Econ 1000 Quiz 2 UPDATED Exam Questions and CORRECT Answers
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Course
ECON 1000
Institution
ECON 1000
Econ 1000 Quiz 2 UPDATED Exam
Questions and CORRECT Answers
Three Fundamental Economic Questions - CORRECT ANSWER- 1. What to produce?
2. How to produce?
3. For whom to produce?
Goods and Services - CORRECT ANSWER- Outputs of the production process, such as
food, clothing, shelter, healthca...
Econ 1000 Quiz 2 UPDATED Exam
Questions and CORRECT Answers
Three Fundamental Economic Questions - CORRECT ANSWER- ✔✔1. What to produce?
2. How to produce?
3. For whom to produce?
Goods and Services - CORRECT ANSWER- ✔✔Outputs of the production process, such as
food, clothing, shelter, healthcare, education, and entertainment
Factors of Production - CORRECT ANSWER- ✔✔Inputs in the production process, broadly
categorized as land, labor, and capital
Production - CORRECT ANSWER- ✔✔The process by which inputs are transformed into an
output
Households - CORRECT ANSWER- ✔✔Primary role is to obtain benefits from consuming
goods and services
- Primary suppliers of labor
Firms - CORRECT ANSWER- ✔✔Primary role is to produce goods and services for
consumption by households
- Create finished goods
Production decision - CORRECT ANSWER- ✔✔What to produce?
Resource use decision - CORRECT ANSWER- ✔✔How to produce it?
Distributional decision - CORRECT ANSWER- ✔✔For whom to produce it?
, Production Possibilities Frontier (PPF) - CORRECT ANSWER- ✔✔A graphic curve used to
describe the maximum output limits on two products that compete for the same finite
resources.
Attainable output combination - CORRECT ANSWER- ✔✔Combinations which can be
produced with the help of given resources and technology
(Could be below or on PPF)
Unattainable output combination - CORRECT ANSWER- ✔✔Combinations which can NOT
be produced with the help of given resources and technology
Productive efficiency - CORRECT ANSWER- ✔✔Producing the largest possible output from
the available resources in an economy without sacrificing production of another good.
- Combination of goods fall inside the PPF -> EFFICIENT
Productive inefficiency - CORRECT ANSWER- ✔✔It is possible to INCREASE the amount
produced of some good, without sacrificing production of another good.
- Combination of goods fall below the PPF -> INEFFICIENT
Absolute advantage - CORRECT ANSWER- ✔✔The ability to produce more output than
another producer using the same amount of inputs.
Opportunity cost - CORRECT ANSWER- ✔✔Benefits that are lost when choosing one
option over another
Comparative advantage - CORRECT ANSWER- ✔✔The ability to produce a particular good
or service at a lower opportunity cost than its trading partners
Law of Comparative Advantage - CORRECT ANSWER- ✔✔This law states that when
increasing the production of a good, a society should do so by using the available productive
resource with the lowest opportunity cost
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