in a typical market economy, producers are allowed to choose which products they wish to make and...

In a typical market economy, producers are allowed to choose which products they wish to make and the amount of those products they will produce. Consumers are allowed to choose which producer they will purchase from and how many they will buy. This MOST DIRECTLY

supports the broad economic goal of

1. Equity

2. Security

3. Freedom

4. Stability

Equity

Security

Freedom

Stability

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Response

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Which statement correctly describes the relationship between investment in personal

education and standard of living?

1. The higher the education level a person has, the higher the salary they are likely to make.

2. The higher the education level a person has, the less likely they are to increase productivity.

3. The higher the education level a person has, the lower the salary they are likely to make.

4. The higher the education level a person has, the more likely they are to be unemployed

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A headline reads: “High Tech Firms Begin Producing New Generation of Computers.” What basic economic question

is being addressed in this headline?

1. For whom to produce

2. When to produce

3. What to produce

4. How to produce

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What is the term for an economic system where the government makes almost all the

economic decisions?

1. Traditional

2. Capitalist

3. Command

4. Market

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Steel Beam, Inc. is looking to purchase a new steel-processing machine and factory. In the circular flow

diagram, this transaction will take place in the

1. Foreign exchange market

2. Resource market

3. Product market

4. Government controlled sector

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If Jim chooses job A, he will receive $50,000 a year, full benefits and 2 weeks of vacation. If he chooses job B he will receive $60,000 a year, full benefits and no paid vacation. Assuming Jim chooses job B, which

statement is correct?

1. Jim’s opportunity cost is everything he gave up at job A.

2. Jim’s opportunity cost is everything he gained at job B.

3. Jim has incurred no opportunity cost because the jobs were completely different.

4. Jim’s opportunity cost is the $50,000 he could have gotten at the other job.

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Which statement is true in the circular flow diagram?

1. Businesses are demanders in the product market and suppliers in the factor market.

2. Businesses and households are not components of the circular flow diagram.

3. Households are demanders in the factor market and suppliers in the product market.

4. Households are demanders in the product market and suppliers in the factor market.

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Jill is trying to decide whether or not to buy a car. If she is using rational decision making,

she should MAINLY consider

1. Whether the car will lose value over time

2. The type of insurance she will need

3. If buying the car will incur any opportunity costs

4. The marginal costs and marginal benefits 1 2 3 4

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If someone has comparative advantage in the production of a good, then

1. With a given set of resources, they produce the good at a lower opportunity cost

2. With a given set of resources, they produce more of the good than the competitors

3. They can produce more of that good than anyone else

4. They can charge more for the good because they have a higher opportunity cost.

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A production possibilities curve shows

1. All of society’s resources

2. Choices a person makes between items

3. The combination of goods that can be produced with a set of resources

4. The technological changes that improve production

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Assume the United States has absolute advantage over Singapore in the production of all goods. Which statement

about trade possibilities between the two countries is correct?

1. They can still arrange a beneficial trade if each one focuses production on a good in which they have comparative advantage

2. Since the United States has absolute advantage in all goods, it is impossible to reach a trade agreement

3. Singapore could benefit from a trade with the United States, but the United States would not benefit.

4. The terms of trade will be based on the United State’s absolute advantage. 1 2 3 4

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Julio decides to attend college after high school rather than getting a job. What is his

opportunity cost of attending college?

1. All the things he could have done in that time

2. His tuition and fees

3. The education he gains in college

4. Wages he could have earned at a job

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Which provides the greatest incentive for entrepreneurs to take risks?

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1. Interest

2. Prices

3. Profits

4. Inflation

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How does specialization relate to voluntary exchange?

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25% 25%25%25%1. Cause and effect, voluntary

exchange forces us to specialize

2. Cause and effect, specialization leads to a need for voluntary exchange

3. It has the same relationship as productivity does to growth

4. It is an inverse relationship

In the production of chocolate chip cookies sold in the commercial market, which

represents the factor of capital?

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1. The oven used to bake the cookies

2. The retailer who sells the cookies

3. The dough used to bake the cookies

4. The worker who decorates the cookies

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Which headline describes a situation that will MOST LIKELY lead to future economic

growth?

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25% 25%25%25%1. “Population increases for 4th straight year!”

2. “Study shows a shift in the production possibilities curve to the left!”

3. Government to pay for more people to attend college!”

4. “New natural resources discovered!"

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Which transaction below will take place in the product market on a circular flow

diagram?

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25% 25%25%25%1. The Pencil Company’s

paying yearly taxes.

2. Chris’ purchase of a new video game.

3. Smithville Farm’s purchase of 3 new tractors.

4. Jenny’s posting of her resume on a website.

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Growth, efficiency, and freedom are broad social goals that are typically associated

with which type of economic system?

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1. Command

2. Monopoly

3. Traditional

4. Market

Competition and free enterprise are most common in which type of economic system?

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1. Market

2. Planned

3. Communist

4. Traditional

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The factors of production are

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1. Land, labor, capital, time

2. Human resources, national resources, capital resources, and time

3. Human resources, natural resources, capital resources, and entrepreneurship

4. Consumption, investment, government spending, and net exports

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Which economic situation is characterized by unlimited wants exceeding limited

resources?

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1. Shortage

2. Surplus

3. Scarcity

4. Specialization

When a retail store dedicates more floor space to selling a new product, what is their

opportunity cost?

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25% 25%25%25%1. The chance to sell an old

product in that space

2. The income generated from selling the new product

3. The money lost while setting up the new space

4. The products that are placed in the new space

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Which describes scarcity?

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25% 25%25%25%1. A condition where

supply exceeds demand

2. Unlimited wants exceeding limited resources

3. The situation that exists when there is temporarily a shortage of a good or service

4. An unlimited demand for goods and services

Jim says “as the price of something increases, the quantity demanded

decreases.” Jim is

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25% 25%25%25%1. Incorrect, he means supply instead of quantity demanded

2. Incorrect, he means demand instead of quantity demanded

3. Correct, that is the law of supply

4. Correct, that is the law of demand

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When buyers and sellers interact in a market, what is the result?

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1. Usually a market clearing price is determined.

2. Since buyers and sellers are always changing their preferences, markets become unstable and unreliable

3. Over time, fewer and fewer goods are produced because buyers have all they want

4. Equilibrium quantities are determined and then prices are set by the government

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Which would cause a production possibilities curve to shift to the left?

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25% 25%25%25%1. A massive disease that wipes out ½ of the population

2. Giving up some of one good to produce another

3. A discovery of new resources

4. A huge population boom in a country

Joe lives in a country where the citizens decide where they want to work, what they want to buy, and how much they want to pay for items.

Based on this limited description, Joe’s country operates under what kind of economic system?

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25% 25%25%25%1. Command

2. Traditional

3. Market

4. Oligopoly

Participant LeadersPoints Participant Points Participant

A COMMAND economy is an economy where the economic questions are

answered by

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1. The government

2. A foreign country

3. Tradition

4. The consumers and producers

An entrepreneur uses which productive resources when creating a good or service?

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1. Scarcity, incentives, interdependence

2. Monetary and fiscal policies

3. Land, labor, capital

4. Technology, education, growth

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Susan offers to trade her old iPod for Claudia’s cell phone and Claudia accepts. Assuming both

products work perfectly, we can conclude that

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25% 25%25%25%1. Susan places the same value

on cell phones as she does for iPods

2. Claudia is now happier than Susan

3. Both people have gained because the exchange was voluntary and non-fraudulent

4. Neither party has gained because the exchange was fraudulent

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In order to build a skyscraper, Builders Inc. purchases land, rents out several cement trucks, and hires 400 construction

workers and 50 managers. Builders Inc. represents

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1. Entrepreneurship

2. Labor

3. Land

4. Capital

Which BEST describes scarcity?

1 2 3 4

25% 25%25%25%1. There is a limited

amount of a resource to meet an unlimited demand

2. When there is not a lot of something

3. There is limited demand for an item that is plentiful

4. What is given up when a choice is made

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Which is NOT one of the three basic economic questions that must be answered

in an economy?

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1. When to produce

2. What to produce

3. For whom to produce

4. How to produce

Sylvia purchased a product that claimed it could make her lose weight. She later found out that the company purposefully did not actually include the key ingredient in the product and it did not work. Which

terms best describe this transaction?

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25% 25%25%25%1. Voluntary and fraudulent

2. Non-fraudulent and mutually beneficial

3. Marginal and scarce

4. Rational and equitable

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Which economic situation exists directly because unlimited wants exceed limited

resources?

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1. Inflation

2. Productive resources

3. Scarcity

4. Gain from trade

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At a restaurant you may find a host, waiter, bus person, cook, and dishwasher. This is an example of the economic principles of

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1. Division of labor

2. Specialization of capital

3. Economy of scale

4. Marginal productivity

In economics rational decisions occur when

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1. Command economies answer the three basic economic questions

2. Marginal benefits equal or exceed marginal costs

3. A budget is used for spending and saving decisions

4. Suppliers lower their prices to increase demand

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In a market economy, the role of buyers and sellers is to

1 2 3 4

25% 25%25%25%1. Manipulate supply and

demand to provide the best overall benefit to everyone in society

2. Establish equilibrium prices and quantities for goods and services

3. Avoid causing inflation

4. Remove any government interaction in the market

Opportunity cost is best described as the

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25% 25%25%25%1. Monetary value of all alternatives forgone when a choice is made

2. Sum of all production costs

3. Value of the best alternative forgone when a choice is made

4. Most expensive resource used in production

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Which is a human resource that Ms. Johnson could use for her art gallery?

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25% 25%25%25%1. A security system to

protect the artwork

2. A series of paintings by a prominent local artist

3. Knowledge of trends in modern art

4. Light fixtures to help display the artwork

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