Ivy Software - Fundamentals of Economics || 100% Correct
Solutions.
A government imposed and legally enforced minimum market price.
a. price ceiling
b. surplus
c. economic burden
d. price floor correct answers d. price floor
The ___________________ of any life activity is the cost of what you give up to partake in that
activity. Among a comparison of individuals, businesses or countries, the one who has the lowest
opportunity cost of an activity has a comparative advantage in that activity.
a. opportunity cost
b. comparative advantage
c. factors of production
d. entrepreneurial ability correct answers a. opportunity cost
All the productive resources of the earth may be put in one of the following four categories: land,
labor, capital, and entrepreneurial ability. In limited supply, so they must be allocated among
members of society.
a. comparative advantage
b. entrepreneurial ability
c. opportunity cost
d. factors of production correct answers d. factors of production
Includes all natural resources that are used to produce goods & services
a. land
b. labor
c. capital
d. entrepreneurial ability correct answers a. land
Includes work time and work effort that people devote to producing goods and services
a. land
b. entrepreneurial ability
c. labor
d. capital correct answers c. labor
Includes all tools, instruments, machines, buildings, and other constructions that have been
produced in the past that businesses now use to produce goods and services
a. capital
b. labor
c. land
d. entrepreneurial ability correct answers a. capital
,Includes all human resources that organize the other factors of production. Entrepreneurs come
up with new ideas about what and how to produce, make business decisions, and bear risks that
arise from these decisions
a. entrepreneurial ability
c. capital
b. labor
d. land correct answers a. entrepreneurial ability
The ________ mechanism is one way that society chooses to allocate scarce resources. The
market prices of each factor of production has been assigned a unique name by economists.
a. rent
b. price
c. interest
d. profit correct answers b. price
Unit price one pays for the use of land.
a. profit
b. wage
c. interest
d. rent correct answers d. rent
Unit price one pays for the services of labor
a. rent
b. wage
c. profit
d. interest correct answers b. wage
Unit price one pays for the use of capital
a. profit
b. interest
c. rent
d. price correct answers b. interest
Income earned (or lost) by an entrepreneur for running a business
a. profit
b. rent
c. interest correct answers d. profit
A model of an economy that shows how much of the economy can produce using all of its
factors of production efficiently.
a. Absolute advantage
b. Opportunity cost
c. Production possibilities frontier
d. Comparative advantage correct answers c. Production possibilities frontier
,The ability of an individual or group to carry out a particular economic activity (such as making
a specific product) more efficiently than another activity; the one who has the lowest opportunity
cost of an activity.
a. entrepreneurial ability
b. comparative advantage
c. opportunity cost
d. absolute advantage correct answers b. comparative advantage
True/False: When an economy fully uses its factors of production, then it ends up at a location
inside the production possibilities frontier correct answers False: it ends up at a location inside
the production possibilities frontier if it does not fully use its factors of production
True/False: When an economy does not fully use its factors of production, then it ends up at a
location inside the production possibilities front correct answers True
True/False: If an economy ends up at a location outside the production possibilities front, the
economy has not fully and efficiently used its factors of production. correct answers True;
this economy does NOT have enough factors of production to produce any bundle beyond its
production possibilities frontier.
True/False: as an economy experiences increasing opportunity cost as they increase one goods
production. correct answers True
The law of __________________ is the concept that as you continue to increase production of
one good, the opportunity cost of producing that next unit increases. This comes about as you
reallocate resources to produce one good that was better suited to produce the original good.
a. absolute advantage
b. entrepreneurial ability
c. increasing opportunity cost
d. comparative advantage correct answers c. increasing opportunity cost
The ability of an individual or group to carry out a particular economic activity more efficiently
than another individual or group; one has the lowest absolute production cost relative to those
with whom they are compared.
a. increasing opportunity cost
b. comparative advantage
c. constant opportunity cost
d. absolute advantage correct answers d. absolute advantage
When the opportunity cost of a good remains constant as output of the good increases.
a. constant opportunity cost
b. increasing opportunity cost
c. comparative advantage
d. decreasing opportunity cost correct answers a. constant opportunity cost
, The concept of ______________ states that when comparing producers, the one with the lowest
opportunity cost in the production of some good or service has a _____________ in that good or
service.
a. entrepreneurial ability
b. comparative advantage
c. opportunity cost
d. absolute advantage correct answers b. comparative advantage
An individual or a business should specialize in the production of a good or service in which
they have a:
a. absolute advantage
b. entrepreneurial ability
c. comparative advantage
d. opportunity cost correct answers c. comparative advantage
True/False: the four categories of land, labor, capital and entrepreneurial ability are collectively
called the factors of production. correct answers True
True/False: comparative advantage is the main concept demonstrated in a production
possibilities frontier. correct answers False: its opportunity cost.
True/False: if the productions possibilities frontier between reading pages of a history text and
reading pages of a biology test is linear, then the opportunity cost of reading additional pages of
history is increasing. correct answers False: it would be increasing opportunity cost if the curve
was concave (bowed-out). In this case, the linear graph is a constant opportunity cost.
True/False: the opportunity cost of something is what you give up to get it correct answers True
True/False: to have a comparative advantage in something means that you have the highest
opportunity cost relative to those with whom you are compared. correct answers False: lowest
opportunity cost
True/False: to have an absolute advantage in something means that you have the lowest absolute
production cost relative to those with whom you are compared. correct answers True
The market price of land is called:
a. wage
b. interest
c. profit
d. rent correct answers d. rent
Kim can the house in 1 hour, it takes Mike 6 hours and Jazzie 2 hours. Kim earns $100/hr, Mike
$50/hr and Jazzie $45/hr. Who has an absolute advantage in cleaning the house?
a. Kim
b. Mike
c. Jazzie correct answers a. Kim
Solutions.
A government imposed and legally enforced minimum market price.
a. price ceiling
b. surplus
c. economic burden
d. price floor correct answers d. price floor
The ___________________ of any life activity is the cost of what you give up to partake in that
activity. Among a comparison of individuals, businesses or countries, the one who has the lowest
opportunity cost of an activity has a comparative advantage in that activity.
a. opportunity cost
b. comparative advantage
c. factors of production
d. entrepreneurial ability correct answers a. opportunity cost
All the productive resources of the earth may be put in one of the following four categories: land,
labor, capital, and entrepreneurial ability. In limited supply, so they must be allocated among
members of society.
a. comparative advantage
b. entrepreneurial ability
c. opportunity cost
d. factors of production correct answers d. factors of production
Includes all natural resources that are used to produce goods & services
a. land
b. labor
c. capital
d. entrepreneurial ability correct answers a. land
Includes work time and work effort that people devote to producing goods and services
a. land
b. entrepreneurial ability
c. labor
d. capital correct answers c. labor
Includes all tools, instruments, machines, buildings, and other constructions that have been
produced in the past that businesses now use to produce goods and services
a. capital
b. labor
c. land
d. entrepreneurial ability correct answers a. capital
,Includes all human resources that organize the other factors of production. Entrepreneurs come
up with new ideas about what and how to produce, make business decisions, and bear risks that
arise from these decisions
a. entrepreneurial ability
c. capital
b. labor
d. land correct answers a. entrepreneurial ability
The ________ mechanism is one way that society chooses to allocate scarce resources. The
market prices of each factor of production has been assigned a unique name by economists.
a. rent
b. price
c. interest
d. profit correct answers b. price
Unit price one pays for the use of land.
a. profit
b. wage
c. interest
d. rent correct answers d. rent
Unit price one pays for the services of labor
a. rent
b. wage
c. profit
d. interest correct answers b. wage
Unit price one pays for the use of capital
a. profit
b. interest
c. rent
d. price correct answers b. interest
Income earned (or lost) by an entrepreneur for running a business
a. profit
b. rent
c. interest correct answers d. profit
A model of an economy that shows how much of the economy can produce using all of its
factors of production efficiently.
a. Absolute advantage
b. Opportunity cost
c. Production possibilities frontier
d. Comparative advantage correct answers c. Production possibilities frontier
,The ability of an individual or group to carry out a particular economic activity (such as making
a specific product) more efficiently than another activity; the one who has the lowest opportunity
cost of an activity.
a. entrepreneurial ability
b. comparative advantage
c. opportunity cost
d. absolute advantage correct answers b. comparative advantage
True/False: When an economy fully uses its factors of production, then it ends up at a location
inside the production possibilities frontier correct answers False: it ends up at a location inside
the production possibilities frontier if it does not fully use its factors of production
True/False: When an economy does not fully use its factors of production, then it ends up at a
location inside the production possibilities front correct answers True
True/False: If an economy ends up at a location outside the production possibilities front, the
economy has not fully and efficiently used its factors of production. correct answers True;
this economy does NOT have enough factors of production to produce any bundle beyond its
production possibilities frontier.
True/False: as an economy experiences increasing opportunity cost as they increase one goods
production. correct answers True
The law of __________________ is the concept that as you continue to increase production of
one good, the opportunity cost of producing that next unit increases. This comes about as you
reallocate resources to produce one good that was better suited to produce the original good.
a. absolute advantage
b. entrepreneurial ability
c. increasing opportunity cost
d. comparative advantage correct answers c. increasing opportunity cost
The ability of an individual or group to carry out a particular economic activity more efficiently
than another individual or group; one has the lowest absolute production cost relative to those
with whom they are compared.
a. increasing opportunity cost
b. comparative advantage
c. constant opportunity cost
d. absolute advantage correct answers d. absolute advantage
When the opportunity cost of a good remains constant as output of the good increases.
a. constant opportunity cost
b. increasing opportunity cost
c. comparative advantage
d. decreasing opportunity cost correct answers a. constant opportunity cost
, The concept of ______________ states that when comparing producers, the one with the lowest
opportunity cost in the production of some good or service has a _____________ in that good or
service.
a. entrepreneurial ability
b. comparative advantage
c. opportunity cost
d. absolute advantage correct answers b. comparative advantage
An individual or a business should specialize in the production of a good or service in which
they have a:
a. absolute advantage
b. entrepreneurial ability
c. comparative advantage
d. opportunity cost correct answers c. comparative advantage
True/False: the four categories of land, labor, capital and entrepreneurial ability are collectively
called the factors of production. correct answers True
True/False: comparative advantage is the main concept demonstrated in a production
possibilities frontier. correct answers False: its opportunity cost.
True/False: if the productions possibilities frontier between reading pages of a history text and
reading pages of a biology test is linear, then the opportunity cost of reading additional pages of
history is increasing. correct answers False: it would be increasing opportunity cost if the curve
was concave (bowed-out). In this case, the linear graph is a constant opportunity cost.
True/False: the opportunity cost of something is what you give up to get it correct answers True
True/False: to have a comparative advantage in something means that you have the highest
opportunity cost relative to those with whom you are compared. correct answers False: lowest
opportunity cost
True/False: to have an absolute advantage in something means that you have the lowest absolute
production cost relative to those with whom you are compared. correct answers True
The market price of land is called:
a. wage
b. interest
c. profit
d. rent correct answers d. rent
Kim can the house in 1 hour, it takes Mike 6 hours and Jazzie 2 hours. Kim earns $100/hr, Mike
$50/hr and Jazzie $45/hr. Who has an absolute advantage in cleaning the house?
a. Kim
b. Mike
c. Jazzie correct answers a. Kim
