Unit 1: Scarcity

Multiple Choice

Which of the following best describes scarcity?

• Having unlimited resources
  
  

• Having excess production capacity

• The condition of not having enough resources to produce desired items

• The distribution of wealth in society

Multiple Choice

What distinguishes a good from a service?

• A good is tangible and can be owned; a service is intangible and involves an activity.
• A good is intangible and cannot be touched.
• A service can be owned and transferred like a good.
• A good is always more expensive than a service.

Multiple Choice

How long must an item last to be classified as a durable good?

• Exactly two years
• At least five months

• At least three years
• Less than one year

Multiple Choice

What is a capital good?

• Money used for investments

• Tools or machinery used to produce other products

• Goods sold directly to consumers

• Products with high monetary value

Multiple Choice

According to Adam Smith, what two factors are necessary for something to have value?

• Popularity and tradition
• Quality and abundance
• Utility and scarcity
• Price and demand

Multiple Choice

Which statement best explains utility?

• The monetary worth of an item

• The capacity to be useful and provide satisfaction

• The scarcity of a product

• The transferability of goods

Multiple Choice

What explains the paradox of value regarding water and diamonds?

• a. Diamonds are more beautiful than water

• b. Water is more abundant and less scarce than diamonds

• c. Diamonds have more utility than water

• d. Water cannot be transferred like diamonds

Multiple Choice

What defines wealth in economic terms?

• The accumulation of services

• The value of all assets and liabilities

• The accumulation of tangible, scarce, utility-related products

• The total amount of money owned

Multiple Choice

Which statement about services is correct?

• Services cannot have value

• Services are always more expensive than goods

• Services can have value despite being intangible

• Services are considered part of wealth