Unit 2: Opportunity Cost, Economic Systems, and Supply and Demand – Review
Help1. Attending college can be viewed as a form of (Points: 1)
investment in which costs are borne today and benefits are received in the future
investment in which benefits are received today and costs are borne in the future
consumption, because learning is an enjoyable activity
leisure, because learning is an enjoyable activity
2. A medium of exchange must be called: (Points: 1)
approved by the government
socially acceptable in exchange for goods and services
easy to reproduce
used to eliminate specialization and the division of labor
3. Society’s production possibilities frontier (Points: 1)
helps explain the immense complexity of the real economy
demonstrates that, although resources are scarce for individuals, there is no problem of scarcity for society as a whole
is based on unrealistic assumptions and therefore has no value as an economic tool
is based on simplifying assumptions, but is still useful for illustrating scarcity, opportunity cost, and economic growth
4. On a production possibilities frontier, the opportunity cost of one more unit of a commodity per time period is measured by the (Points: 1)
monetary price of the commodity
amount of the other commodity that must be sacrificed
amount of unemployed resources that must be used
amount of satisfaction it gives consumers
5. Pure capitalism and a pure command system represent (Points: 1)
two different ways of answering the basic economic questions
two names describing the same method of answering the basic economic questions
the only two ways of answering the basic economic questions
the most efficient ways to answer the basic economic questions
6. In what way is consumer demand different from consumer wants? (Points: 1)
Demand is only for necessities.
Demand is only for luxuries.
Demand takes into account the ability to pay.
Consumer wants are only for luxuries.
7. In the case of a normal good, an increase in consumers’ incomes would shift the (Points: 1)
supply and demand curves inward
demand curve inward
demand curve outward
supply curve inward
8. Larger quantities of any good will be supplied at higher prices because (Points: 1)
consumers will be more satisfied
higher prices attract resources from other uses
people are naturally lazy and have to be bribed to give up their leisure
price and quantity supplied are inversely related
9. If there is a shortage in the market for athletic shoes, (Points: 1)
the price should rise to eliminate the shortage
inventories of athletic shoes will grow
demand will decrease to restore equilibrium
firms will reduce production to restore equilibrium
10. Which of the following is correct when a price is set below a market’s equilibrium price? (Points: 1)
quantity demanded exceeds quantity supplied at the set price
quantity demanded is less than quantity supplied at the set price
quantity demanded is equal to quantity supplied at the set price
at the set price there is a surplus
