Question 1

Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume.This primarily addresses the economic question of:

Accepted Answer

The question of what goods and services a society should produce is directly addressed by the community's decision to pass a sales tax increase to fund education. It implies that the community values education as a good or service that should be produced and prioritized over other goods they typically consume, indicating a choice between different allocation possibilities.

Question 2

The problem of determining for whom to produce exists because:

Accepted Answer

This is because resources are limited and cannot satisfy all of the wants and needs of consumers. When a firm decides to produce a good or service for a particular group of consumers, it means that it cannot produce for another group at the same time. This creates the problem of determining for whom to produce.

Question 3

The fundamental economic questions that every economic system must answer are:

Accepted Answer

The three fundamental economic questions are what goods and services to produce, how to produce them, and for whom to produce them. These questions are all encompassed within the options presented in choice A.

Question 4

The problem of determining how goods and services should be produced is a problem of deciding:

Accepted Answer

The problem of determining how goods and services should be produced is primarily concerned with finding the most efficient combination of available resources to produce goods and services. This involves deciding on factors such as what inputs to use, how to allocate resources, and how to organize production processes. While ownership of resources is also an important consideration, it is not the primary focus of this particular problem. Import and export levels are also important, but they are not the central issue being addressed here.

Question 5

A free good is different from a scarce good because it is:

Accepted Answer

A free good is a good that is not scarce, meaning it is easily available and there is no opportunity cost associated with its use. A scarce good, on the other hand, is a good that is limited in quantity and has an opportunity cost associated with its use. Therefore, choice C is the correct answer since a free good is not scarce.

Question 6

The problem of determining what goods and services society should produce:

Accepted Answer

The problem of determining what goods and services society should produce exists because there are not enough resources to provide all the goods and services that people want to purchase. This is known as scarcity, which means that there are limited resources but unlimited wants and needs. As a result, society must decide what goods and services are most important to produce and distribute.

Question 7

The problem of determining what goods and services society should produce exists because:

Accepted Answer

The problem of determining what goods and services society should produce exists because resources are scarce. If resources were plentiful, there would be no need for society to make choices about how to allocate them. However, since resources are limited, society must make decisions about how to use them most effectively.

Question 8

An answer to the question "For whom" determines:

Accepted Answer

The answer to the question "For whom" determines who gets the goods and services produced, as it addresses the distribution and allocation of resources and production outputs. The other options may have some influence, but they are not the primary focus of the question.

Question 9

The problem of determining how goods and services should be produced exists because:

Accepted Answer

The problem of determining how goods and services should be produced exists because most goods can be produced with different combinations of resources. This leads to the question of which combination of resources is the most efficient and cost-effective way to produce the good or service. This decision affects the allocation of resources and the productivity of the economy as a whole.

Question 10

The Case in Point on the oil extraction suggests that one reason oil may become more costly is that :

Accepted Answer

As oil becomes harder to extract, more valuable resources and alternatives may need to be sacrificed, increasing costs.

Question 11

In the 1930s, the federal government established the social security system to provide a minimum level of income to elderly and disabled people.This primarily addressed the economic question of:

Accepted Answer

The establishment of the social security system addressed the economic question of "For whom shall the goods be produced?" as it focused on providing a minimum level of income to elderly and disabled people.

Question 12

One question that arises when determining for whom goods and services should be produced is:

Accepted Answer

The question of for whom goods and services should be produced ultimately comes down to issues of distribution and allocation, which involve determining who gets what share of the economic pie.

Question 13

Whenever a choice is made:

Accepted Answer

The opportunity cost of a choice is the highest-valued other choice that could have been made. Therefore, the best choice is the one with the lowest opportunity cost. Choosing the option with the highest opportunity cost means giving up the most valuable alternative, which is not the optimal decision.

Question 14

The answer to, "What goods are to be produced ?" deals with:

Accepted Answer

The question specifically asks about the kinds and quantities of goods and services being produced, which falls under the category of production decisions. The other options deal with distribution, consumer behavior, and resource allocation, which are not directly related to the question being asked.

Question 15

An answer to the question "How are goods produced?" determines:

Accepted Answer

How goods are produced depends on how resources (land, labor, and capital) are combined in the production process. This determines the efficiency and effectiveness of production, which in turn affects the types and quantities of goods and services produced. The other options do not directly relate to the production process.

Question 16

The statement that "there is no such thing as a free lunch" means:

Accepted Answer

The statement "there is no such thing as a free lunch" means that every economic choice involves a tradeoff, sacrificing one alternative for another. This is because resources are limited and must be allocated to different uses. Therefore, choice B is the best choice as it accurately reflects the meaning of the statement.

Question 17

The three fundamental economic questions of what, how, and for whom:

Accepted Answer

The three fundamental economic questions of what to produce, how to produce, and for whom to produce exist because of scarcity. Scarcity exists because resources are limited while human wants and needs are unlimited. Therefore, every society must make choices about what goods and services to produce, how to produce them, and who will receive them. This dilemma is a central problem in economics.

Question 18

A free good is:

Accepted Answer

A free good is a good that has no opportunity cost, meaning it is available in abundance and does not require any resources to acquire it.

Question 19

In the 1970s, the Organization of Petroleum Exporting Countries (OPEC)tripled the price of petroleum, causing automobile manufacturers to look for ways to produce more fuel-efficient cars by substituting aluminum and plastic for steel.This was primarily a response to the economic question of:

Accepted Answer

The decision by automobile manufacturers to substitute aluminum and plastic for steel was primarily a response to the economic problem of how goods and services should be produced, specifically how to produce more fuel-efficient cars in response to the increased price of petroleum.

Question 20

The Case in Point on oil extraction implies that the environmental damage associated with future oil extraction is likely to :

Accepted Answer

The Case in Point specifically mentions that future oil extraction is likely to require more environmentally invasive procedures, such as deep-sea drilling, tar sands extraction, and fracking, which could result in increased environmental damage. None of the other answer options are supported by the article.

Quiz 1: Economics: the Study of Choice