Economics Final Review

What is the difference between a scarcity and a shortage?

• A scarcity occurs when producers will not or cannot offer goods or services at the current prices, and a shortage occurs when there are limited quantities to meet unlimited wants.
• Scarcity is the effort that people devote to a task that meets unlimited wants, and a shortage occurs when supplies of goods or services run low.
• A scarcity occurs when supplies of goods and services are suddenly attainable, and a shortage occurs when producers will not or cannot offer goods or services at the current prices.
• A scarcity occurs when there are limited quantities to meet unlimited wants, and a shortage occurs when a good or service is unavailable.

By the end of the summer, Jason had saved enough money for college from his job as a waiter. He even had some money left over. Although he wanted both, he decided to buy a DVD player rather than a digital camera. Which of the following is the opportunity cost in this scenario?

• the DVD player
• the digital camera
• college
• the job

In a free market economy, the factor market involves which type of exchange?
 

• The goods and services that households produce are purchased by firms.
• Firms purchase factors of production from households. 
• Households purchase factors of production from firms.
• Firms loan money to households to purchase capital.

The purpose of the free enterprise system is to

• give consumers goods and services free of charge
• eliminate economic choices. 
• give consumers freedom to make economic choices
• create political campaign slogans

What are some of the basic principles of free enterprise?

• research institutions, government restriction, and stock qualifications
• profit motive, legal equality, private property rights, free contract, and competition
• interest groups, disclosure laws, public interest, and negative regulation
• absolute organizations, low prices, and quality control indexes

Which word BEST completes the following sentence? Improvements in _____ allow an economy to produce more output from the same or a smaller quantity of inputs.

• GDP
• free enterprise
• technology
  
• communication

Which of the following is NOT a key economic question?

• What goods and services should be produced?
• How should these goods and services be produced?
• Who consumes these goods and services?
• How should it be ensured that goods and services are paid for?

Which of the following is NOT a weakness of centrally planned/command economies?

• Most workers lack job security.
• Consumers’ needs are generally not met.
• Workers lack incentives to be innovative.
• Individual freedoms are sacrificed for societal goals.

Any resources that are made by humans and used to create other goods and services are called ____________. 

• services.
• production. 
• captial
• labor

Resources used to make all goods and services are the _________________. 

• production possibilities
• factors of production
• production trade offs
• opportunity costs