Chapter 1
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
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8.
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20.
Any resources that are made by humans and used to create other goods and services are called
An example of a shortage is limited amounts of
The resources used to make all goods and services are the
All of the following are types of decisions that can be made at the margin EXCEPT
The purpose of a production possibilities graph is to
An efficient economy is one that
The law of increasing costs means that when an economy increases the production of one item
The government of a country must make a decision between increasing military spending and subsidizing wheat
farmers. This kind of decision is a
The opportunity cost of a decision can be examined by using a
Production possibilities frontiers curve when they are charted on a graph because they show
Why are all goods and services scarce?
What is the opportunity cost of a decision?
Which of the following is the kind of decision that can be made at the margin?
What is a factory building an example of?
The government of a country must make a decision between spending money on a hospital or spending the same
amount on border security. What kind of decision is this?
How would you describe an economy that uses its resources to make the greatest possible number of goods and
services?
What does a production possibilities frontier show?
The lack of which of the following represents a scarcity?
Which of the following makes someone an entrepreneur?
A country’s production possibilities increase because the available workers become more skilled at using a
computer. This is an example of growth caused by
21. Drawing Conclusions Explain how the introduction of physical capital, in the form of a computer, could
benefit a family. Are there also some ways in which a computer might not benefit a family?
22. Examining as an economist: Using what we have discussed in class identify the positive and negatives for the
following event using appropriate economic terms.
It appears that the Cincinnati Reds will be playing at least one home playoff series for the first time in over
fifteen years. Explain the positive and negative effects, using correct economic terms, this will have on the
local economy.
OR
Your favorite band has announced they will be playing a concert U.S. Bank Arena this coming fall. Explain
the positive and negative effects, using correct economic terms, this will have on the local economy.
Chapter 1
Answer Section
MULTIPLE CHOICE
1. ANS:
TOP:
2. ANS:
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3. ANS:
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4. ANS:
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20. ANS:
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ESSAY
C
DIF: Medium
REF: 4
capital
C
DIF: Medium
REF: 4
shortage
B
DIF: Medium
REF: 4
factors of production
D
DIF: Medium
REF: 10
thinking at the margin
C
DIF: Medium
REF: 13
production possibilities graph
C
DIF: Medium
REF: 15
efficiency
A
DIF: Medium
REF: 17
law of increasing costs
A
DIF: Medium
REF: 8
guns or butter, trade-off
A
DIF: Medium
REF: 9
opportunity cost, production possibilities graph
C
DIF: Medium
REF: 14
production possibilities frontier
B
DIF: Medium
REF: 4
scarcity
D
DIF: Medium
REF: 9-10
opportunity cost, trade-off
A
DIF: Medium
REF: 10
thinking at the margin
B
DIF: Medium
REF: 4
physical capital
A
DIF: Medium
REF: 8
guns or butter, trade-off
A
DIF: Medium
REF: 15
efficiency
D
DIF: Medium
REF: 14
production possibilities frontier
B
DIF: Medium
REF: 4
scarcity
C
DIF: Medium
REF: 6
entrepreneur
C
DIF: Medium
REF: 18
technology, production possiblities frontier
OBJ: 1.1.1.3
OBJ: 1.1.1.2
OBJ: 1.1.1.3
OBJ: 1.1.2.3
OBJ: 1.1.3.1
OBJ: 1.1.3.2
OBJ: 1.1.3.2
OBJ: 1.1.2.1
OBJ: 1.1.3.1
OBJ: 1.1.3.2
OBJ: 1.1.1.4
OBJ: 1.1.2.2
OBJ: 1.1.2.3
OBJ: 1.1.1.3
OBJ: 1.1.2.1
OBJ: 1.1.3.2
OBJ: 1.1.3.1
OBJ: 1.1.1.2
OBJ: 1.1.1.4
OBJ: 1.1.3.3
21. ANS:
The computer allows many activities that were not possible before, such as completing homework, paying bills,
collecting recipes, and creating holiday cards with the computer. It also allows the use of the Internet for both
school and personal needs. Family members will all become more knowledgeable computer users, and their
productivity should increase. The trade-offs may include family members spending less time with each other
and less time doing other things.
DIF: Hard
REF: 4-5
TOP: physical capital, trade-off
22. ANS:
Answers will vary.
OBJ: 1.1.1.3, 1.1.2.1