Passage One
Questions 57 to 61 are based on the following passage.
Resources can be said to be scarce in both an absolute and relative sense: the surface of the Earth is finite, imposing absolute scarcity; but the scarcity that concerns economists is the relative scarcity of resources in different uses. Materials used for one purpose cannot at the same time be used for other purposes; if the quantity of an input is limited, the increased use of it in one manufacturing process must cause it to become less available for other uses.
The cost of a product in terms of money may not measure its true cost to society. The true cost of, say, the construction of a supersonic jet is the value of the schools and refrigerators that will never be built as a result. Every act of production uses up some of society’s available resources; it means the foregoing of an opportunity to produce something else. In deciding how to use resources most effectively to satisfy the wants of the community, this opportunity cost must ultimately be taken into account.
In a market economy the price of a good and the quantity supplied depend on the cost of making it, and that cost, ultimately, is the cost of not making other goods. The market mechanism enforces this relationship. The cost of, say, a pair of shoes is the price of the leather, the labor, the fuel, and other elements used up in producing them. But the price of these inputs, in turn, depends on what they can produce elsewhere—if the leather can be used to produce handbags that are valued highly by consumers, the prices of leather will be bid up correspondingly.
57. What does this passage mainly discuss?
A) The scarcity of manufactured goods.
B) The value of scarce materials.
C) The manufacturing of scarce goods.
D) The cost of producing shoes.
58. According to the passage, what are the opportunity costs of an item?
A) The amount of time and money spent in producing it.
B) The opportunities a person has to buy it.
C) The value of what could have been produced instead.
D) The value of the resources used in its production.
59. According to the passage, what is the relationship between production and resources?
A) Available resources stimulate production.
B) Resources are totally independent of production.
C) Production increases as resources increase.
D) Production lessens the amount of available resources.
60. What determines the price of a good in a market economy?
A) The cost of all elements in production.B) The cost of not making other goods.
C) The efficiency of the manufacturing process.D) The quantity of materials supplied.
61. Which of the following examples BEST reflects a cost to society as defined in the passage?
A) A family buying a dog.
B) Eating in a restaurant instead of at home.
C) Using land for a house instead of a park.
D) Staying at home instead of going to school.
Passage Two
Questions 62 to 66 are based on the following passage. |
