Mastering the Basics of Economics

Questions and Answers

What is the basis for making tradeoffs?

Marginal cost

Opportunity cost (correct)

Comparative advantage

Specialization

What is dynamic comparative advantage?

The ability to produce more with the same resources

The ability to gain an advantage through learning and specialization (correct)

The pursuit of trade and specialization by countries

The ability to gain an advantage through property rights and markets

What is scarcity?

A condition where resources are abundant

A condition where resources are insufficient to satisfy people's wants (correct)

A condition where resources are equally distributed

A condition where resources are unlimited

What is used to determine the level of production?

Marginal cost and benefit Signup and view all the answers

What is the fundamental economic problem?

To use limited resources to produce the items that we value most highly Signup and view all the answers

Which countries pursued dynamic comparative advantage?

Hong Kong, South Korea, and Taiwan Signup and view all the answers

What does efficient use of resources mean?

Producing goods valued most highly Signup and view all the answers

What is economics?

The study of how people make choices to cope with scarcity Signup and view all the answers

What is the function of property rights in trade?

To govern ownership, use, and disposal of resources Signup and view all the answers

How is trade organized?

Through social institutions like property rights and markets Signup and view all the answers

How is economic growth measured?

By the increase in GDP per capita Signup and view all the answers

Which of the following is NOT a category of resources?

Money Signup and view all the answers

What is the production possibility frontier (PPF)?

The boundary between attainable and unattainable combinations of goods and services Signup and view all the answers

How is intellectual property protected?

Through copyrights and patents Signup and view all the answers

What are the two factors that influence economic growth?

Technological change and capital accumulation Signup and view all the answers

What leads to gains from trade?

Specialization and comparative advantage Signup and view all the answers

What is the relationship between economic growth and scarcity?

Economic growth reduces scarcity but does not eliminate it Signup and view all the answers

What is comparative advantage?

Having a lower opportunity cost in an activity Signup and view all the answers

Why must we make choices?

Because our wants are effectively unlimited Signup and view all the answers

What causes differences in opportunity costs?

Individual abilities and resource characteristics Signup and view all the answers

What is the most accurate definition of tradeoffs?

The process of making choices and giving up one thing in order to get something else Signup and view all the answers

What is the relationship between resources and the production possibility frontier (PPF)?

Resources determine the attainable combinations of goods and services on the PPF Signup and view all the answers

Why do not all individuals excel in every activity?

Due to differences in opportunity costs Signup and view all the answers

What does comparative advantage lead to?

Specialization and gains from trade Signup and view all the answers

What is the goal of economic decision making?

To get the most out of our limited resources Signup and view all the answers

Study Notes

Economic growth does not liberate us from scarcity.
Scarcity is a condition where resources are insufficient to satisfy people's wants.
The fundamental economic problem is to use limited resources to produce the items that we value most highly.
Economics is the study of the choices people make to cope with scarcity.
Resources are grouped into four categories: labor, land, capital, and entrepreneurship.
Our wants are effectively unlimited.
We must make choices and rank our wants to get the most out of our resources.
The production possibility frontier (PPF) is the boundary between attainable and unattainable combinations of goods and services.
Tradeoffs arise in every imaginable real-world situation.
We are limited in what we can produce, defining a boundary between what we can attain and what we cannot attain.

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Description

Test your knowledge of basic economic concepts with this quiz! From scarcity to the production possibility frontier, this quiz covers the fundamental principles of economics. Challenge yourself to understand the choices we make to cope with scarcity and how we allocate resources to produce the items we value most highly. With 10 questions covering key concepts such as labor, land, capital, entrepreneurship, and tradeoffs, you'll have the chance to demonstrate your understanding of the economic world around us.