12 Questions
Which of the following statements accurately describes an economy's production possibilities?
An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.
In economics, what is the opportunity cost to Toyland of increasing the production of fire trucks from 200 to 350, as per Table 1?
300 dolls
What do economists consider positive statements to be?
Descriptive, making a claim about how the world is
Based on Figure 2, what points can the economy produce at?
Points A, B, C, E
What is considered the primary determinant of a country's standard of living?
The ability to produce goods and services
In economics, what is meant by the cost of something?
The opportunity given up in order to obtain that item
What is the opportunity cost of Mallory working overtime rather than watching a video with her friends?
The $24 minus the enjoyment she would have received from watching the video
In a market economy, what guides economic activity?
Prices
What does a point on a country's production possibilities frontier represent?
A combination of two goods that an economy can produce using some of its resources and technology
What happens when scientists make good assumptions?
They greatly simplify the problem without substantially affecting the answer
In the simple circular-flow diagram, who are the decision makers?
Households, firms, and government
When is an economic outcome said to be efficient?
If the economy is getting all it can from the scarce resources it has available
Test your knowledge about production possibilities and an economy's ability to produce goods and services efficiently. The quiz includes questions about the production possibilities frontier and where an economy can operate on it.
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