ECON - Unit 1 Practice Test

What is the opportunity cost of a decision?

• the series of alternative decisions that could have been made

• the best possible way the question could have been decided

• the different ways that a different person might have made the decision

• the most desirable alternative given up for the decision

What incentive motivates an entrepreneur or business owner to sell a product?

• making profits on sales

• putting others out of business

• pleasing the consumer

• popularity of the product

All economic systems can be classified as a _____________ economy?

• command

• market

• mixed

• traditional

What does the process of specialization do for an economy?

• It eliminates unemployment.

• It fosters competition.

• It makes it more efficient.

• It makes it easier to control.

The resources used to make all goods and services are the ___________________________.

• 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 are goods and services to be paid for?

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

• services

• production

• capital

• labor

The lack of which of the following represents a scarcity?

• orange juice because the trucks carrying it are on strike

• enough workers to finish two jobs because there’s a limited supply of workers

• enough workers to work at night because the pay is too low

• grapefruit juice because very few people want to buy it

What is the function of an economic system?

• to make sure all people have equal access to goods

• to produce and distribute goods and services

• to give all producers the same access to consumers

• to make sure people are paid for their labor

Why does even a free market (capitalist) economy need some government intervention?

• to provide for things that the marketplace does not address

• to ensure that the government has the freedom to tax as necessary

• to make sure that the government can fulfill its needs for military personnel

• so that the government has some control over factor resources