Question 1

Which of the following best describes the concept of opportunity cost?

Accepted Answer

The highest-valued alternative that must be given up to engage in an activity.

Question 2

Suppose Ford can produce either 100 gasoline-powered F-150s or 100 electric F-150 Lightnings per day with its current resources. If Ford decides to produce 20 more electric F-150s, it must produce 20 fewer gasoline-powered F-150s. What is the opportunity cost of producing 20 more electric F-150s?

Accepted Answer

$$20$$ gasoline-powered F-150s$

Question 3

A production possibilities frontier (PPF) that is bowed outward (concave to the origin) illustrates which economic concept?

Accepted Answer

Increasing marginal opportunity costs

Question 4

If an economy experiences technological improvement in the automobile industry but not in the tank industry, how will the PPF shift?

Accepted Answer

The PPF will shift outward only along the automobile axis.

Question 5

Which of the following statements about points on, inside, and outside the PPF is correct?

Accepted Answer

Points on the PPF are efficient and attainable.

Question 6

Suppose you can pick 20 pounds of apples or 20 pounds of cherries in a week, while your neighbor can pick 30 pounds of apples or 60 pounds of cherries. Who has the comparative advantage in picking apples?

Accepted Answer

You

Question 7

Which of the following best explains why both parties can benefit from trade, even if one party has an absolute advantage in both goods?

Accepted Answer

Because trade allows both parties to consume outside their individual PPFs.

Question 8

If Jack is much faster at cooking and only a little faster at laundry compared to Jill, who should specialize in which task according to comparative advantage?

Accepted Answer

Jack should specialize in cooking, Jill in laundry.

Question 9

Which of the following is NOT considered a factor of production?

Accepted Answer

Money

Question 10

In the circular-flow diagram, what do households provide to firms?

Accepted Answer

Factors of production

Question 11

Which of the following is a key function of entrepreneurs in the market system?

Accepted Answer

Bringing together the factors of production to produce goods and services

Question 12

According to Adam Smith, what mechanism allows individual self-interest to benefit society as a whole?

Accepted Answer

The invisible hand

Question 13

Which of the following is necessary for a successful market system, according to the study materials?

Accepted Answer

Protection of private property and enforcement of contracts

Question 14

Suppose a country moves from a centrally planned economy to a free market system. What is the most likely long-term outcome based on historical evidence?

Accepted Answer

Rising living standards

Question 15

If the opportunity cost of producing one more unit of a good increases as more of that good is produced, what does the PPF look like?

Accepted Answer

It is bowed outward (concave to the origin).

Question 16

Which of the following best describes a product market?

Accepted Answer

A market for goods and services

Question 17

If a country can produce more of both wheat and corn than another country using the same resources, but has a lower opportunity cost for wheat, what should it do according to the principle of comparative advantage?

Accepted Answer

Specialize in wheat and trade for corn

Question 18

Which of the following is an example of a real-world application of the market mechanism?

Accepted Answer

Hundreds of firms producing components for an iPad without knowing the final product

Question 19

Which of the following is NOT a characteristic of a free market?

Accepted Answer

Centralized economic planning

Question 20

Suppose the government enforces property rights and contracts. What is the likely effect on the market system?

Accepted Answer

It increases the incentive for households and firms to participate in the market.

Trade-offs, Comparative Advantage, and the Market System: Core Concepts in Macroeconomics

Guida di studio - Domande di pratica

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