1. Def of Econ
Opp Cost
Decision
Making
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2. List the factors of production

3. Land, Labor, Captiol

4. a. hiring more workers to do a job
Which of the following is an example of using physical capital to save time and money?
a. hiring more workers to do a job
b. switching from oil to coal to make production cheaper
c. building extra space in a factory to simplify production
d. lowering workers’ wages to increase profits

5. c

6. What does an economist mean by the term land?
a. farmland only
b. goods and services that are produced from land.
c. all natural resources used to produce goods and services.

7. c. all natural resources used to produce goods and services.

8. Economics is the study of how people calculate their income taxes
Economics is the study of how people
calculate their income taxes
choose from limited resources to meet their needs
respond to war and drought
gain knowledge and skills from study and experience

9. choose from limited resources to meet their needs

10. What is the difference between a shortage and scarcity?
a. A shortage can be temporary or long-term, but scarcity always exists.
b. A shortage results from rising prices; scarcity results from falling prices.

11. a. A shortage can be temporary or long-term, but scarcity always exists.

12. a. the most desirable alternative given up as a result of a decision.
Opportunity cost is
a. the most desirable alternative given up as a result of a decision.
b. any alternative we sacrifice when we make a decision.
c. all of the alternatives we sacrifice when we make a decision.

13. the most desirable alternative given up as a result of a decision.

14. Every decision involves trade-offs because
everyone’s resources are limited
some people have more money than others
some decisions are made for business, others for society

15. a) everyone’s resources are limited

16. Economists use the phrase “guns or butter” to describe the fact that
a. a person can spend extra money either on sports equipment or food.
b. a person must decide whether to manufacture guns or butter.
c. a nation must decide whether to produce more or less military or consumer goods.

17. c. a nation must decide whether to produce more or less military or consumer goods.

18. the market price that the business can obtain for a dress.
For a business producing shirts and dresses, the opportunity cost of a dress is
the market price that the business can obtain for a dress.
the cost of the labour and raw materials used in making the dress.
the shirts that could have been produced with the resources used to make the dress
the total cost of all the resources used to make one dress.

19. c

20. What is the opportunity cost of buying a new car?
What is the opportunity cost of buying a new car?
The value of other goods and services you could have purchased with the money you spent on the car
The price you paid for the car
The cost of operating and maintaining the car
The difference between the price of the car and the price of a used car

21. The value of other goods and services you could have purchased with the money you spent on the car

22. When you decide how much more or less to do, you are____________________

23. thinking at the margin

24. _________________are all the alternatives that we give up whenever we choose one course of action over others

25. Trade-offs

26. Why does scarcity mean that people must choose?

27. Scarcity describes the situation in which people have limited resources but nearly unlimited wants. In other
words, people cannot satisfy all their wants with their limited resources. They must choose which goods
and services to buy.

28. What does TINSTAAFL mean?

29. There is no such thing as a free lunch

30. How is a family budget an exercise in managing scarcity?
A family budget is a plan for managing income and spending.
A family budget can be scarce and must be improved.
A family budget requires detailed planning.

31. A family budget is a plan for managing income and spending.

32. An economy using its resources to produce the maximum number of goods and services is described as
trading off
efficient.
growing.

33. efficient.

34. production possibilities frontier maximum possible production line.
The line on a production possibilities curve showing the relationship amounts of two types of goods produced using all resources is called the
opportunity cost line
production possibilities frontier
maximum possible production line.

35. production possibilities frontier

36. a reduction in the rate of unemployment
Which of the following will not shift a country's production possibilities frontier outward?
a reduction in the rate of unemployment
an increase in the size of the available labor force
an advance in technology
an increase in production costs

37. d) an increase in production costs

38. An increase in production costs A decrease in natural resource prices
Which of the following would cause an outward shift of a country's production possibilities curve?
An increase in production costs
A decrease in natural resource prices
An increase in consumer demand
An increase in immigration

39. An increase in immigration

40. A decrease in the size of the active labour force.
Which of the following would lead to an inward movement of a county's production possibility frontier?
A decrease in the size of the active labour force.
A slower growth of spending on new capital equipment
A slower rate of technological progress.
A decrease in unemployment.

41. A decrease in the size of the active labour force.