Economics Final Review

At its core, economics is about solving the problem of…

• capitalism

• scarcity

• greed

• abundance

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

• services

• production

• capital

• labor

What are the most basic resources needed to make a good or service?

• production possibilities

• factors of production

• production trade-offs

• opportunity costs

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?

Why is any point under the production possibilities frontier considered an underutilization of resources?

• all of the available resources are being used

• not all of the available resources are being used

• all of the resources are being used for one product

• any point under the ppf is impossible

According to the law of demand, as prices go down, quantity demanded

• goes down

• goes up

• stays the same

• lags behind quantity supplied

A cost that does not change, no matter how much of a good is produced is known as

• a fixed cost

• a marginal cost

• a variable cost

• equilibrium

A firm will respond to excess demand by

• lowering prices

• supplying less

• raising prices

• shutting down

Which of the following is a basic principle of the law of demand?

• The higher the price, the more people will want the good.

• Everyone has a limited income that they will spend.

• When a good’s price is lower, people will buy more of it.

• Services are of interest in the same way that goods are.

The United States is considered to have a mixed economy because the economy includes

• Domestic and foreign markets for American-made goods

• Private businesses and some government regulation of business

• Agricultural and industrial production

• Public ownership of the means of production