Deck 2: Production, Economic Growth, and Trade

Question 1

Planned economies rely heavily on ________ to make most economic decisions.

A) consumers
B) producers
C) the central government
D) corporations

Answer 1

the central government

Question 2

______ refers to the way an economy allocates goods and services to consumers.

A) Production
B) Capital
C) Distribution
D) Absolute advantage

Answer 2

Distribution

Question 3

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.

Answer 3

market economy.

Question 4

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) a drag on the economies of the trading countries.
D) a driver of economic growth.

Question 5

In a planned economy,most of the productive resources are owned by:

A) households.
B) business firms.
C) the government.
D) foreign countries.

Question 6

Which of the following 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 7

Which of the following 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 8

In a commustate,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 9

The "what" question primarily refers to:

A) the set of goods and services that are produced.
B) production efficiency.
C) whether the goods are produced under a communist system or a democratic system.
D) who gets what.

Question 10

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 11

Which of the following 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 12

The way an economy allocates output to consumers is called:

A) distribution.
B) efficiency.
C) governmental allocation.
D) output maximization.

Question 13

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 14

To answer the question of how the 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 government wants.
D) what products to export.

Question 15

In a market economy,product prices do NOT help 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 16

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;and 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 17

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 18

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 19

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 20

Which of the following 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 21

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 products used in the production process.
D) anything that adds to human capital.

Question 22

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 23

The conversion of resources to satisfy wants is described as:

A) consumption.
B) distribution.
C) production.
D) conservation.

Question 24

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 25

The process of converting factors of production into goods and services is called:

A) distribution.
B) production.
C) factor conversion.
D) efficiency.

Question 26

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 27

In economics,the term "land" includes:

A) mostly agricultural land.
B) natural resources excluding water resources.
C) all natural resources.
D) resources found on Earth's surface.

Question 28

Economists refer to the payment to capital as:

A) rent.
B) wages.
C) interest.
D) profit.

Question 29

The payment to land is called:

A) rent.
B) wages.
C) interest.
D) profit.

Question 30

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 31

Which of the following is NOT an economic factor of production?

A) land
B) entrepreneurial ability
C) money
D) labor

Question 32

The payment to entrepreneurship is called:

A) rent.
B) wages.
C) interest.
D) profit.

Question 33

Human capital is:

A) the improvement to 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 34

Economists refer to "rent" as a payment to:

A) housing.
B) land.
C) capital.
D) labor.

Question 35

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 36

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 37

The Scandinavian countries of Europe:

A) allow no role for the market.
B) allow a large role for government services.
C) have no barriers to the market.
D) do not protect property rights.

Question 38

Economists refer to the payment to land as:

A) rent.
B) wages.
C) interest.
D) profit.

Question 39

Land as a productive resource does NOT include:

A) mineral deposits.
B) oil.
C) water.
D) computers.

Question 40

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 41

Which statement regarding entrepreneurs is NOT correct?

A) Entrepreneurs combine the other resources to produce goods and services.
B) Entrepreneurs manage the day-to-day marketing,finance,and production decisions.
C) The payment entrepreneurs earn is called profit.
D) Entrepreneurs do not take on any business risks.

Question 42

_______________ occurs when goods and services are produced at their lowest resource cost,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 43

Land:

A) is not a scarce resource.
B) earns rent.
C) earns interest.
D) is only agricultural.

Question 44

All of the following 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 45

______ 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 46

Which of the following pairs do NOT match?

A) capital-interest
B) land-lease payment
C) labor-wages
D) entrepreneurial ability-profit

Question 47

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 products used to produce other goods and services.

Question 48

Entrepreneurs:

A) take no risk,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 49

In economics,the payment to capital is called:

A) factor payment.
B) interest.
C) capitalization.
D) profit.

Question 50

Economists refer to the payment to labor as:

A) rent.
B) wages.
C) interest.
D) profit.

Question 51

Which of the following 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 52

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 53

When the mix of goods and services produced is just what the society desires,then we have:

A) socialism.
B) communism.
C) production efficiency.
D) allocative efficiency.

Question 54

Which is considered a land resource?

A) a sewing machine
B) an apprentice
C) mineral deposits
D) a copier

Question 55

What is considered a labor resource?

A) a sewing machine
B) an apprentice
C) mineral deposits
D) a copier

Question 56

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 apprenticeship program
D) an employee learning to use Microsoft Access

Question 57

When an economy is producing the mix of goods and service MOST desired by society,that economy is considered to be:

A) productively efficient.
B) productively equitable.
C) allocatively efficient.
D) allocatively equitable.

Question 58

Natural resources such as copper deposits are:

A) capital.
B) land.
C) labor.
D) investment capital.

Question 59

Capital includes all of the following,EXCEPT:

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

Question 60

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 61

A change from an inefficient mix to an efficient mix of output would BEST be represented with a production possibilities frontier (PPF)as a:

A) shift outward of the PPF.
B) shift inward of the PPF.
C) movement from inside the PPF onto the PPF.
D) movement from a point on the PPF to a point inside the PPF.

Question 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.

Question 63

___________ 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 64

The production possibilities model holds _______________ and _____________ constant.

A) growth;human capital
B) land;labor
C) labor;capital
D) resources;technology

Question 65

The graphical tool we could use to represent the combinations of two goods that are possible with a given society at full employment is a(n):

A) efficiency curve.
B) allocation curve.
C) production possibilities frontier.
D) cost graph.

Question 66

When an economy is operating efficiently,the production of one more unit of a good will result in the production of less of another good because:

A) technology can only improve the production of one good.
B) the PPF shifts inward as more of only one good is produced.
C) resources are limited and efficiency implies that all resources are already in use.
D) consumers will not want more of both goods.

Question 67

Production levels to the left of the PPF are:

A) attainable but efficient.
B) attainable but inefficient.
C) unattainable and efficient.
D) unattainable and inefficient.

Question 68

If an economy is operating at a point that is inside of its production possibilities frontier,then it can be assumed that its resources are:

A) misallocated.
B) overutilized.
C) fully utilized.
D) underutilized.

Question 69

Production levels to the right of the PPF are:

A) attainable.
B) efficient.
C) inefficient.
D) unattainable.

Question 70

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.

Question 71

A country operating outside of the production possibilities frontier is:

A) operating efficiently.
B) operating inefficiently and at an unattainable level.
C) operating inefficiently but in an area that can be attained with proper use of resources.
D) impossible.A country cannot operate outside the production possibilities frontier.

Question 72

"Production efficiency" is described as:

A) goods and services are being produced at their lowest resource cost.
B) the mix of goods and services produced is just what the society desires.
C) when one country has a lower opportunity cost of producing a good than another country.
D) when one country can produce more of a good than another country.

Question 73

A point on a nation's production possibilities frontier indicates:

A) an undesirable combination of goods and services.
B) combinations of output that are unattainable,given the current stock of resources and technology.
C) levels of production that will cause both unemployment and inflation.
D) that resources are fully utilized in producing a given combination of goods and services.

Question 74

The ________ shows the combination of two goods that are possible for a society to produce at full employment.

A) full employment line
B) production possibilities frontier
C) goods and services frontier
D) maximal productivity curve

Question 75

Points that are unattainable for an economy are shown as points:

A) inside the PPF.
B) on the PPF.
C) outside the PPF.
D) of unemployment.

Question 76

When a society is producing what 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) allocative efficiency.

Question 77

Which of the following 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 78

If an economy is producing at a point inside its PPF:

A) it is possible to produce more of one good without sacrificing some of the other good.
B) it is producing efficiently.
C) it is producing beyond its production possibilities.
D) full employment is achieved.

Question 79

The derivation of a production possibilities frontier assumes:

A) some resources are not being used.
B) there is a fixed quantity of resources and technology available.
C) some resources are not being produced efficiently.
D) technology is free.

Question 80

A point to the right of the production possibilities frontier is:

A) inefficient.
B) unattainable.
C) improbable.
D) efficient.