Question

name
chapter 1: what is economics?
test b (continued)
directions: use the graph below to answer questions 13 and 14.

1. the graph shows how many new schools and new roads a city can

build using all of its resources. what trend does the graph show?
a. as more new schools are built, the number of new roads increases.
b. as more schools are built, the number of new roads decreases.
c. as the number of new roads decreases, the number of new schools
also decreases.
d. the number of new roads has no effect on the number of schools.

1. if the city builds 15 new roads, how many new schools can it build?

a. 0
c. 2
b. 8
d. 5

1. why are goods and services scarce?

a. some goods cost more than others.
b. resources used to produce them are limited.
c. people want more than they can have.
d. greedy people want too many goods.

1. which is an example of thinking at the margin?

a. figuring out what you will give up and what you will gain by
hiring a new worker
b. thinking about whether or not to go on a vacation to a warm beach
c. drawing plans to build an extra room on an old home
d. deciding whether to have a dog or a cat as a pet

Explanation:

1. In a production - possibilities curve, there is a trade - off. When more of one good (new schools) is produced, less of the other good (new roads) can be produced due to limited resources.
2. By looking at the graph (assuming the current curve), when the miles of roads is 15, the number of schools is 2.
3. The scarcity of goods and services is mainly because the resources used to produce them are limited.
4. Thinking at the margin involves considering the additional costs and benefits. Figuring out what you will give up and gain by hiring a new worker is an example of marginal thinking.

Answer:

1. B. As more schools are built, the number of new roads decreases.
2. C. 2
3. B. Resources used to produce them are limited.
4. A. figuring out what you will give up and what you will gain by hiring a new worker