Which statement best defines the economic concept of scarcity?
Fundamental Economic Concepts
Question · Easy
A student spends an afternoon studying instead of working a $40 shift. What is the opportunity cost of studying?
A firm decides to hire one more worker only if the additional revenue the worker generates exceeds the additional wage cost. This decision rule is an example of
Question · Medium
Which of the following is classified as the factor of production called "capital"?
In a pure market economy, the central question of "What goods will be produced?" is primarily answered by
An economy is operating at a point INSIDE its production possibilities curve. This indicates that the economy is
Along a bowed-outward (concave) production possibilities curve, moving more resources into producing one good results in
Question · Hard
Country A can produce either 100 bushels of wheat or 50 barrels of oil with its resources. The opportunity cost of producing 1 barrel of oil in Country A is
A country has a comparative advantage in producing a good when it can produce that good at a
Which scenario best illustrates the role of incentives in economic behavior?
A sunk cost is best described as a cost that
Specialization and voluntary trade between two parties generally lead to
Which of the following is a normative economic statement rather than a positive one?
An economy that relies primarily on custom, religion, and inherited roles to decide what is produced and who receives it is best described as a
Entrepreneurship as a factor of production is best characterized by the function of
An outward shift of an economy's entire production possibilities curve most directly represents
The economic concept that "there is no such thing as a free lunch" is most directly an expression of
Which of the following is the best example of a capital resource being used to increase future productivity?
Two friends produce both bracelets and necklaces. Ana's opportunity cost of one necklace is 3 bracelets; Ben's opportunity cost of one necklace is 1 bracelet. Based on comparative advantage,
Which of the following best distinguishes microeconomics from macroeconomics?
The law of demand states that, holding other factors constant, as the price of a good rises,
Microeconomics
Which of the following would shift the demand curve for coffee to the right?
If a good is a normal good, a decrease in consumer income will
The law of supply states that, all else equal, as the price of a good increases, the quantity supplied
At a price above the market equilibrium price, a competitive market will exhibit
In the market for new cars, the price of steel (an input) rises sharply while consumer incomes are unchanged. The most likely result is
The price elasticity of demand for a good is calculated as the
When the demand for a good is price inelastic, a firm that raises the price of that good will experience
Which of the following best describes a recessionary (deflationary) gap in the aggregate demand and aggregate supply model?
Macroeconomics
Consumer surplus in a market is best defined as
Producer surplus is represented graphically as the area
An effective price ceiling, set below the equilibrium price, will most likely cause
A government sets a minimum wage above the equilibrium wage in a competitive labor market. The predicted result is
Which of the following is a defining characteristic of a perfectly competitive market?
A profit-maximizing firm in any market structure produces the quantity at which
Compared with a perfectly competitive market producing the same product, a single-price monopoly typically produces
An industry dominated by a few large, interdependent firms whose pricing decisions affect one another is best classified as
Monopolistic competition differs from perfect competition primarily because monopolistically competitive firms
A negative externality in production, such as factory pollution, leads a free market to
A government policy that taxes a polluting firm an amount equal to the external cost it imposes is intended to
A public good is best characterized as being
The free-rider problem helps explain why private markets tend to
In the short run, the law of diminishing marginal returns states that as more units of a variable input are added to a fixed input,
A supply shock such as a sharp rise in world oil prices is most likely to cause
Economic profit differs from accounting profit because economic profit also subtracts
In the long run, a perfectly competitive firm earns zero economic profit primarily because
The demand for labor by a firm is best described as a
In a competitive labor market, a profit-maximizing firm hires additional workers until the
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