Economics Unit I Quiz Questions for Review

Economics Unit I Quiz Questions for Review

Economics Unit I Test Quiz Questions for Review A factor of production that includes natural resources Land

A factor of production that includes the tools, equipment, and factories used in the production of goods and services Capital A factor of production that includes people

and their efforts, abilities and skills Labor Factor of production that involves risk takers in search of profits Entrepreneurship

Condition that arises because society does not have enough resources to produce all the things people would like to have Scarcity An alternative choice

Trade-off Diagram representing various combinations of goods and services an economy can produce when all resources are fully employed

Production Possibilities Frontier The cost of the next best alternative when a choice is made Opportunity Cost

Location or other mechanism that allows buyers and sellers to exchange economic products Market Basic requirement for survival

Needs Works that are performed for someone Services Which of the following is not a basic economic question?

a. What to produce b. When to produce c. For whom to produce d. How to produce What is the fundamental problem of economics? a. Scarcity b. Capital

c. The factors of production d. Labor Which of the following is not a capital good? a. b. c. d.

A bulldozer at a construction site A cash register at a clothing store An oven at a bakery A television for sale at an appliance store 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 cost

Imagine you decide to purchase a $50 iPod charger for your car. Which of the following is an opportunity cost of your decision? a. The time you spent deciding to spend your money on the iPod charger b. Something else you wanted that could have been bought with your $50 c. $50 in cash

d. The time spent making the purchase and the tax paid on the bill Productivity goes up whenever a. More resources are discovered b. The same output is produced with fewer inputs c. There is movement along the production

possibilities frontier d. The product gains additional utility One of Adam Smiths most important contributions dealt with competition and the concept of a. Welfare capitalism b. The invisible hand

c. Unintended consequences d. Conspicuous consumption If you are making decisions at the margin, you are a. Selecting either all or nothing at all b. Confused about what to do c. Comparing the extra benefit to the extra cost

d. All of the above Which of the following is an example of an incentive? a. Money b. A speeding ticket c. Extra credit grades d. All of the above

The study of economics is important because it enables us to a. Memorize past events b. Predict future economic needs c. Become better decision makers d. Become good shoppers

For a consumer, the most important reason for a purchase is a. Price b. Color c. Entertainment value d. Utility Which statement is the best example of thinking

at the margin? a. John has six shirts and is trying to decide whether to buy a seventh b. Mary observes that the cost of shoes is higher than last year c. David decides to volunteer this summer instead of working for pay d. Jane wants to buy a car but decides she cant

afford the insurance What is the best title for the following list: innovator, strategist, risk-taker a. Capitalist b. Entrepreneur c. Investor d. Laborer

What does it mean to maximize utility? a. To become as efficient as possible b. To gain the most satisfaction possible c. To strengthen a national infrastructure d. To strengthen the skills of the workforce Which scenario best illustrates the law of

diminishing marginal utility? a. A car breaks down more as it gets older b. A collector of china figurines is eager to get a new one c. Someone who doesnt listen to music does not care about getting a new iPod d. A new toy is less exciting to a child with many toys than to a child with just a few

Toilet paper truck drivers go on strike. Delivery of toilet paper to Giant is nearly stopped. Scarcity or shortage? Shortage

A newly discovered Leonardo Da Vinci painting is discovered. It is expected to sell for $20 million. Scarcity or shortage? Scarcity Nursing schools are not graduating enough

qualified nurses to fill open positions at many hospitals. Scarcity or shortage? Shortage I want an iPhone 6 but dont have enough money to get one.

Scarcity or shortage? Shortage There just arent enough hours in a day to complete all the work I have to do! Scarcity or shortage?

Scarcity Which factor of production is it? Tractor Capital Which factor of production is it?

Pizza Delivery Guy Labor Which factor of production is it? A forest Land

Which factor of production is it? Electric car inventor Entrepreneurship Which factor of production is it? A savings bond

Capital (financial) Suppose Country A produces 3,000 bicycles. Estimate the maximum number of pairs of shoes it can produce with current resources. 40,000 pairs of shoes Estimate the opportunity cost of increasing shoe production

from Point A by 10,000 pairs. Loss of 100-250 bicycles Estimate the opportunity cost of increasing shoe production from Point B by 10,000 pairs Loss of 2,000 bicycles D. C.

Government data show that the country is currently producing at the level of 2,000 bicycles and 30,000 pairs of shoes. Mark that point on the graph and label it C. Evaluate the efficiency of the economy at Inefficient use of resources this point. Suppose you are an adviser for economic development. Your nation is currently employing all of its labor and resources. The govt wants to increase production to 4,000 bicycles and 40,000 pairs of shoes

per year. Mark that point D. Can a govt do that? Not possible at the moment Societys way of coordinating the production and consumption of goods and services Economic System

People have to rely on others for most of their goods and services they want Economic Interdependence The condition that exists when one party can produce a good or service

using fewer resources than another Absolute Advantage Development of skills or knowledge, becoming an expert in a particular activity

Specialization The direct exchange of goods and services without money Barter

Income earned from sale or rent of a factor of production Factor Payment The condition where one party can produce a good or service at a lower opportunity cost than another

Comparative Advantage The fairness with which an economy distributes it resources and wealth Economic Equity

Economic system in which the means of production are mostly privately owned and operated for profit Free enterprise system

Economic system where decisions are made by the government Command economy An economic system in which economic decisions are left up to

individual producers and consumers Market economy An economic system in which both the government and individuals play important roles in production and consumption

Mixed economy The allocation of separate tasks to different people Division of Labor

An economic system in which decisions about production and consumption are based on custom and tradition Traditional economy

Willingly trading one item for another in which both parties expect to gain Voluntary exchange The three fundamental economic questions are what to produce, __________________________to

produce, and for whom to produce. a. Why b. How c. When d. Where Which of these economic goals is most important in a traditional economy?

a. Growth b. Stability c. Freedom d. Efficiency Which kind of economy is most common today? a. Command b. Market

c. Mixed d. Traditional A variety of goods and services is characteristic of a. A traditional economy b. A market economy c. A command economy

d. All economic systems The American economic system can be described as having a. A command economy b. Quota system c. Traditional system d. Free enterprise system

Which of the following is NOT considered an economic goal a. Economic efficiency b. Price stability c. Economic growth d. Entrepreneurship

Under capitalism, an incentive to work, save, and invest is due to a. The Social Security system b. Voluntary exchange c. Consumer Sovereignty d. The ability to own private property In which of the following economic systems is

the factors of production privately owned? a. b. c. d. Mixed Command

Traditional Communist In a market economy, what is the governments role? a. b. c.

d. Decides what goods are manufactured Owns and operates major industries Encourage competition among businesses Sets prices on goods and services Which is the best example of a transfer payment?

a. Social Security Check b. Police officers paycheck c. Fee for renting a park facility d. Moving expense reimbursement There is a country in which the government owns all the industries, businesses, and farms. The government sets production and wages. The

government provides all education, childcare, and medical care for all the people. What type of economy does this describe? a. Traditional b. Command c. Mixed d. Market

Which is the best example of specialization? a. A surf shop lowers the price on swimsuits. b. A dry cleaner spends extra time on grease spots. c. An assistant in a tailoring shop only replaces zippers. d. An online clothing outlet offers customized monograms.

In a voluntary exchange, why do people give something up? a. to increase their self-sufficiency b. to get something they want more c. to allocate scarce resources fairly d. to comply with state requirements

By using the distribution of labor, people benefit because a. it increases how fast things are created b. it increases the quality of things created c. it increases peoples standard of living d. all of the above are correct How is it that specialization increases trade?

a. By making people only able to do one thing, therefore needing to trade for others b. By making people able to make multiple things, then needing to trade them away c. By making people desire all the goods in the world that they can make themselves d. By making people specializing in only wanting to trade one product

Which of the following is not a strength of a market economy? a. It can adjust to change over time b. It gives producers and consumers a great deal of freedom c. It has decentralized decision-making d. It supports all of its people equally

All of the following are weaknesses of a command economy except that it a. Requires a large decision-making bureaucracy b. Provides few incentives for people to work hard c. Lacks the flexibility to deal with minor problems

d. Can change direction drastically in a short time Which of the following is likely to occur in a traditional economy a. A new factory opens to produce computer chips b. A father teaches his son how to clear land for

crops c. A new clothing fashion increases the profits of textile mills d. A large government agency decides to build more warships What type of economy collapsed in the communist bloc countries of Eastern Europe and

the Soviet Union? a. A traditional economy b. A command economy c. A market economy d. A free enterprise economy Who would you most likely find participating in a market economy?

a. A government official deciding how much wheat to plant this season b. A teenage girl deciding how to spend the extra money she earned working overtime c. A hunter deciding where to hunt to provide his family with a meal that night d. A worker deciding to leave his job early because the production quota has been met

Which of the following is not a major economic goal of the U.S.? a. Economic interdependence b. Economic security c. Economic growth d. Economic efficiency

Economic goals are important because they a. Tell us what and how to produce b. Answer the for whom to produce question c. Serve as benchmarks that help people determine if an economic system meets their needs d. Tell the government what kinds of regulations are needed

Which is an example of economic growth? a. When a new ball bearing plant opens, 1,500 jobs are created b. The price of vegetables increase sharply in the spring c. An employer is fined for refusing to hire women to fill new job openings

d. A man decides to quit working as a waiter and begin a career in marketing Why is economic growth an important goal of the United States? a. Americans have a strong sense of fairness b. Economic growth leads to price stability c. Americans have discovered that economic

growth is the only way to achieve economic equity d. Economic growth is needed to better satisfy the wants and needs of a growing population What are the origins of the seven major economic goals of the U.S.? a. An official list prepared by the federal

government b. The results of elections c. A combination of the beliefs and statements of American consumers, business people, and government officials d. Passages from the major documents of Americas history, including the Constitution

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