Chapter 1.1, 1.2, 1.3

Econ prequizzes

What are the three factors of production?

Land, labor, capital

Which of the following is a benefit that a business is likely to attain from purchasing new equipment?

Increased productivity

Why are entrepreneurs important to the economy?

They promote economic growth.

A sales clerk represents which factor of production?

Labor

Why is there scarcity even in an affluent country like the United States?

Resources are limited but wants are unlimited.

What are economists referring to when they say "choosing is refusing"?

Opportunity cost

Because of scarcity, every decision involves a

trade-off

A basketball coach is performing a cost/benefit analysis in order to determine if more hours of practice would help the team score more points. The coach's action is an example of

marginal thinking

The phrase "guns or butter" expresses the idea that

government decisions involve trade-offs between military and domestic needs.

An opportunity cost is

the best alternative that is given up when a decision is made.

If Capeland switches from producing 0 watermelons to producing 18 million tons of watermelons, what does it give up?

6 million pairs of shoes

Point b on the graph above represents

an underutilization of resources.

In 1991, for a short time, Iraq invaded Kuwait and seized its oil fields. During that time, what impact, if any, did the invasion have on Iraq's production possibilities frontier?

The production possibilities frontier shifted to the right.

A country has two main products: hats and grapes. The country decides to start making more and more hats and fewer and fewer grapes. Why does the opportunity cost of making hats increase as more and more hats are produced?

The best resources for producing grapes are least suited to making hats.

Which of the following courses of action makes the MOST sense in today's world for manual laborers who have been replaced by robots?

Seek training in the latest technology related to a type of work they enjoy.