question

When manufactured goods are used to produce other goods and services, they are called capital goods.

answer

True

question

A nondurable good lasts less than five years when used on a regular basis

answer

False

question

Economic growth occurs when a nation's total output of goods and services increases over time

answer

True

question

The circular flow of economic activity describes an economy that is free of markets

answer

False

question

Economics is a social science because it deals with how people behave while trying to satisfy their needs and wants through relatively scarce resources

answer

True

question

Economic products consist of both goods and services that are useful, relatively scarce, and transferable to others

answer

True

question

Time is an opportunity cost when a manufacturer assigns workers to one task rather than to another

answer

True

question

The production possibilities frontier can be reached even if certain resources remain idle

answer

False

question

Capitalism is a competitive economic system in which private citizens own the factors of production

answer

True

question

Voluntary exchange is a characteristic of command economies

answer

False

question

Preferred stock represents the nonvoting ownership of a corporation

answer

True

question

Limited liability is one characteristic of the corporate form of business organization

answer

True

question

A proxy is a written promise issued by a corporation to repay borrowed money at a later date

answer

False

question

One disadvantage of a general partnership is each partner's responsibility for the acts of all other partners

answer

True

question

Cooperative can be organized to help consumers, provide services, or help producers

answer

False

question

Social security is an example of government's direct role in the economy

answer

False

question

The dividends of stockholders in a corporation are subject to double taxation

answer

True

question

A consumer cooperative can offer members prices that are lower than those charged by regular businesses

answer

True

question

A desire to buy a product is the only requirement needed for demand to exist

answer

False

question

A supply curve is a graph that shows the various quantities supplied at a single market price

answer

False

question

When more suppliers enter the markets, the market supply will typically decline

answer

False

question

The theory of production deals with the relationship between the factors of production and the output of goods and services

answer

True

question

The Law of Variable Proportions states that in the short run, output will not change as one production input is varied while the other remain constant

answer

False

question

The production function describes the relationship of changes in output to different amounts of a single input while others are held constant

answer

True

question

An increase in output as each new input is added, as in the addition of a worker, describes Stage I of the stages of production

answer

True

question

An increase in the cost of inputs can cause the supply curve to shift to the left

answer

True

question

The supply curve is likely to be elastic for products that can be made quickly without huge amounts of capital and skilled labor

answer

True

question

Economists often use an academic model to help analyze behavior and predict outcomes

answer

False

question

If the price of an item is too high in a competitive market, shortage appears until the price goes down

answer

False

question

Market situations lacking one or more of the characteristics of perfect competition are called imperfect competition.

answer

True

question

A government monopoly is a monopoly based on ownership or control of a manufacturing method or process.

answer

False

question

A private agency usually approves prices for water and electric utilities.

answer

False

question

The U.S. government intervenes in the economy to reduce the costs of imperfect competition.

answer

True

question

Non-price competition is the use of advertising, giveaways, and other promotional campaigns to win customers.

answer

True

question

Market failure can occur when resources do not move freely from one industry to another.

answer

True

question

The Sherman Antitrust Act prohibits monopolistic competition.

answer

False

question

The United States government uses taxes to reduce the effects of negative externalities.

answer

True

question

Japan experienced outstanding economic growth during the 1970s and 1980s.

answer

True

question

North Korea is one of the economically successful Asian Tigers.

answer

False

question

During the 1990s, Sweden restructured its economy to pure capitalism.

answer

False

question

The situation in which some necessities have little value while some non-necessities have a much higher value is known as

answer

Paradox of value

question

Manufactured goods needed to produce other goods and services are called

answer

Capital goods

question

To arrive at an economic decision, a decision-making grid may be used to evaluate

answer

Alternative choices of action

question

Division of labor is a characteristic of

answer

Assembly line production

question

The study of economics is important because it enables us to

answer

become better decision makers.

question

A popular model used to illustrate the concept of opportunity cost is

answer

the production possibilities frontier.

question

An economy at its production possibilities frontier is operating

answer

At full potential

question

The money used to buy the tools and equipment needed for production is known as

answer

Financial capital

question

Actions in one part of the country or world that have an economic impact on what happens elsewhere are examples of

answer

economic interdependence.

question

Study the graph. Suppose this nation starts with producing all military goods. It then decides to produce a mix of civilian and military goods represented by point B. What represents the cost in military goods given up?

answer

the vertical distance from point A to point x

question

In this passage, Adam Smith is describing the basic economic concept of

answer

division of labor.

question

According to this author, a good economic theory is one that

answer

helps solve real problems.

question

Which of the following choices best describes what this production possibilities frontier is depicting?

answer

economic growth

question

In the production possibilities frontier shown in this graph, what could cause production to move from point b to point d?

answer

increased productivity

question

In this production possibilities frontier, what could cause production to move from point a to point e?

answer

factories that are available but idle

question

This passage advises advertisers to focus on the economic concept of

answer

utility.

question

According to Alice Rivlin in the passage, if you have a rudimentary working knowledge of economic concepts, you will be

answer

able to ask questions to gain more knowledge.

question

The purpose of government in a command economy is to

answer

make major economic decisions.

question

An example of a market economy is

answer

the United States

question

Which of the following is NOT considered an economic and social goal?

answer

entrepreneurship

question

Which group of people ultimately determines the products that a free enterprise economy produces?

answer

consumers

question

The United States can best be described as having a

answer

modified private enterprise system.

question

All of the following are characteristics of a command economy EXCEPT

answer

public services are available at little or no cost.

question

A market economy

answer

does not provide for everyone's basic needs.

question

The minimum wage is an example of a federal law that supports

answer

economic equity.

question

The concept of voluntary exchange means

answer

people freely and willingly engage in market transactions.

question

The government's role in a mixed economy is that it is the

answer

regulator charged with preserving competition.

question

According to Adam Smith, what directs the choices business people make about how to use their resources?

answer

profit

question

In the economic system described in this passage, answers to the basic economic questions would be determined by

answer

habit and custom.

question

This cartoonist would like government to

answer

interfere with business less.

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