Questions and Answers
What is the study of economics primarily concerned with?
Choices that are made in seeking the best use of resources.
Which of the following is not considered by economists to be an economic resource?
Which of the following will not produce an outward shift of the production possibilities curve (PPC)?
What does a production possibilities curve (PPC) illustrate?
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What assumption does the construction of a production possibilities curve make?
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What is a fundamental characteristic of a market system?
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What is the regulatory mechanism of a market system?
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What does competition mean in a market context?
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In a simple circular flow model, who are the sellers of final products?
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What does it mean when an economy is operating under conditions of full employment?
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What effect will resolving unemployment have on an economy's production possibility curve (PPC)?
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What does the negative slope of the PPC indicate?
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Which of the following could lead to an inward shift of a nation’s PPC, except:
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Study Notes
Key Concepts in Economics
- Economics studies choices made to optimize resource allocation.
- Money is not considered an economic resource by economists.
Production Possibilities Curve (PPC)
- Reduction of unemployment does not shift the PPC outward.
- PPC illustrates the concept of scarcity in resource allocation.
- The construction of a PPC assumes that technology remains fixed.
- The negative slope of the PPC demonstrates opportunity cost; producing more of one commodity means producing less of another.
Market System Characteristics
- Fundamental characteristics of a market system include property rights.
- Competition acts as the regulatory mechanism within the market system.
- Independent acting buyers and sellers drive competition in each market.
Circular Flow Model
- In the simple circular flow model, businesses act as sellers of final products.
Full Employment and Resource Limitations
- Operating under full unemployment means that increasing the production of one commodity results in a decrease in another due to limited resources.
- Addressing unemployment could lead to an increase in actual output, moving closer to the economy's PPC.
Factors Affecting PPC Shifts
- An increase in skill levels within occupational groups does not cause an inward shift of the national PPC.
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Description
Test your knowledge of basic economic concepts with these flashcards. This quiz covers essential topics such as resource allocation, production possibilities, and definitions crucial to understanding economics. Perfect for beginners and students in economics courses.
