Eight Powerful Ideas MCQ
Which of the following statements about economic growth rates is TRUE?
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Correct Answer:
A slight difference in growth rates over a long period of time makes a big difference.
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Inflation is defined as ______.
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An increase in the overall price level in an economy
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In a market economy, a trade-off often exists between the size of the economic pie and how it is divided, or between ______.
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Efficiency and equality
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What type of market failure occurs when a single seller dominates a market and excludes others from participating in mutually beneficial exchange?
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In a market economy, most of the resources are owned by ______.
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Private individuals and firms
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Production of citrus crops in Florida demonstrates what concept in economics?
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Correct Answer:
Specialization
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The voluntary exchange of goods and services is called ______.
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Which of the following statements about incentives is most accurate?
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Correct Answer:
Incentives may be either positive or negative.
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In economic decision making, the difference between expected marginal benefits and expected marginal costs is known as the ______.
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Correct Answer:
Net benefit
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Economists consider the concept of need difficult to define because ______.
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It is hard to compare “needs” among people
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In economics, the idea that people make the best choice they can, based on their values, information, and circumstances, is called ______.
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Correct Answer:
Rational decision making
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In economic decision making, the term opportunity cost refers to ______.
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Correct Answer:
The value of the best alternative that was not chosen
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Which of the following items is considered an economic good?
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A person who combines the resources of labor, land, and capital to produce goods and services is called a(n) ______.
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Entrepreneur
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Office buildings, machines, and factories are all considered what type of economic resource?
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Items we value or desire that we can reach out and touch are called
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Tangible Goods
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Specializing is Concentrating on the production of _____ Goods
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Both of these
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Services are ______ items of value provided to consumers
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Intangible
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If the expected marginal benefits are greater than the expected marginal costs
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Rule of rational choice
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Rational decision making is the idea that people do the best they can, based on their values and information.
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Output per worker is called
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Productivity
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Price controls are Government-mandated ________ prices
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Minimum or Maximum
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An incentive that either reduces costs or increases benefits
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Positive incentive
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The value of the best forgone alternative that was not chosen is called
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Opportunity cost
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________ is the difference between the expected marginal benefits and the expected marginal costs
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Net benefit
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An incentive that either increases costs or reduces benefits, resulting in a decrease in an activity or behavior is called
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Negative incentive
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When the economy fails to allocate resources efficiently on its own is called
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Market failure
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Marginal thinking is Focusing on the ____ choices
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Additional or Marginal
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______ is the natural resources used in the production of goods
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Labor is the _______ effort used in the production of goods and services
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Both of these
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Goods that we cannot reach out and touch are called
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Intangible goods
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Items we value or desire are called Goods
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A benefit from consumption that spills over to those who are not consuming the good is called
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Externality
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Those who combine labor, and capital to produce services are called
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Entrepreneurs
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Entrepreneurial ability is an ability to develop new products or _____existing products and/or production processes.
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When an economy gets the most out of its scarce resources is called______.
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Efficiency
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The economy’s ability to produce more goods and services is economic _____.
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Economic goods are goods that are desirable but ____ in supply.
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______advantage that occurs when a person, a region, or country can produce a good or service at a lower opportunity cost than others.
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Comparative
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The equipment and structures used to produce goods and services is called _____.
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Bads are Items that we do not desire or want such as terrorism, smog, or poison
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