Unit 1-5 Test Prep

Identify the cause of scarcity

• having only limited resources to meet seemingly unlimited wants

• spending too much money to buy tools and equipment

• a society that allows non-necessities to have more value than necessities

• markets where producers sell their goods and services to consumers

A production possibilities curve illustrates all the

• technological changes that help to increase production

• choices a person can make between items

• economic choices a society can make

• combinations of two goods or services that can be produced

An assembly line can increase a factory's productivity because it allows workers to

• diversify their skills

• use a wide range of knowledge

• focus on a specific task

• put in overtime hours on the job

Alex and Dylan both wash cars and change oil. Currently, each man washes and changes oil all by himself, but the process takes a long time. They would MOST LIKELY improve their efficiency if

• Alex washes cars while Dylan changes oil

• Alex washes Dylan’s car while Dylan washes Alex's car

• Alex and Dylan reduce the number of cars they wash

• Alex and Dylan wash a car and change the oil together

Susan offers to trade her old iPod for Claudia’s cell phone and Claudia accepts. Assuming both products work perfectly, we can conclude that

• Claudia is now happier than Susan

• neither party has gained because the exchange was fraudulent

• both people have gained because the exchange was voluntary and non-fraudulent

• Susan places the same value on cell phones as she does for iPods

Because command economies have a high degree of government interaction, they are better suited to meet which economic goals?

• freedom and growth

• efficiency and freedom

• growth and efficiency

• stability and equity

In a typical market economy, producers are allowed to choose which products they wish to make and the amount of those products they will produce. Consumers are allowed to choose which producer they will purchase from and how many they will buy. This MOST DIRECTLY supports the broad economic goal of

• freedom

• equity

• security

• stability

Government agencies inspect restaurants on a regular basis to insure the restaurants are obeying health and food safety regulations. What economic effect does this have on the restaurants?

• they charge higher prices to cover the costs of the time and resources used in meeting the regulations

• more food is produced because the regulations make the restaurant more productive and efficient

• restaurants make more profits because the government takes fewer taxes when they meet regulations

• the price of food is usually lower because the regulations force restaurants to use cheaper ingredients

Investing heavily in new capital equipment and technology is MOST related to

• supply and demand

• opportunity costs

• economic growth

• economic freedom

Which headline would MOST LIKELY be found in a country that will experience future economic growth?

• “Country experiences population reduction.”

• “Government to offer new educational opportunities.”

• “Inflation rate hits new highs.”

• “Central bank to raise interest rates.”