Econ – Flashcard Test
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According to the law of increasing opportunity costs,
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In order to produce additional units of a particular good, it is necessary for society to sacrifice increasingly larger amounts of alternative goods.
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In economics, scarcity means that
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Society's desires exceed the want-satisfying capability of the resources available to satisfy those desires.
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The production possibilities curve illustrates which two of the following essential principles?
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scarce resources and opportunity cost
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Which of the following events would allow the production possibilities curve to shift outward?
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more teenagers enter the labor force
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Which of the following is an assumption under which the production possibilities curve is drawn?
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the supply of resources is fixed
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In terms of the production possibilities curve, inefficiency is represented by
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all points inside the curve
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Macroeconomics focuses on the performance of
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the overall economy
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The points on a production possibilities curve show
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potential output
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per capita GDP is
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GDP divided by total population
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A point on a nation's production possibilities curve represents
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The full employment of resources to achieve a particular combination of goods and services.
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Producing at a point inside the production possibilities curve
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Suggests we are forgoing the ability to produce more of both goods.
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The study of microeconomic theory focuses on the
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Structure and performance of individual markets and the operation of the price system.
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The basic factors of production include
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Land, labor, capital, and entrepreneurship.
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Opportunity cost is
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The best alternative that must be given up in order to get something else.
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The market mechanism may best be defined as
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The use of market prices and sales to signal desired output.
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The opportunity cost of studying for an economics test is
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best alternative use of your time
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Which of the following will cause the production possibilities curve to shift inward?
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a decrease in the size of the labor force
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A city's decision to limit smoking in public areas is an example of
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government intervention
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Which of the following can be used to correct market failure?
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laws and regulations
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A production possibilities curve indicates the
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Maximum combinations of goods and services an economy can produce given its available resources and technology.
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Which of the following correctly characterizes the shape of a constant opportunity cost production possibilities curve?
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A straight line when there is constant opportunity costs.
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Adam Smith's invisible hand is now called
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the market mechanism
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Government intervention may achieve a more optimal outcome than the market mechanism when addressing
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consumption of cigarettes
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The production possibilities curve illustrates
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The limitations that exist because of scarce resources.
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The Latin phrase ceteris paribus means
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other things remain equal
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The "guns versus butter" dilemma that all nations confront is that
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An increase in national defense implies more sacrifices of civilian goods and services.
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According to the law of increasing opportunity costs,
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Greater production of one good requires increasingly larger sacrifices of other goods.
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Which of the following is not one of the three core economic issues that must be resolved?
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what to produce with unlimited resources
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The doctrine of laissez faire is based on the belief that
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Markets are likely to do a better job of allocating resources than government directives.
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A mixed economy
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Utilizes both market and nonmarket signals to allocate goods and services.
