Question 1

Increasing the level of education in the United States will:
A)shift the production possibilities curve to the left.
B)improve the level of technology.
C)lead to increased natural resource use.
D)lead to workers possessing greater human capital.

Accepted Answer

Increasing the level of education in the United States will lead to workers possessing greater human capital. This means they will have more skills and knowledge, which can lead to increased productivity and innovation in the economy. It does not necessarily lead to a shift in the production possibilities curve or increased natural resource use, but it can improve the level of technology.

Question 2

Factors of production are:
A)the resources the economy has available to produce goods and services.
B)generally unlimited in modern economies.
C)always employed in modern economies.
D)the knowledge that can be applied to the production of goods and services.

Accepted Answer

Factors of production refer to the resources that an economy has at its disposal to produce goods and services. These resources include natural resources, human resources (labor), capital (machinery and equipment), and entrepreneurship. While some resources may be limited, the concept of scarcity implies that resources are not unlimited. Additionally, not all factors of production are always employed in modern economies. Finally, knowledge that can be applied to production is a part of the entrepreneurial factor of production.

Question 3

Any factor of production is capital if it:
A)was produced and can be used to produce other goods and services.
B)generates utility.
C)uses human effort to produce goods and services.
D)is included in financial capital.

Accepted Answer

Capital refers to any produced factor of production that can be used for the production of other goods and services. This includes physical capital such as machinery, buildings, and equipment, as well as financial capital such as money and investments. Therefore, A is the correct choice as it fits the definition of capital as a produced factor of production.

Question 4

An economic system is the set of rules that define _______ and _______.
A)resources; prices
B)who gets to vote; when elections will be held
C)market prices; factors of production
D)how an economy's resources are to be owned; how decisions about the resources are to be made

Accepted Answer

An economic system defines how an economy's resources are to be owned (private or government) and how decisions about the resources are to be made (market or central planning). Option A is partially correct as prices are a part of the economic system, but resources alone cannot define the economic system. Option B is incorrect as it refers to political systems and not economic systems. Option C is also partially correct as market prices are a part of the economic system, but it does not define the entire economic system.

Question 5

Which of the following is an example of capital?
A)a gravel truck
B)a savings account
C)a share of General Motors stock
D)a lake

Accepted Answer

A gravel truck is an example of capital because it is a physical asset used in the production of goods and services.

Question 6

Resources from nature that can be used to produce other goods and services are called:
A)money.
B)natural resources.
C)labor.
D)capital.

Accepted Answer

Natural resources are materials and substances that occur naturally, such as air, water, minerals, and land, which can be used for economic gain. These resources can be transformed into goods and services, making them an important factor in economic development. Money, labor, and capital are all important aspects of the economy, but they are not resources from nature.

Question 7

A factor of production that is produced in order to produce something else is called:
A)money.
B)labor.
C)technology.
D)capital.

Accepted Answer

Capital is a factor of production that is produced in order to produce something else. It includes tools, equipment, and machinery used in production processes. Other factors of production, such as labor and technology, are not produced specifically for the purpose of producing other goods or services.

Question 8

To be considered capital, a factor of production must:
A)have been produced.
B)occur naturally.
C)be part of a factory or building.
D)be a skill or talent possessed by a person.

Accepted Answer

Capital refers to man-made resources used in the production of goods and services, such as machinery, tools, buildings, and equipment. These resources must have been produced through a human effort, making option A the correct choice. Options B, C, and D refer to natural resources, physical assets, and human resources, respectively, which are not considered capital.

Question 9

The factors of production are:
A)money, labor, natural resources, and capital.
B)technology, human capital, and natural resources.
C)money, capital, and natural resources.
D)labor, capital, and natural resources.

Accepted Answer

The factors of production are the resources required to produce goods and services. Labor refers to the human effort put into production, capital refers to man-made resources used in production such as machinery and tools, and natural resources refer to resources supplied by nature such as land, water, and minerals. Money is not a factor of production, but rather a medium of exchange for goods and services.

Question 10

For a factor of production to be called capital it must:
A)be produced.
B)occur in the natural environment.
C)be a part of human skill.
D)be a result of a stock issue.

Accepted Answer

Capital is a factor of production that is man-made or produced. Examples include machinery, equipment, buildings, and tools. Capital is used to produce goods and services, and it is distinguished from land and labor, the other two primary factors of production.

Question 11

Human effort that can be applied in the production process is called:
A)natural resources.
B)technology.
C)labor.
D)specialization.

Accepted Answer

Labor refers to the human effort that is applied in the production process, including physical and mental contributions. Natural resources or technology do not necessarily involve direct human effort, while specialization refers to the division of labor among individuals or groups.

Question 12

An example of capital is:
A)cash.
B)a factory building.
C)money in a checking account.
D)the existing state of technology.

Accepted Answer

Capital refers to physical assets such as buildings, machinery, tools, and equipment used in the production of goods or services. A factory building is a clear example of capital because it is used to produce goods. Cash (option A) is considered a financial asset, while money in a checking account (option C) is considered part of the money supply. The existing state of technology (option D) is not considered capital, but rather a component of productivity.

Question 13

Economic resources used in the production process are called:
A)free gifts of the natural environment.
B)factors of production.
C)consumer items.
D)money capital.

Accepted Answer

Economic resources used in the production process are known as factors of production, which include land, labor, capital, and entrepreneurship. Choice A is incorrect because while some natural resources may be used in the production process, they are typically not free gifts as they must be extracted or harvested, which incurs costs. Choice C is incorrect because consumer items are goods or services produced for the purpose of consumption, not for use in the production process. Choice D is incorrect because money capital is a financial resource used to finance production, not a resource used in production itself.

Question 14

The three broad types of resources used to produce goods and services are also known as:
A)economic systems.
B)factors of production.
C)production possibilities.
D)financial capital.

Accepted Answer

The three broad types of resources used to produce goods and services are land, labor, and capital, which are also known as factors of production.

Question 15

Labor is the _____ that can be applied to production.
A)the natural environment.
B)produced resources.
C)financial assets.
D)human effort.

Accepted Answer

Labor refers to the physical and mental effort of human beings that is applied to the production of goods and services. It is one of the three factors of production, along with capital (produced resources) and land (the natural environment). Financial assets are not a factor of production since they are merely claims on existing resources.

Question 16

A factor of production that has been produced for use in the production of other goods and services is:
A)labor.
B)money.
C)capital.
D)natural resources.

Accepted Answer

Capital refers to tools, machinery, equipment, and other manufactured goods that are used in the production of other goods and services. It is a factor of production that has been produced itself and is not a natural resource or labor. Money, while important in facilitating transactions, is not considered a factor of production.

Question 17

The three broad types of factors of production are:
A)capital, labor, and natural resources.
B)money, profit, and interest.
C)stocks, bonds, and financial assets.
D)technology, human capital, and comparative advantage.

Accepted Answer

The traditional factors of production are land/natural resources, labor, and capital. Money, profit, interest, stocks, bonds, financial assets, technology, human capital, and comparative advantage are not considered as broad types of factors of production.

Question 18

The model that shows the goods and services the economy is capable of producing is the model of:
A)utility.
B)the fallacy of composition.
C)production possibilities.
D)scarcity.

Accepted Answer

The production possibilities model is a graphical representation of the maximum quantity of two goods that an economy can produce when resources are fully and efficiently employed. It is a useful tool to show the trade-offs and opportunity costs of producing one good over another due to the constraints of limited resources and technology. The model helps to illustrate the concept of scarcity and the need for choice-making.

Question 19

Capital is best considered as:
A)the natural environment.
B)a factor of production that has been produced.
C)financial assets.
D)money.

Accepted Answer

Capital refers to the factor of production that has been produced, such as tools, equipment, and machinery. It is not the natural environment (A), financial assets (C), or simply money (D).

Question 20

One of the two criteria for a resource to be considered capital is that it must:
A)occur naturally.
B)be part of a factory or building.
C)be a skill or talent possessed by a person.
D)be possible to use it to produce other goods and services.

Accepted Answer

The criteria for a resource to be considered capital is that it must be possible to use it to produce other goods and services. This means that it is not enough for a resource to occur naturally or be part of a building. Skills and talents possessed by a person may be valuable, but they do not meet the criteria for capital unless they can be used in the production of other goods and services.

Quiz 2: Confronting Scarcity: Choices in Production

Increasing the level of education in the United States will:

Factors of production are:

Any factor of production is capital if it:

An economic system is the set of rules that define _ and _.

Which of the following is an example of capital?

Resources from nature that can be used to produce other goods and services are called:

A factor of production that is produced in order to produce something else is called:

To be considered capital, a factor of production must:

The factors of production are:

For a factor of production to be called capital it must:

Human effort that can be applied in the production process is called:

An example of capital is:

Economic resources used in the production process are called:

The three broad types of resources used to produce goods and services are also known as:

Labor is the _____ that can be applied to production.

A factor of production that has been produced for use in the production of other goods and services is:

The three broad types of factors of production are:

The model that shows the goods and services the economy is capable of producing is the model of:

Capital is best considered as:

One of the two criteria for a resource to be considered capital is that it must: