Scarcity-Trade offs, Opportunity Cost
. Scarcity exists because:
A. Resources are unlimited and wants are limited
B. Resources are limited and wants are unlimited
C. Everyone has the same amount of resources
D. Money can buy all needs
B. Resources are limited and wants are unlimited
Which is NOT a factor of production?
A. Land
B. Labor
C. Money
D. Capital
C. Money
Marginal means:
A. Extra or additional
B. Total
C. Scarce
D. Free
A. Extra or additional
An unintended consequence is:
A. A planned result
B. An unexpected outcome
C. A rational choice
D. An opportunity cost
B. An unexpected outcome
Opportunity cost is best illustrated by:
A. Buying lunch instead of saving money
B. Having free air
C. Unlimited wants
D. Government spending
A. Buying lunch instead of saving money
A trade-off is:
A. A decision made without costs
B. Choosing one option over another
C. A free good
D. Always an equal exchange
B. Choosing one option over another
Human effort used in production is called:
A. Capital
B. Labor
C. Land
D. Entrepreneurship
B. Labor
Marginal cost is:
A. Cost of all units
B. Cost of producing one more unit
C. Average cost
D. Total revenue
B. Cost of producing one more unit
Government raises cigarette taxes. An unintended consequence might be:
A. More smokers
B. Decrease in smoking but rise in black market sales
C. Increase in health risks
D. None
B. Decrease in smoking but rise in black market sales
. Entrepreneurs contribute by:
A. Creating jobs and innovations
B. Eliminating scarcity
C. Removing all trade-offs
D. Avoiding risks
A. Creating jobs and innovations
The value of the next best alternative given up is:
A. Trade-off
B. Scarcity
C. Opportunity cost
D. Benefit
C. Opportunity cost
A factory building is an example of:
A. Land
B. Capital
C. Labor
D. Scarcity
B. Capital
Marginal benefit is:
A. The gain from consuming one more unit
B. The cost of all units
C. Total profit
D. Average benefit
A. The gain from consuming one more unit
Consumer sovereignty means:
A. Businesses control markets
B. Consumers determine what is produced
C. Government dictates products
D. Scarcity disappears
B. Consumers determine what is produced
Which of the following combines land, labor, and capital?
A. Government
B. Entrepreneur
C. Consumer
D. Teacher
B. Entrepreneur
Which of the following is an example of opportunity cost?
A. Choosing to study instead of going to the movies
B. Having unlimited choices
C. Buying something with a coupon
D. Getting a free gift
A. Choosing to study instead of going to the movies
. Oil, minerals, and forests are:
A. Land
B. Capital
C. Labor
D. Entrepreneurship
A. Land
Rational decision-making occurs when:
A. Marginal benefit > marginal cost
B. Marginal benefit < marginal cost
C. Scarcity does not exist
D. No opportunity costs
A. Marginal benefit > marginal cost
When consumers choose healthier foods, producers:
A. Ignore demand
B. Stop producing food
C. Adapt products
D. Face no trade-offs
C. Adapt products
A marginal cost of $5 and marginal benefit of $7 means:
A. Don’t produce
B. Produce more
C. Reduce output
D. Stop all production
B. Produce more
If you spend $50 on a video game instead of saving for a concert, the concert is the:
A. Benefit
B. Trade-off
C. Opportunity cost
D. Scarcity
C. Opportunity cost
Risk-taking and innovation in business describes:
A. Labor
B. Entrepreneur
C. Capital
D. Land
B. Entrepreneur
If producing one more pizza costs $8 but customers pay $10, the decision is:
A. Irrational
B. Rational
C. Trade-off
D. Scarce
B. Rational
Which is a negative unintended consequence of car use?
A. Convenience in travel
B. Air pollution
C. Job creation
D. Freedom
B. Air pollution
If consumers refuse to buy a product, the producer will likely:
A. Keep producing
B. Stop or change production
C. Eliminate scarcity
D. Increase price
B. Stop or change production
Which of the following is NOT scarce?
A. Time
B. Air in a normal environment
C. Money
D. Water in a desert
B. Air in a normal environment
A delivery truck used by Amazon is:
A. Land
B. Capital
C. Labor
D. Entrepreneurship
B. Capital
When marginal cost = marginal benefit, a producer should:
A. Increase production
B. Stop production
C. Maintain current production
D. Eliminate costs
C. Maintain current production
Positive unintended consequence of smartphones:
A. More distracted driving
B. Better global communication
C. Shorter attention span
D. Higher costs
B. Better global communication
Which best illustrates marginal benefit?
A. Total revenue from sales
B. Satisfaction from one more slice of pizza
C. All profits in a year
D. Rent for a factory
B. Satisfaction from one more slice of pizza
Choices are necessary because:
A. People want less
B. Government controls all resources
C. Scarcity forces decision-making
D. Opportunity costs don’t exist
C. Scarcity forces decision-making
A farmer growing wheat is using which factor most?
A. Labor
B. Capital
C. Land
D. Entrepreneurship
C. Land
Marginal analysis helps:
A. Avoid all risks
B. Improve decision-making
C. Eliminate scarcity
D. Avoid trade-offs
B. Improve decision-making
When businesses respond to consumer demand, this demonstrates:
A. Consumer sovereignty
B. Scarcity
C. Opportunity cost
D. Marginal analysis
A. Consumer sovereignty
. Marginal cost generally:
A. Increases as production expands
B. Stays the same
C. Decreases always
D. Does not exist
Increases as production expands
Deciding between working overtime or spending time with family is an example of:
A. Scarcity
B. Trade-off
C. Benefit
D. Free choice
B. Trade-off
An entrepreneur combines resources to:
A. Increase scarcity
B. Create goods and services
C. Decrease labor
D. Remove trade-offs
B. Create goods and services
A student studies for 2 hours and earns a B. One more hour earns an A. The marginal benefit of the extra hour is:
A. The B grade
B. Getting an A grade
C. No benefit
D. Wasted time
B. Getting an A grade
A new government regulation may create:
A. No effects
B. Only positive consequences
C. Both intended and unintended consequences
D. Free resources
C. Both intended and unintended consequences
If the marginal cost of driving one more mile is $0.50 and the benefit is $0.30, the driver should:
A. Drive more
B. Stop driving
C. Ignore costs
D. Sell the car
B. Stop driving
. The opportunity cost of going to college is:
A. Tuition only
B. Time and money spent plus lost wages
C. Free education
D. None
B. Time and money spent plus lost wages
. Which factor of production receives wages?
A. Land
B. Labor
C. Capital
D. Entrepreneurship
B. Labor
A factory producing more than optimal output where MC > MB should:
A. Keep producing
B. Reduce output
C. Increase labor
D. Ignore costs
B. Reduce output
Consumer sovereignty is most powerful in:
A. Command economy
B. Market economy
C. Traditional economy
D. None
B. Market economy
Decision-making at the margin means:
A. Comparing total costs and benefits
B. Comparing additional costs and benefits
C. Ignoring opportunity cost
D. Eliminating scarcity
B. Comparing additional costs and benefits
Trade-offs apply:
A. Only to businesses
B. Only to governments
C. To all choices at every level
D. Never
C. To all choices at every level
Which factor receives profit?
A. Labor
B. Land
C. Entrepreneurship
D. Capital
C. Entrepreneurship
A company producing fewer goods than MB > MC should:
A. Reduce production
B. Increase production
C. Eliminate production
D. Stop producing
B. Increase production
An unintended consequence of new technology could be:
A. Lower productivity
B. New jobs lost but others created
C. Elimination of scarcity
D. Free goods
B. New jobs lost but others created
35. Marginal analysis encourages:
A. All-or-nothing choices
B. Incremental decisions
C. Ignoring unintended consequences
D. Avoiding trade-offs
B. Incremental decisions