Chapter 1 - Section III Quiz
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
____ 1. Which of the following best describes the relationship between trade-offs and opportunity costs?
a. Opportunity costs are incurred when trade-offs are made.
b. Opportunity costs are the opposite of trade-offs.
c. Trade-offs lower the opportunity costs of an economic decision.
d. Trade-offs occur when there are no opportunity costs.
____ 2. Imagine you decide to purchase a soccer ball for $35. Which of the following is an opportunity cost of your
decision?
a. the time spent deciding to spend your money
b. something else that could have been bought
c. $35 in cash
d. the time spent making the purchase and the tax paid on the ball
____ 3. Which of the following is NOT a characteristic of a production possibilities frontier?
a. It illustrates the concept of opportunity costs.
b. It is based on full employment of all resources.
c. It is used by economists as a tool for description and analysis.
d. It indicates the ideal production levels for goods and services.
____ 4. The study of economics helps people to
a. become better decision makers.
b. make wise choices for political candidates.
c. understand the free-enterprise system.
d. all of the above
____ 5. Which of the following is NOT an example of economic decision making?
a. writing a thesis c. using cost-benefit analysis
b. building simple models d. taking small, incremental steps
Matching
Match each statement with the correct item below.
a. alternative choices
b. where consumers and privately owned businesses answer the three basic economic
questions
c. the quality of life based on the possession of the necessities and luxuries that make life
easier
d. the cost of the next best alternative when a choice is made
e. diagram representing various combinations of goods and services an economy can produce
when all resources are fully employed
____ 6. opportunity cost
____ 7. production possibilities frontier
____ 8. trade-offs
____ 9. free enterprise economy
____ 10. standard of living
