WKU ECON 202--Wilson Quiz 1

An arrangement that allows buyers and sellers to exchange things is called:

A market

The above graph depicts the mythical country of Sandwichia's production possibility frontier. Sandwichia would have to experience significant technological progress or massive saving and investment before it could feasibly choose to produce at:

Point E

From above graph, the opportunity cost of producing an extra jar of jelly in Sandwichia is highest at:

Point B

The _______ the opportunity cost of doing something, the _______ likely it will be done

Higher, less

To think at the margin means to consider

How a small change in one variable affects another variable

The 3 key economic questions include all of the following EXCEPT

"Where should these products be produced"

The additional cost resulting from a small increase in some activity is called the

Marginal Cost

Because resources are limited

People must make choices

If an economy is operating at a point inside the production possibilities curve,

Its resources are being wasted

The opportunity cost of going to college

Includes wages you lose by going to school instead of working

Does voluntary change create wealth (value)?

Yes, trade generally permits the trading partners to gain more of what they value; this is why they agree to the terms of the exchange

Customarily, economists classify resources into these major groups:

Land, labor, capital, and entrepreneurship

When economists assume that people are rational and respond to incentives, they mean

People act in their own self-interest

The principle that the cost of something is equal to what is sacrificed to get it is known as the

Principle of opportunity cost

Which of the following will most likely occur under a system of clearly defined and enforced private property rights?

Resource owners will gain by discovering and employing their resources in ways that are highly valued by others

Economic capital refers to:

Buildings, machinery, and equipment

Increasing opportunity cost while moving along a production possibility frontier is due to

The fact that resources are not equally productive in alternative uses

The "coincidence of wants" problem associated with barter refers to the fact that

For exchange to occur each transactor must have a product which the other transactor wants

Which of the following might be considered to be a characteristic of a planned economy?

There is no incentive for people to work hard