Basic Economic Problem
The basic economic problem that all people and governments have to make decisions based on is called?
A) Law of Demand
B) Law of Supply
C) Scarcity
D) Opportunity Cost
C
What does the PPC show?
A) The amount of money spent in an economy on two goods
B) Maximum possible production combinations of two goods
C) The price of two goods in the market
D) The number of people willing to buy two goods
B) Maximum possible production combinations of two goods
What is an incentive?
A) Something that motivates behavior
B) Financial rewards
C) A government regulation
D) A natural resource
A) Something that motivates behavior
In which system are decisions based on customs and might rely heavily on agriculture?
A) Market
B) Traditional
C) Command
D) Mixed
B) Traditional
How is scarcity different from shortage?
A) Scarcity is temporary, shortage is permanent
B) Scarcity exists only in government
C) Scarcity is permanent, shortage is temporary
D) They are the same
C) Scarcity is permanent, shortage is temporary
A point inside the PPC represents:
A) Maximum efficiency
B) Unattainable production
C) Inefficiency/ unemployment of resources
D) Economic growth
C) Inefficiency/ unemployment of resources
Which is an example of a non-monetary incentive?
A) A cash bonus
B) A scholarship check
C) Employee of the Month program
D) Overtime pay
C) Employee of the Month program
Which of the following definitely does NOT characterize the US economy?
A) Traditional Economy
B) Mixed Economy
C) Market Economy
D) Capitalist Economy
A
Which situation BEST illustrates scarcity?
A) A new video game sells out on launch day
B) A farmer has to choose between planting corn or wheat
C) A store raises prices during the holidays
D) A celebrity endorses a product
B) A farmer has to choose between planting corn or wheat
Which of the following would shift the PPC inward
A) New technology
B) Discovery of new natural resources
C) A population boom
D) A natural disaster
D
A fine for polluting is an example of:
A) Positive monetary incentive
B) Negative monetary incentive
C) Criminal incentive
D) External influence
B) Negative monetary incentive
Whose decisions have the most influence in a market economy?
A) high-level economic planners
B) the governments’ central bankers
C) manufacturers, based on their long-range economic forecasts
D) buyers and sellers, through voluntary exchange
D
Opportunity cost defined as:
A) The total cost of a choice
B) The money spent on a choice
C) The next best alternative given up
D) The benefit of a choice
C) The next best alternative given up
You can produce cars or grain in your economy. Point A you produce 50 cars and 100 lbs. grain. Point B = 60 cars and 70 grain. What is the opportunity cost of moving from point A to B?
A) 10 Cars
B) 10 Grain
C) 30 Grain
D) 30 Cars
C) 30 Grain
A city introduces a tax on sugary drinks to reduce consumption. Which statement best describes the economic reasoning behind this policy?
A) The government wants to increase revenue only
B) The tax is a negative incentive intended to change consumer behavior
C) People will ignore the tax since wants are unlimited
D) The tax eliminates scarcity of healthy options
B) The tax is a negative incentive intended to change consumer behavior
All economic systems must answer the three basic economic questions. Which set correctly lists them?
A) What to produce? How to produce? For whom to produce?
B) What to produce? How to produce? Who to trade with?
C) How much to save? How much to spend? How much to trade?
D) Where to produce? Why produce? For whom to produce?
A) What to produce? How to produce? For whom to produce?
A country diverts a fixed amount of skilled labor and rare minerals from consumer electronics production to expand domestic semiconductor manufacturing.
Given the scenario, which concept best explains a decrease in smartphone availability?
A. A short-run shortage caused by increased consumer demand
B. Greater scarcity due to resources being reallocated
C. A lower opportunity cost of producing semiconductors
D. A long-run shortage because materials can't be used for both
B
You can produce Textbooks or Laptops in your economy. Point A you produce 10 laptops and 100 textbooks. Point B = 12 laptops and 90 texts. Point C = 15 laptops and 75 texts. What is the opportunity cost of moving from point C to A?
A) 25 Textbooks
B) 2 Laptops
C) 10 Textbooks
D) 5 Laptops
D) 5 Laptops
A city pays sanitation workers a bonus for each block cleaned faster than the weekly average. After the policy begins, workers skip time-consuming tasks like sorting recyclables and reporting damaged bins, even though total cleaning time per shift decreases.
Which best describes the result of this incentive?
A. The positive incentive also created a perverse incentive
B. The positive incentive resulted in better performance across the whole department
C. There is now a negative incentive to clean faster since you will eventually hit a limit.
D. Workers will be incentivized to do their other tasks now they have more time to complete them
A
In the country of Furgtopia, the government owns all major factories, sets wages and prices, and dictates what goods are produced. Citizens have little choice, and private businesses are virtually nonexistent.
Which type of economic system does Furgtopia have?
A. Mixed economy
B. Market economy
C. Command economy
D. Traditional economy
C