Problem%20Set%20Chp.2

Problem%20Set%20Chp.2 - Problem Set Chp.2: The Economic...

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Problem Set Chp.2: The Economic Problem - Scarcity and Choice MULTIPLE CHOICE: Choose the one alternative that best completes the statement or answers the question. 1. Factors of production are A. the mathematical calculations firms make to determine production. B. weather and social and political conditions that affect production. C. the physical relationships between economic inputs and outputs. D. inputs into the production process. 2. Which of the following would an economist classify as capital? A. A phone that you use to make personal calls B. A computer used by an accountant in a firm C. A public corporation's employees D. A silver earring 3. In economics, capital refers to A. the finances necessary for firms to produce their products. B. factories and machines used in the production process. C. the money households use to purchase firms’ output. D. the city where firms must apply for the business license in their state. 4. The process of using resources to produce new capital is A. investment. B. consumption. C. research and development. D. economic growth. 5. As economists use the term, an act of ‘investment’ occurs when a(n) A. individual buys 100 shares of stock at $30 a share in the stock market. B. city park commission throws a party for its workers. C. family buys their groceries for the week. D. truck manufacturer builds a new plant to make more trucks. 6. Because resources are scarce, the opportunity cost of investment in capital is A. infinite. B. zero. C. forgone future consumption. D. forgone present consumption. 1
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7. The production possibilities frontier is a A. map which shows the frontier beyond which agriculture is unprofitable. B. map which shows areas of the world in which capitalist production is now possible. C. graph which shows the various combinations of resources that can be used to produce a given level of output in an efficient manner. D. graph that shows the various combinations of output the economy can possibly produce efficiently given the available resources and technology. 8. Which of the following is the most accurate statement about production possibilities? A. An economy can produce only on the production possibilities frontier. B. An economy can produce at any point inside or outside a production possibilities frontier. C. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. D. An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier. 9. When constructing a production possibilities frontier, all of the following are assumptions EXCEPT A. the economy produces only 2 goods. B. all the economy's factors of production are being used.
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This note was uploaded on 04/06/2008 for the course ECON 2005 taught by Professor Zirkle during the Spring '07 term at Virginia Tech.

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Problem%20Set%20Chp.2 - Problem Set Chp.2: The Economic...

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