Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | efficiency | g. | shortage | b. | goods | h. | opportunity cost | c. | trade-off | i. | underutilization | d. | production
possibilities graph | j. | labor | e. | scarcity | k. | factors of production | f. | services |
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1.
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most desirable alternative given up when people choose one course of action
over another
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2.
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limited quantities of resources to meet unlimited needs or desires
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3.
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representation of alternative ways to use an economy’s resources
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4.
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use of fewer resources than the economy is capable of using
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5.
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actions or activities that one person performs for another
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6.
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physical objects that can be exchanged
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7.
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paid effort that people devote to a task
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8.
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use of resources in a way that maximizes output of goods and services
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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9.
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Any resources that are made by humans and used to create other goods and
services are called
a. | services. | c. | capital. | b. | production. | d. | labor. |
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10.
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An example of a shortage is limited amounts of
a. | water available for irrigating a crop because it is used for other
crops. | b. | labor available because the workers have other jobs. | c. | food available
because the trucks carrying it are on strike. | d. | food available because few people want to buy
it. |
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11.
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The resources used to make all goods and services are the
a. | production possibilities. | c. | production
trade-offs. | b. | factors of production. | d. | opportunity costs. |
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12.
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All of the following are types of decisions that can be made at the margin
EXCEPT
a. | whether to grow beans or corn on a large farm. | b. | whether or not to
hire 100 new workers. | c. | whether to leave early in the morning or late
in the day for a trip. | d. | whether or not to go on a
vacation. |
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13.
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The purpose of a production possibilities graph is to
a. | enable a country to mobilize to win a war. | b. | keep an economy from
having nonproductive workers. | c. | show alternative ways to use an economy’s
resources. | d. | make it possible to increase an economy’s
output. |
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14.
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An efficient economy is one that
a. | has very few people who do not work for a living. | b. | makes the best use
of all its goods and services. | c. | uses its resources to make the most goods and
services. | d. | makes the least costly use of its resources. |
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15.
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The law of increasing costs means that when an economy increases the production
of one item
a. | the opportunity cost goes up. | b. | the actual cost of making the item goes
down. | c. | the actual cost goes up but the opportunity cost goes down. | d. | the production costs
will increase also. |
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16.
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The government of a country must make a decision between increasing military
spending and subsidizing wheat farmers. This kind of decision is a
a. | guns or butter issue. | c. | global trade-off. | b. | decision at the margin. | d. | basic economic
decision. |
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17.
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The opportunity cost of a decision can be examined by using a
a. | production possibilities graph. | c. | global trade-off
grid. | b. | factors of production chart. | d. | graph of increasing
costs. |
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18.
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Production possibilities frontiers curve when they are charted on a graph
because they show
a. | the underutilization of resources. | b. | the maximum output of goods and
services. | c. | the increasing costs resulting in increasingly less output. | d. | the technological
level of the economy’s productivity. |
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Short Answer
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Interpreting a Decision-Making Grid
Decision Making at the Margin | | Options | Benefits | Opportunity
Cost | | Work 1 hour | 1 hour pay | 1 hour of study or
recreation time | | Work 2 hours | 2 hours pay | 2 hours of study or
recreation time | | Work 3 hours | 3 hours pay | 3 hours of study or
recreation time | | Work 4 hours | 4 hours pay | 4 hours of study or
recreation time | | Work 5 hours | 5 hours pay | 5 hours of study or
recreation time | | | |
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19.
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According to the grid, which option has the greatest opportunity cost?
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20.
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According to the grid, which option has the least benefit?
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21.
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According to the grid, which option leaves the most time for recreation?
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22.
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What basic assumption is made by the grid?
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Essay
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Critical Thinking
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23.
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Drawing Conclusions Explain how the introduction of physical capital, in
the form of a computer, could benefit a family. Are there also some ways in which a computer might
not benefit a family?
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24.
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Analyzing Information Explain how an economy can work efficiently in
terms of its production possibilities but not be producing goods that are useful to it.
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