest.
D) profit.
Question
The concept of human capital is important to economists because:

A) improvements to human capital lead to higher standards of living.
B) it compares people with machinery.
C) it helps managers plan for future growth.
D) it shows ways for firms to reduce costs.
Question
In economics, the term "land" includes:

A) mostly agricultural land.
B) natural resources excluding water resources.
C) all natural resources.
D) resources found on the Earth's surface.
Question
If a pizza parlor uses an oven in its production process, the oven is an example of which factor of production?

A) capital
B) entrepreneurial ability
C) labor
D) land
Question
Economists refer to the payment to capital as:

A) rent.
B) wages.
C) interest.
D) profit.
Question
In economics, capital refers to:

A) funds used by businesses to acquire goods and services.
B) the process of raising money in the stock market.
C) actual manufactured buildings and equipment used in the production process.
D) anything that adds to human capital.
Question
Which is an example of capital in the production process of an amusement park?

A) the electricity used at the park
B) the mechanics who maintain the equipment
C) the roller coaster
D) the ticket-taker
Question
Human capital is:

A) the improvement of labor capabilities from training, education, and apprenticeship programs.
B) the equipment that companies use in the production process.
C) included in the land resource.
D) included in entrepreneurial ability.
Question
When the mix of goods and services produced is just what society desires, then __________ exists.

A) socialism.
B) communism.
C) production efficiency.
D) allocative efficiency.
Question
When society produces the mix of goods and services that are most desired and produces them at the lowest cost possible:

A) production efficiency is achieved.
B) allocative efficiency is achieved.
C) production and allocative efficiency are achieved.
D) inefficiency occurs.
Question
"Production efficiency" is described as:

A) goods and services that are produced using the fewest resources possible.
B) the mix of goods and services produced being just what society desires.
C) one country having a lower opportunity cost of producing a good than another country.
D) one country being able to produce more of a good than another country.
Question
Which statement about entrepreneurs is NOT correct?

A) Entrepreneurs combine other resources to produce goods and services.
B) Entrepreneurs manage the day-to-day marketing, finance, and production decisions.
C) The payment that entrepreneurs earn is called profit.
D) Entrepreneurs do not take on any business risks.
Question
All of these are considered human capital, EXCEPT:

A) working in a factory.
B) obtaining a college education.
C) receiving training for another area in a current job.
D) completing a professional development course.
Question
When a society is producing the mix of goods that the society wants to consume, then it is said to have:

A) solved the economic problem.
B) an equitable distribution of goods and services.
C) an efficient form of government.
D) obtained allocative efficiency.
Question
_____ occurs when goods and services are produced with as few resources as possible, while _____ occurs when the mix of goods and services produced is the most desired by society.

A) Allocative efficiency; production efficiency
B) Production efficiency; social efficiency
C) Allocative efficiency; social efficiency
D) Production efficiency; allocative efficiency
Question
_____ combine land, labor, and capital to produce goods and services and assume the risks associated with running businesses.

A) Economists
B) Capital marketers
C) Entrepreneurs
D) Financiers
Question
Capital includes all of these EXCEPT:

A) dollar bills in a bank vault.
B) copy machines in an insurance company.
C) tractor loaders of a construction firm.
D) drilling equipment at a tool-and-die company.
Question
Capital:

A) refers to commercial bank-lending policies.
B) is any manufactured product that is used to produce other products.
C) is a field of corn.
D) is the only element that is needed to turn resources into products.
Question
Which pair does NOT relate?

A) capital-interest
B) land-revenue
C) labor-wages
D) entrepreneurial ability-profit
Question
Economists refer to the payment to labor as:

A) rent.
B) wages.
C) interest.
D) profit.
Question
_____ occurs when the mix of goods society decides to produce is produced at the lowest possible resource or opportunity cost.

A) Allocative efficiency
B) Production efficiency
C) Opportunity cost
D) Cost allocation
Question
In economics, the term "capital" refers to:

A) money available to firms.
B) markets where companies go to raise funds.
C) the primary city in each governmental jurisdiction where most economic activity occurs.
D) manufactured buildings and equipment used to produce other goods and services.
Question
When an economy is producing the mix of goods and services MOST desired by society, that economy is considered to have:

A) productive efficiency.
B) productive equitability.
C) allocative efficiency.
D) allocative equitability.
Question
Which statement is TRUE regarding production efficiency?

A) Efficiency and cost are unrelated concepts.
B) Production efficiency is independent of the type of technology used.
C) Producing at the lowest possible resource cost is equivalent to getting as much output as possible from a given set of resources.
D) The most economically efficient production technology is not always the cheapest.
Question
Which of these items restricts our choices so that we must make tradeoffs?

A) time and money
B) money and personal preferences
C) time and personal preferences
D) time, money, and personal preferences
Question
In economics, the payment to capital is called:

A) wages.
B) interest.
C) capitalization.
D) profit.
Question
Entrepreneurs:

A) take no risks, if they are smart.
B) earn wages for their work.
C) combine and manage inputs of land, labor, and capital.
D) earn rents for their work.
Question
The production of too many Matchbox cars and not enough Barbie Dolls is an example of:

A) production inefficiency.
B) allocative inefficiency.
C) technical inefficiency
D) labor inefficiency.
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Deck 2: Production, Economic Growth, and Trade
1
The "what" question primarily refers to:

A) the mix of goods and services that are produced.
B) production efficiency.
C) whether the goods and services are produced under a communist system or a democratic system.
D) who gets the goods and services.
A
2
Which of these questions would NOT be considered one of the basic economic questions?

A) Should Brazil continue to produce ethanol?
B) What production method should be used to make batteries for plug-in cars?
C) When will the new high-speed train in California be completed?
D) To whom will the production of solar panels be sold to?
C
3
Which of these would be least likely to increase economic growth?

A) An increase in investment in infrastructure such as new roads and rail lines.
B) An increase in tariffs to protect domestic industries from foreign competition.
C) An expansion of financial aid options to college students.
D) Protecting intellectual property rights (such as patents) to provide incentives for innovation.
B
4
The main reason why a production possibilities frontier would have a concave shape is:

A) because of decreasing opportunity costs
B) because the rate at which one good can be substituted for another is fixed.
C) because as a country specializes in one product, it must give up more of the other.
D) because consumers face diminishing marginal returns in consumption.
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5
Suppose that Costa Rica is able to produce 50,000 pounds of coffee or 10,000 medical devices per day; Vietnam is able to produce 40,000 pounds of coffee or 5,000 medical devices per day. Which statement is TRUE?

A) Costa Rica has an absolute advantage in medical device production, while Vietnam has an absolute advantage in coffee production.
B) Costa Rica has a comparative advantage in the production of both coffee and medical devices.
C) Costa Rica has a comparative advantage in coffee production, while Vietnam has a comparative advantage in the production of medical devices.
D) Costa Rica has a comparative advantage in the production of medical devices, while Vietnam has a comparative advantage in coffee production.
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6
For a country to have a comparative advantage in a good, it must have:

A) more labor to produce that good
B) more capital to produce that good
C) an ability to produce more of that good than another country has
D) a lower opportunity cost of producing that good
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7
(Figure) The area between which two points on the production possibilities frontier could represent an improvement in productive efficiency? <strong>(Figure) The area between which two points on the production possibilities frontier could represent an improvement in productive efficiency?  </strong> A) from A to B B) from B to C C) from C to B D) from D to B

A) from A to B
B) from B to C
C) from C to B
D) from D to B
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8
What does the term "laissez-faire" mean in economics?

A) Government plays a major role regulating businesses to protect consumers.
B) Government does not intervene in personal decisions but it controls economic decisions.
C) The market economy requires intervention to ensure efficiency.
D) The role of government should be as minimal as possible.
Unlock Deck
Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
9
Which of the following is not possible for two countries who trade computers and automobiles with one another?

A) One of the countries has an absolute advantage in the production of both products.
B) One of the countries has a comparative advantage in the production of both products.
C) One country has an absolute advantage in one product and a comparative advantage in the other product.
D) One country does not have an absolute advantage in either product but has a comparative advantage in one product.
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10
Which is NOT one of the three basic economic questions that each society must answer?

A) What goods and services are to be produced?
B) How are the goods and services to be produced?
C) Who decides what goods and services are in demand?
D) Who will receive the goods and services?
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11
(Figure) The area between which two points on the PPF could represent an improvement in allocative efficiency? <strong>(Figure) The area between which two points on the PPF could represent an improvement in allocative efficiency?  </strong> A) from A to B B) from A to C C) from B to C D) from B to D

A) from A to B
B) from A to C
C) from B to C
D) from B to D
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12
To answer the question of how goods and services are to be produced, society must decide:

A) what products businesses want to produce.
B) how to combine its scarce resources to produce the desired products.
C) what products the government wants.
D) what products to export.
Unlock Deck
Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
13
Which of these would NOT be considered a factor of production?

A) mineral deposits
B) a large copy machine at the office
C) college graduates seeking a job
D) a bank loan used to start a new business
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14
Which is NOT considered a basic economic question?

A) How will the system accommodate change?
B) What goods and services will be produced?
C) Who will receive the goods and services?
D) How will these goods and services be produced?
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Unlock for access to all 342 flashcards in this deck.
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15
China produces many products at the lowest cost possible, even though Chinese consumers do not desire many of these products (e.g., football helmets). China is achieving:

A) production efficiency only
B) allocative efficiency only
C) both production efficiency and allocative efficiency
D) neither production efficiency nor allocative efficiency
Unlock Deck
Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
16
Why is entrepreneurial ability considered a factor of production?

A) because it is a physical input such as land, labor, and capital
B) because entrepreneurs assume the risk of producing output, an important part of the production process
C) because entrepreneurs work very long hours and demand large profits for the work that they accomplish
D) because it is an input that can be used by itself to produce many goods and services desired by society
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Unlock Deck
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17
Trade is:

A) a way for rich countries to take advantage of poorer countries.
B) good for rich countries and bad for poorer countries.
C) something that slows down the economies of the trading countries.
D) a driver of economic growth.
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
18
(Figure) What would be a reason why an economy is operating at point D? <strong>(Figure) What would be a reason why an economy is operating at point D?  </strong> A) A reduction in business investment causes unemployment to increase. B) There is a new technological breakthrough in the production of energy-efficient airplanes. C) An economy uses all of its inputs efficiently but changes the ratio of the goods produced. D) An economy experiences an influx of immigrants seeking jobs.

A) A reduction in business investment causes unemployment to increase.
B) There is a new technological breakthrough in the production of energy-efficient airplanes.
C) An economy uses all of its inputs efficiently but changes the ratio of the goods produced.
D) An economy experiences an influx of immigrants seeking jobs.
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19
If a farmer can grow 100 tubs of grapefruit or 250 tubs of oranges per acre of land, what is the opportunity cost of growing one orange?

A) 0.4 of an orange
B) 0.4 of a grapefruit
C) 2.5 oranges
D) 2.5 grapefruits
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20
Using the productivity rates for Spain and Portugal, which statement is TRUE? <strong>Using the productivity rates for Spain and Portugal, which statement is TRUE?  </strong> A) Spain has a comparative advantage in olives. B) Portugal has a comparative advantage in olives. C) Both Portugal and Spain have a comparative advantage in oranges. D) Both Spain and Portugal have a comparative advantage in olives.

A) Spain has a comparative advantage in olives.
B) Portugal has a comparative advantage in olives.
C) Both Portugal and Spain have a comparative advantage in oranges.
D) Both Spain and Portugal have a comparative advantage in olives.
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21
Which of these is NOT an economic factor of production?

A) land
B) entrepreneurial ability
C) money
D) labor
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22
In a _____ economy, individuals and firms own most resources, and in a _____ economy, the government controls most resources.

A) market; planned
B) planned; socialist
C) planned; market
D) socialist; planned
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k this deck
23
In a market economy, product prices do NOT help to determine how:

A) consumers decide whether to buy or not buy.
B) firms employ their resources.
C) firms decide which production technology to use.
D) governments allocate their resources.
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24
_____ refers to the way an economy allocates goods and services to consumers.

A) Production
B) Capital
C) Distribution
D) Absolute advantage
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25
The conversion of resources to satisfy wants is described as:

A) consumption.
B) distribution.
C) production.
D) conservation.
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Unlock Deck
k this deck
26
Which is NOT one of the basic economic questions that each society must answer?

A) What goods and services are to be produced?
B) How are these goods and services to be produced?
C) How much do we pay those who produce the goods and services?
D) Who will receive these goods and services?
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27
Which of the following is part of a planned economy?

A) Private individuals and firms own most resources.
B) Product prices are primarily determined by the interaction of demand and supply.
C) Most of the productive resources are owned by the state.
D) Consumers are free to decide what goods and services to purchase.
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28
In a communist state, the _____ decide(s) what a society wants, but in a capitalist economy, the _____ decide what products they want.

A) government; producers
B) consumers; producers
C) government; consumers
D) producers; consumers
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29
The Scandinavian countries of Europe:

A) have economies coordinate solely by markets.
B) allow a large role for government services.
C) have no barriers to the market.
D) do not protect property rights.
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30
Planned economies rely heavily on _____ to make most economic decisions.

A) consumers
B) producers
C) the government
D) corporations
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31
Which statement is NOT part of a market economy?

A) Most economic decisions are made by central governments.
B) Product prices are the principal mechanism for communicating information in the system.
C) Consumers are free to decide what goods and services to purchase.
D) The government plays a primary role in protecting private property rights.
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32
The way an economy allocates output to consumers is called:

A) distribution.
B) efficiency.
C) government allocation.
D) output maximization.
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33
A laissez-faire approach to the question of "how to produce" would be found in a:

A) socialist economy.
B) communist economy.
C) market economy.
D) planned economy.
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34
Which is NOT a basic economic question that societies must answer?

A) What goods and services are to be produced?
B) How are the goods and services to be produced?
C) Why are these goods and services being produced?
D) For whom are the goods and services being produced?
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35
Capital, which includes all manufactured products that are used to produce other goods and services, earns:

A) profit.
B) wages.
C) interest.
D) rent.
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36
In a planned economy, most of the productive resources are owned by:

A) households.
B) business firms.
C) the government.
D) foreign countries.
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k this deck
37
A market economy is also known as a _____ economy, and decisions are made by _____.

A) capitalist; the government
B) capitalist; private individuals
C) socialist; the government
D) socialist; private individuals
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38
In a capitalist economy, the answer to the question "What should be produced?" is determined by:

A) the government.
B) consumers' demands for specific goods and services.
C) producers.
D) government and producers acting together.
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Unlock Deck
k this deck
39
What are the three basic economic questions each society must answer?

A) what to produce; how to produce; for whom to produce
B) how much to produce; what quality to produce; what price to sell at
C) what to produce; how to much to produce, how to consume
D) how much goes to government; how much goes to consumers; how much is exported
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Unlock for access to all 342 flashcards in this deck.
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k this deck
40
In a pure market economy, the government's primary roles do NOT include:

A) protecting property rights.
B) enforcing contracts between private parties.
C) providing public goods, such as national defense.
D) reallocating resources across the economy.
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k this deck
41
The resource known as "labor" includes:

A) physical labor only.
B) physical and mental skills and talents.
C) people willing to do physical and difficult work.
D) the work of legal workers.
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k this deck
42
The payment to entrepreneurship is called:

A) rent.
B) wages.
C) interest.
D) profit.
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Unlock for access to all 342 flashcards in this deck.
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k this deck
43
Natural resources in the production process are called _____, and their payment is called _____.

A) capital; rent
B) labor; interest
C) land; rent
D) land; wages
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44
Which of the following is NOT an example of an improvement to human capital?

A) students taking a course in economics
B) increasing the number of machines available to workers
C) an intensive internship program
D) an employee learning to use Microsoft Access
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45
Economists refer to "rent" as a payment to:

A) housing.
B) land.
C) capital.
D) labor.
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46
What is considered a labor resource?

A) a sewing machine
B) a trainee
C) mineral deposits
D) a copier
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47
Which is considered a land resource?

A) a sewing machine
B) an apprentice
C) mineral deposits
D) a copier
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k this deck
48
Natural resources such as copper deposits are:

A) capital.
B) land.
C) labor.
D) investment capital.
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k this deck
49
Land as a productive resource does NOT include:

A) mineral deposits.
B) oil.
C) water.
D) computers.
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Unlock for access to all 342 flashcards in this deck.
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k this deck
50
Economists refer to the payment to land as:

A) rent.
B) wages.
C) interest.
D) profit.
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
51
Entrepreneurs receive profits for their efforts primarily because they:

A) combine land, labor, and capital to produce goods and services.
B) combine land, labor, and capital to produce goods and services and assume the risks associated with business.
C) assume the risks associated with business.
D) have the best ideas.
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Unlock for access to all 342 flashcards in this deck.
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k this deck
52
Land:

A) is not a scarce resource.
B) earns rent.
C) earns interest.
D) is only agricultural.
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Unlock Deck
k this deck
53
The payment to land is called:

A) rent.
B) wages.
C) interest.
D) profit.
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
54
The concept of human capital is important to economists because:

A) improvements to human capital lead to higher standards of living.
B) it compares people with machinery.
C) it helps managers plan for future growth.
D) it shows ways for firms to reduce costs.
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
55
In economics, the term "land" includes:

A) mostly agricultural land.
B) natural resources excluding water resources.
C) all natural resources.
D) resources found on the Earth's surface.
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
56
If a pizza parlor uses an oven in its production process, the oven is an example of which factor of production?

A) capital
B) entrepreneurial ability
C) labor
D) land
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Unlock Deck
k this deck
57
Economists refer to the payment to capital as:

A) rent.
B) wages.
C) interest.
D) profit.
Unlock Deck
Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
58
In economics, capital refers to:

A) funds used by businesses to acquire goods and services.
B) the process of raising money in the stock market.
C) actual manufactured buildings and equipment used in the production process.
D) anything that adds to human capital.
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Unlock for access to all 342 flashcards in this deck.
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k this deck
59
Which is an example of capital in the production process of an amusement park?

A) the electricity used at the park
B) the mechanics who maintain the equipment
C) the roller coaster
D) the ticket-taker
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k this deck
60
Human capital is:

A) the improvement of labor capabilities from training, education, and apprenticeship programs.
B) the equipment that companies use in the production process.
C) included in the land resource.
D) included in entrepreneurial ability.
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Unlock for access to all 342 flashcards in this deck.
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k this deck
61
When the mix of goods and services produced is just what society desires, then __________ exists.

A) socialism.
B) communism.
C) production efficiency.
D) allocative efficiency.
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k this deck
62
When society produces the mix of goods and services that are most desired and produces them at the lowest cost possible:

A) production efficiency is achieved.
B) allocative efficiency is achieved.
C) production and allocative efficiency are achieved.
D) inefficiency occurs.
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k this deck
63
"Production efficiency" is described as:

A) goods and services that are produced using the fewest resources possible.
B) the mix of goods and services produced being just what society desires.
C) one country having a lower opportunity cost of producing a good than another country.
D) one country being able to produce more of a good than another country.
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
64
Which statement about entrepreneurs is NOT correct?

A) Entrepreneurs combine other resources to produce goods and services.
B) Entrepreneurs manage the day-to-day marketing, finance, and production decisions.
C) The payment that entrepreneurs earn is called profit.
D) Entrepreneurs do not take on any business risks.
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Unlock for access to all 342 flashcards in this deck.
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k this deck
65
All of these are considered human capital, EXCEPT:

A) working in a factory.
B) obtaining a college education.
C) receiving training for another area in a current job.
D) completing a professional development course.
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
66
When a society is producing the mix of goods that the society wants to consume, then it is said to have:

A) solved the economic problem.
B) an equitable distribution of goods and services.
C) an efficient form of government.
D) obtained allocative efficiency.
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k this deck
67
_____ occurs when goods and services are produced with as few resources as possible, while _____ occurs when the mix of goods and services produced is the most desired by society.

A) Allocative efficiency; production efficiency
B) Production efficiency; social efficiency
C) Allocative efficiency; social efficiency
D) Production efficiency; allocative efficiency
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68
_____ combine land, labor, and capital to produce goods and services and assume the risks associated with running businesses.

A) Economists
B) Capital marketers
C) Entrepreneurs
D) Financiers
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
69
Capital includes all of these EXCEPT:

A) dollar bills in a bank vault.
B) copy machines in an insurance company.
C) tractor loaders of a construction firm.
D) drilling equipment at a tool-and-die company.
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Unlock for access to all 342 flashcards in this deck.
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k this deck
70
Capital:

A) refers to commercial bank-lending policies.
B) is any manufactured product that is used to produce other products.
C) is a field of corn.
D) is the only element that is needed to turn resources into products.
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Unlock for access to all 342 flashcards in this deck.
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71
Which pair does NOT relate?

A) capital-interest
B) land-revenue
C) labor-wages
D) entrepreneurial ability-profit
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Unlock Deck
k this deck
72
Economists refer to the payment to labor as:

A) rent.
B) wages.
C) interest.
D) profit.
Unlock Deck
Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
73
_____ occurs when the mix of goods society decides to produce is produced at the lowest possible resource or opportunity cost.

A) Allocative efficiency
B) Production efficiency
C) Opportunity cost
D) Cost allocation
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
74
In economics, the term "capital" refers to:

A) money available to firms.
B) markets where companies go to raise funds.
C) the primary city in each governmental jurisdiction where most economic activity occurs.
D) manufactured buildings and equipment used to produce other goods and services.
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
75
When an economy is producing the mix of goods and services MOST desired by society, that economy is considered to have:

A) productive efficiency.
B) productive equitability.
C) allocative efficiency.
D) allocative equitability.
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k this deck
76
Which statement is TRUE regarding production efficiency?

A) Efficiency and cost are unrelated concepts.
B) Production efficiency is independent of the type of technology used.
C) Producing at the lowest possible resource cost is equivalent to getting as much output as possible from a given set of resources.
D) The most economically efficient production technology is not always the cheapest.
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Unlock for access to all 342 flashcards in this deck.
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77
Which of these items restricts our choices so that we must make tradeoffs?

A) time and money
B) money and personal preferences
C) time and personal preferences
D) time, money, and personal preferences
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
78
In economics, the payment to capital is called:

A) wages.
B) interest.
C) capitalization.
D) profit.
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
79
Entrepreneurs:

A) take no risks, if they are smart.
B) earn wages for their work.
C) combine and manage inputs of land, labor, and capital.
D) earn rents for their work.
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Unlock for access to all 342 flashcards in this deck.
Unlock Deck
k this deck
80
The production of too many Matchbox cars and not enough Barbie Dolls is an example of:

A) production inefficiency.
B) allocative inefficiency.
C) technical inefficiency
D) labor inefficiency.
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Unlock Deck
Unlock for access to all 342 flashcards in this deck.