Economic systems
Absolute and Comparative Advantages
Allocative and Productive Efficiency
Cost benefit analysis
Miscellaneous terms
100
In a command economy, the government primarily allocates resources through:
(a) Profit maximization
(b) Consumer choice
(c) Central planning
(d) Market forces
(c) Central planning
100
What is the definition of absolute advantage?
Absolute advantage is the ability to produce more with the available number of resources
100
What is productive efficiency?
Productive efficiency is who can create a product with the smallest or least opportunity cost.
100
What is the law of diminishing marginal utility?
The more unit that are consumed, the more marginal utility will decrease
100
What is normative economics?
economic ideology that includes value judgements
200
Which of the following economic systems is characterized by private ownership of the means of production, limited government intervention, and reliance on markets to allocate resources?
(a) Traditional economy
(b) Command economy
(c) Mixed economy
(d) Market economy
(d) Market economy
200
If country A can produce 50 jets and county B can produce 40 jets, who has the absolute advantage in producing jets?
Country A
200
Where on a PPC is the graph productively efficient?
Anywhere on the line
200
What is opportunity cost?
The cost of the next best alternative
200
What are the 4 factors of production?
Land,labor,physical capital,and human capital
300
In a traditional economy, what is the primary factor driving resource allocation?
(a) Scarcity
(b) Market Forces
(c) Government planning
(d) Customs and traditions
(d) Customs and traditions
300
What does it mean when a group has the comparative advantage?
It means that they can produce a product with the lower opportunity cost
300
What is the definition of allocative efficiency?
Allocative efficiency is where societies wants are best fulfilled.
300
What is marginal cost?
The cost of producing one more of something
300
What is positive economics?
Economic ideology that includes facts
400
In a mixed economy, which of the following is most likely to be provided by the government?
(a) Luxury goods like designer clothes
(b) Basic necessities like public education
(c) Production of specialized industrial machinery
(d) Development and marketing of new consumer electronics
(b) Basic necessities like public education
400
If country A can produce 100 cars or 75 trucks and county B can produce 50 cars or 25 trucks, who has the comparative advantage in producing cars?
Country B
400
List where the PPC is allocatively efficient, if society needs a lot of wheat and only a little Cloth.
B
400
A student can either study for their test, mow lawns for $20, or work at McDonalds for $25. What is the opportunity cost of choosing to study?
$25
400
What are quotas?
Quotas are specific requirements that workers have to produce
500
Which economic system is most common in the real world?
(a) Traditional economy
(b) Command economy
(c) Mixed economy
(d) Market economy
(e) They are all found equally
(c) Mixed economy
500
If country A takes 4 hours to produce a car and 3 hours to produce a truck, while county B takes 6 hours to produce a car and 4 hours to produce a truck, who has the comparative advantage in producing trucks?
Country B
500
Producing at which point will lead to the greatest economic growth in the future?
Point Z
500
If a student has 3 hours and they can either play videogames or play cards, which combination should they do if: the 1 hour of videogaming gives 20 Utils, 2 hours gives 25 Utils, and 3 hours gives 27 Utils, while 1 hour of cards gives 15 Utils, 2 hours gives 25 Utils, and 3 hours gives 30 Utils.
1 hour of videogames and 2 hours of cards.
500
What are the 4 PPC Shifters?
1) Resource Quantity
2) Resource Quality
3) Technology
4) Trade