Mastering Market Economies and Capitalism
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Questions and Answers

What is the most important characteristic of market-based economies?

  • Private property rights (correct)
  • Efficient outcomes
  • Individual consumers
  • Limited resources
  • What is the term used in economics to describe the value of the best alternative not chosen?

  • Opportunity cost (correct)
  • Explicit cost
  • Implicit cost
  • Incremental cost
  • Which type of cost is the money paid when a choice is made?

  • Implicit cost
  • Incremental cost
  • Explicit cost (correct)
  • Opportunity cost
  • What is the total of explicit costs and implicit costs called?

    <p>Opportunity cost (B)</p> Signup and view all the answers

    What do economists like to say every choice has?

    <p>A cost (B)</p> Signup and view all the answers

    Which term is often used interchangeably with opportunity cost in economics classes?

    <p>Cost (C)</p> Signup and view all the answers

    What is the basic assumption in Microeconomics about how people make choices?

    <p>People act in their own best interest (C)</p> Signup and view all the answers

    Which of the following is NOT considered a resource in economics?

    <p>Money (A)</p> Signup and view all the answers

    What is human capital?

    <p>The skills and knowledge of a worker (B)</p> Signup and view all the answers

    Which of the following is an example of physical capital?

    <p>Machines (D)</p> Signup and view all the answers

    What is the role of an entrepreneur in the economy?

    <p>To take risks and produce goods or services (C)</p> Signup and view all the answers

    What is opportunity cost?

    <p>The value of the next best alternative that is forgone (D)</p> Signup and view all the answers

    What are the three basic economic questions that every society must answer?

    <p>What to produce, how to produce, and for whom to produce (D)</p> Signup and view all the answers

    Which economic system relies on custom and culture to answer the basic economic questions?

    <p>Traditional economy (C)</p> Signup and view all the answers

    Which of the following is the best definition of scarcity?

    <p>The problem of limited resources and unlimited wants (D)</p> Signup and view all the answers

    What is the main difference between scarcity and shortage?

    <p>Scarcity is a problem of unlimited wants and limited resources, while shortage is when items sell out at the current price (B)</p> Signup and view all the answers

    Which of the following is NOT one of the 3 productive resources?

    <p>Money (C)</p> Signup and view all the answers

    What is the term used to describe resources that come from nature?

    <p>Land (C)</p> Signup and view all the answers

    Which of the following is an example of labor as a resource?

    <p>Work done by people (A)</p> Signup and view all the answers

    What is the relationship between scarcity and price?

    <p>The more scarce an item is, the higher its price tends to be (D)</p> Signup and view all the answers

    What is the main problem that scarcity poses for people?

    <p>Limited resources are insufficient to fulfill people's wants (D)</p> Signup and view all the answers

    If the total benefit of going to the movies is larger than the total cost, what would a rational person do?

    <p>Go to the movies (D)</p> Signup and view all the answers

    What is the term often used to refer to the satisfaction that comes from consuming a good or service for consumers?

    <p>Utility (A)</p> Signup and view all the answers

    What is the term often used to refer to the money brought in by selling a good or service for businesses?

    <p>Revenue (C)</p> Signup and view all the answers

    What does the Production Possibilities Curve (PPC) illustrate?

    <p>Different combinations of two goods that can be produced with fixed resources (D)</p> Signup and view all the answers

    What does the opportunity cost on a PPC graph represent?

    <p>The cost of producing one good in terms of the other good that must be given up (A)</p> Signup and view all the answers

    If an economy produces at point 2 instead of point 1 on a PPC graph, what is the opportunity cost of 6 additional units of consumer goods?

    <p>13 units of capital goods (A)</p> Signup and view all the answers

    What is the term often used to refer to the satisfaction that comes from consuming a good or service for businesses?

    <p>Revenue (D)</p> Signup and view all the answers

    What is the term often used to refer to the money brought in by selling a good or service for consumers?

    <p>Utility (A)</p> Signup and view all the answers

    If the total cost of going to the movies is larger than the total benefit, what would a rational person do?

    <p>Not go to the movies (B)</p> Signup and view all the answers

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