Mastering Market Economies and Capitalism

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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?

Opportunity cost Signup and view all the answers

What do economists like to say every choice has?

A cost Signup and view all the answers

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

Cost Signup and view all the answers

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

People act in their own best interest Signup and view all the answers

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

Money Signup and view all the answers

What is human capital?

The skills and knowledge of a worker Signup and view all the answers

Which of the following is an example of physical capital?

Machines Signup and view all the answers

What is the role of an entrepreneur in the economy?

To take risks and produce goods or services Signup and view all the answers

What is opportunity cost?

The value of the next best alternative that is forgone Signup and view all the answers

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

What to produce, how to produce, and for whom to produce Signup and view all the answers

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

Traditional economy Signup and view all the answers

Which of the following is the best definition of scarcity?

The problem of limited resources and unlimited wants Signup and view all the answers

What is the main difference between scarcity and shortage?

Scarcity is a problem of unlimited wants and limited resources, while shortage is when items sell out at the current price Signup and view all the answers

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

Money Signup and view all the answers

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

Land Signup and view all the answers

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

Work done by people Signup and view all the answers

What is the relationship between scarcity and price?

The more scarce an item is, the higher its price tends to be Signup and view all the answers

What is the main problem that scarcity poses for people?

Limited resources are insufficient to fulfill people's wants 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?

Go to the movies 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?

Utility 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?

Revenue Signup and view all the answers

What does the Production Possibilities Curve (PPC) illustrate?

Different combinations of two goods that can be produced with fixed resources Signup and view all the answers

What does the opportunity cost on a PPC graph represent?

The cost of producing one good in terms of the other good that must be given up 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?

13 units of capital goods 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?