EPF 1st Semester Exam Review

Front

Connor is starting a bakery and needs to make some important decisions. Which of the following is not one of the three basic economic questions he should consider?
How will it be produced?
For whom will it be produced?
What will be produced?

Back

What will be charged?

Answer explanation

The three basic economic questions are: What will be produced? How will it be produced? For whom will it be produced? 'What will be charged?' is not one of these fundamental questions.

Front

Which of the following is, or could be, an example of a traditional economy? North Korea, Spain, a small rural community, The Soviet Union

Back

A small rural community

Answer explanation

A small rural community typically relies on traditional practices, such as farming and barter, making it a clear example of a traditional economy. In contrast, North Korea, Spain, and the Soviet Union have more complex economic systems.

Front

Which of the following has a command economy: The United States, Spain, England, North Korea?

Back

North Korea

Answer explanation

North Korea has a command economy, where the government makes all economic decisions. In contrast, the United States, Spain, and England have market economies, where supply and demand dictate production and pricing.

Front

Abby runs a small bakery and notices that the government rarely interferes with how she sets prices or chooses suppliers. What does this approach most closely mean in economic policy?

Back

Government allows markets to operate with minimal intervention

Answer explanation

The government's minimal interference in Abby's pricing and supplier choices indicates a laissez-faire approach, allowing markets to operate freely without heavy regulation.

Front

Which country is best described as having a mixed market economy? Options: The Soviet Union under full state control, Norway combining markets and welfare policies, A small rural village with barter trade, North Korea with centralized planning only.

Back

Norway combining markets and welfare policies

Answer explanation

Norway is best described as having a mixed market economy because it combines free market principles with significant government intervention and welfare policies, unlike the other options which represent more extreme economic systems.

Front

Jahazel is planning a community event and has a limited budget and time. Which statement about scarcity in Jahazel's situation is false? Scarcity means resources are limited, not infinite; Scarcity makes it challenging to allocate resources well; Scarcity forces choices about using time or money; Scarcity implies society’s wants and resources are limitless.

Back

Scarcity implies society’s wants and resources are limitless

Answer explanation

The statement 'Scarcity implies society’s wants and resources are limitless' is false because scarcity indicates that resources are limited, leading to the need for choices in allocation.

Front

Cartier is deciding how to spend his Saturday afternoon. He can either practice tennis or spend time with a friend. Which option correctly identifies the opportunity cost in this situation?

Back

Practicing tennis means you lose time with a friend; the lost time is the opportunity cost.

Answer explanation

The correct choice highlights that by practicing tennis, Cartier loses the opportunity to spend time with a friend. Therefore, the lost time with the friend is the opportunity cost of choosing tennis.

Front

In economics, the term marginal means additional. True or False?

Back

True

Answer explanation

The term 'marginal' in economics refers to the additional benefit or cost associated with producing one more unit of a good. Therefore, Cartier's inquiry about making one more cup of lemonade aligns with this definition, making the statement true.

Front

If buying a new phone leads to more costs than benefits, is Ku'von's decision likely poor?

Back

True

Answer explanation

True. If the costs of buying the phone outweigh the benefits, it indicates a poor decision. Evaluating the balance of costs and benefits is crucial in making sound purchasing choices.

Front

If Adriana must work an extra shift to afford the friends’ trip, what is the marginal benefit described?

Back

Extra enjoyment from time with close friends

Answer explanation

The marginal benefit of choosing the friends' trip is the extra enjoyment from time spent with close friends, which outweighs the cost of working an extra shift.