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Unformatted text preview: AP ECONOMICS CHAPTER 2 STUDY GUIDE TB2 1. The basic economic problem is the combined existence of: A) inflation and unemployment. B) economic freedom and income equality. C) scarce economic resources and unlimited economic wants. D) growing populations and the depletion of natural resources. 2. In every economic system, choices must be made because resources are: A) infinite, but economic wants are finite. B) finite, but economic wants are insatiable. C) unlimited, but economic wants are limited. D) limited, and so are economic wants. 3. Economic resources in the capitalist system are brought together by: A) government units. B) entrepreneurs. C) corporate shareholders. D) the managerial elite. 4. The role of the entrepreneur in society is to: A) bring the factors of production together and take the risks of producing. B) provide capital to the firm which the management combines with labor. C) control the land upon which all production takes place to get the most rent. D) work with other elected officials to determine what goods are produced. 5. When an economy achieves both allocative and productive efficiency, it implies that there is: A) income equality. B) price stability. C) full production. D) fixed technology. 6. With productive efficiency: A) the state of technology, or methods used to produce output, constantly change. B) the available supplies of factors of production are variable in quantity and quality. C) there is production of any particular mix of goods and services in the least costly way. D) there is production of that particular mix of goods and services most wanted by society. 7. Society wants to use its scarce resources efficiently. To achieve this economic goal it must: A) have full employment and full production. B) have a fixed resource base and fixed technology. C) expand the use of capital goods and reduce the use of labor. D) increase the rental, interest, wage, and profit payments to the factors of production. 8. Which is one of the four simplifying assumptions made in the chapter about the construction of the production possibilities model? A) The state of technology is constantly changing. B) The number of products produced is more than two. C) The economy is fully employed and is using least-cost methods of production. D) The quantities of all resources available to the economy are not fixed, but are variable. 9. The production possibilities curve represents: A) the maximum amount of labor and capital available for production. B) combinations of goods and services among which consumers are indifferent. C) maximum combinations of products available with fixed resources and technology. D) the maximum rate of growth of capital and labor in an economy....
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This note was uploaded on 05/18/2011 for the course ECON 101 taught by Professor Mcdounough during the Spring '11 term at DeVry Westminster.

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