Unit 1: Basic Economic Concepts

Every choice results in a foregone best alternative, which economists call the

Which of the following is a direct, accurate link within the circular flow?

Which of the following must exist to allow for mutual benefit from specialization and trade between two countries?

Based on this information, which country has a comparative advantage in producing wheat, and what is the opportunity cost of one bushel of wheat for that country?

A production possibilities curve that is bowed outward (concave to the origin) illustrates

Which of the following would most likely cause the production possibilities curve to shift outward?

If a nation is currently producing at a point inside its production possibilities curve, which of the following is true?

According to Say's law,

An economy is producing at a point on its PPF. If total output of consumer goods increases with no change in technology or resources, which of the following must be true?

Based on the table, what is Country B's opportunity cost of producing one unit of Good X?

Which of the following best describes the concept of marginal analysis in economics?

Which of the following would most likely shift a country's PPF inward?

A point beyond (outside) the production possibilities curve represents

Which of the following best illustrates the concept of a positive externality?

In a market economy, the "invisible hand" described by Adam Smith refers to

Based on this data, who has the comparative advantage in producing widgets?

Which of the following is a characteristic of a command economy?

If Country A can produce either 100 units of food or 50 units of clothing, and Country B can produce either 80 units of food or 80 units of clothing, which statement about trade is correct?

Which of the following statements about economic models is correct?

A country is currently operating on its production possibilities curve. If the country increases investment in capital goods today, it should expect which of the following in the future?

The law of increasing opportunity cost states that

Which of the following is a normative economic statement?

Based on the table, which country should specialize in producing Good Y?

The concept of "ceteris paribus" in economics means

A straight-line production possibilities curve indicates that

Which of the following best illustrates the economic concept of trade-offs?

The production possibilities curve (PPC) illustrates the concept of

An outward shift of the production possibilities curve can result from

Based on the data, which country has a comparative advantage in producing wheat?

If a country is producing at a point inside its PPC, this indicates

According to the law of increasing opportunity cost, the PPC is

What is Country B's opportunity cost of producing one car?

Absolute advantage means that a country can

In the circular flow model, households supply

If both countries specialize according to comparative advantage and trade, both countries

A market economy answers the question of "what to produce" through

For mutually beneficial trade, the terms of trade for 1 unit of Good X must be between

In a command economy, the question of "how to produce" is decided by

Capital, as a factor of production, refers to

A straight-line PPC implies that the opportunity cost of producing additional units of one good is

Property rights are important for a market economy because they

Economic growth can be represented on the PPC by

A nation that devotes a larger share of its resources to capital goods production will likely experience

In the circular flow, firms receive revenue from

Country X can produce either 100 units of wheat or 50 units of cloth. Country Y can produce either 80 units of wheat or 40 units of cloth. Which of the following statements is correct?

A country currently operates on its production possibilities curve producing military goods and consumer goods. If the government increases military spending without improving technology or increasing resources, which of the following will occur?

An economy is currently operating inside its production possibilities curve. Which of the following would move the economy TO a point on the curve?

Country A can produce 100 cars or 200 computers. Country B can produce 80 cars or 400 computers. If the two countries specialize and trade, which terms of trade would benefit BOTH countries?

In the circular flow model, if households increase their saving rate significantly, what is the most likely short-run impact on the goods and services market?