Economics Practice Quiz 129

Q1.Which of the following combinations of corn and cotton is possible according to the production possibility frontier?

A. 1 unit of corn and 9 units of cotton B. 4 units of corn and 10 units of cotton C. 2 units of corn and 8 units of cotton D. 3 units of corn and 5 units of cotton

Q2.What does a point lying strictly below the production possibility frontier represent?

A. Underemployment or wasteful use of resources B. Full utilization of resources C. Maximum production of both goods D. Efficient production

Q3.What is the term used for the cost of having a little more of one good in terms of the amount of the other good that has to be forgone?

A. Opportunity cost B. Production cost C. Marginal cost D. Economic cost

Q4.What is another name for opportunity cost?

A. Economic cost B. Production cost C. Explicit cost D. Sunk cost

Q5.In a centrally planned economy, who makes all important decisions regarding production, exchange and consumption?

A. The government or central authority B. Free interaction of individuals C. Market forces D. Private firms

Q6.What does the production possibility frontier show?

A. Combinations of two goods that can be produced with full utilization of resources B. Combinations of goods that are always produced C. The maximum profit possible D. The demand for goods

Q7.If the economy wants to produce more corn, what happens to the production of cotton?

A. Less cotton can be produced B. More cotton can be produced C. Cotton production remains unchanged D. Cotton production increases proportionally

Q8.Which of the following is a central problem of the economy mentioned in the text?

A. Choosing from one of the many production possibilities B. Maximizing profit C. Minimizing cost D. Achieving full employment

Q9.How can basic economic problems be solved?

A. By free interaction of individuals in the market or by central planning B. Only through government intervention C. Only through market forces D. By international trade

Q10.What is the primary role of the central authority in a centrally planned economy when some people get too little share of goods and services?

A. To induce individuals to produce more goods B. To intervene and achieve an equitable distribution C. To organize free market interactions D. To set prices based on demand

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Economics Practice Quiz 129