Standard 1: Scarcity and Economic Reasoning

Which statement explains the reason for scarcity?

• Problems arise in getting products from producers to consumers
• Population always grows faster than production
• People's wants exceed the resources available
• Governments buy too many goods and services. leaving little for consumers

In explaining the concept of scarcity, economists make which of the following assumptions? 

• People's wants exceed the ability of resources to satisfy them
• Opportunity costs arise only when someone spends money
• The market is always in equilibrium
• People's wants are basically fixed 

Which of the following are scarce? 

• time for recreation
• clean air
• information
• all of the above

Opportunity cost

• does not relate to the use of one's time.
• is a change in prices.
• is defined as the amount of money spent to buy something.
• is the highest valued alternative given up whenever someone makes a choice.

Susan wants to play softball and work after school. She cannot do both, so she decides to play softball. What is her opportunity cost? 

• Playing softball
• Working 
• Being with her friends
• There is no opportunity cost because she spends no money 

Jenny has saved some money from babysitting and she now wants to spend some of the money. She either wants to buy a new cell phone or a new Ipad. She decides to buy the phone so what is her opportunity cost? 

• cell phone
• Ipad
• new clothes
• savings

A company or person who accepts less of one thing to have more of something else is 

• making a trade-off.
• eliminating scarcity. 
• balancing demand and supply. 
• exchanging with other people.

What are the three factors of production? 

• Profits, prices, and markets
• Natural, human, and capital resources
• Economic wants, scarcity, and entrepreneurship
• Goods, services, and capital

Which of the factors of production are used in producing and selling a hat? 

• Only capital and human resources
• Natural, capital, and human resources
• Only human resources and entrepreneurship
• Only capital and natural resources

When economists refer to capital resources, they are describing 

• the workers and managers who produce goods and services.
• money in banks.
• fertile soil, mineral deposits, forest and similar sources of raw materials. 
• factories, equipment, and machinery used for producing goods and services.