Econ Unit 1 pretest

People keep spending additional units of a particular resource on a want until their marginal benefit is _____________________ their marginal cost.

• decreasing with

• greater than

• less than

• not affected by

Which of these is not a scarce resource?

• oil

• coal

• sunlight

• electricity

Ben has $10 to spend on dinner. He can have a pizza delivered, drive to a burger place, or go to the grocery store to get ingredients for a fresh salad. In the end, he goes with the salad. If each meal would have cost him the same amount, what is Ben’s incentive for choosing salad?

• to eat a healthier meal

• to help the local economy

• to save gas

• to save on his telephone bill

Nick won a $1,000 lottery prize. He can't decide what he should spend the money on. For some time now, he has been planning to buy a gaming console, a bicycle, and a watch. But he also needs to save money for an overseas trip in the future.

He can give up the bicycle and the watch, but he really wants that gaming console. On the other hand, he also wants to experience a foreign culture. In the end, he decides to save the whole amount for the trip.

Which item is the opportunity cost of Nick’s trip?

• bicycle

• gaming console

• overseas trip

• $1,000

In a communist economy, all economic activities are controlled by the government. Such economies are also known as _________________________.

• command economies

• market economies

• traditional economies

For a while, Southern Brewers is the only coffee supplier in the market. Eventually, Albert Coffee enters the market and sells coffee at lower prices than Southern Brewers does. Later, Café Brites enters the same market with lower prices for coffee. Southern Brewers now charges lower prices than Albert Coffee and Café Brites do. What made Southern Brewers lower its prices?

• competition

• decrease in supply of raw materials

• government policies

• high demand from consumers

Who introduced the concept of laissez-faire?

___________________ introduced the concept of laissez-faire, which means minimal government interference in the functioning of an economy.

• Milton Friedman

• Adam Smith

• John Maynard Keynes

Which feature is characteristic of a market economy?

• Government provides basic goods.

• Self-interest motivates buyers.

• People have less economic freedom.

• People have no property rights.

Linda owns a successful clothing store. She wants to expand her business by starting another store. But she cannot do so because the government allows a person to own only one store. Which type of economy does this scenario describe?

• traditional economy

• mixed economy

• communist economy

• market economy

Which statement defines equilibrium in a graph showing demand and supply curves?

• It is the point where the demand and supply curves intersect.

• It is the point where the demand and supply curves begin.

• It is the point on the demand curve where demand is highest.

• It is the point on the supply curve where supply is highest.