Unit 1: Introduction to Economics Test Review

Which of the following statements is true about scarcity?

• A. Scarcity is our inability to satisfy all of our wants.

• B. Scarcity problem arises because our wants are greater than resources available.

• C. The poor and the rich both face scarcity.

• D. All of the above.

Economics is the study of how society makes _______________

• Choices

• Graphs

• Money

• News

Trade-offs

• Are the same as opportunity costs
• Can all be considered opportunity costs; it depends on an individual's choice
• Is only the next best alternative to the choice you made
• Weight the costs and benefits

All of the following are possible costs of your decision to go away to college except

• You will spend lots of time studying
• There may be a lot of social distractions
• You will become more educated
• You will be paying a lot of money

All of the following may be benefits of going to school except

• Getting an education
• Getting less sleep
• Seeing your friends
• Not sitting at home being bored

All of the following are trade-offs except

• A teenager decided to choose the smarties over the stickers, pencils, and tissues
• A teenager decides to study instead of sleeping or being on her phone
• Ford decides to make hybrids rather than SUVs
• McDonald's needs to decide how many hamburgers to buy

Which is true about scarcity?

• All resources are scarce but some are more scarce than others
• Scarcity will go away if people use their resources to their fullest potential
• Scarcity does not exist in places where people are rich
• Scarcity is not a reason why people have to make economic decisions

The term "invisible hand" was Adam Smith's way of explaining the relationship between what two groups?

• The communist government and the people

• The producers and the consumers

• The government and the people

• The United States and other countries

There are 4 _______________. They are land, labour, capital and entrepreneurship.

• Factors of Production 
• Market Economy 
• Profit 
• Economics 

Goods or services that are not necessary, but that we desire or wish for. Examples: video games, toys, concert tickets, etc.

• Demand
• Needs
• Wants
• Presents