Econ Final Review

The circular flow model of a market economy shows

• how profits are made
• what inputs are required for what outputs
• how many firms can support the needs of how many households
• the interactions between households and  firms in the free market

What do businesses provide for consumers according to the circular flow model?

• goods and services
• only goods
• only services
• taxes

Goods and services are sold in the ___ market

• Factor

• Product

• Illegal

• Black

The economic problem is that

• resources are limited and wants are limited.

• resources are unlimited and wants are limited.

• resources are limited and wants are unlimited.

• resources are unlimited and wants are unlimited.

The production possibility curve shows

• alternative combinations of two goods that an economy is capable of producing.

• the actual levels of production of two goods that the economy is achieving.

• alternative combinations of productive resources that can be used to produce two goods.

• the total value of two goods produced in one time period.

If an economy is producing at a point inside its production possibility curve, then

• consumption is greater than production.

• productive resources are not used to their full potential.

• production of capital goods is inadequate.

• it cannot benefit by specialisation and trade.

When "wants are greater than the resources available to satisfy them," it is called...

• Scarcity

• Needs

• Opportunity Cost

• None of these answers

Because of scarcity, people are forced to make _________ about how to use resources.

• Choices

• Opportunities

• Houses

• Desires

For the law of demand, as price rises, what happens to quantity demanded?

• it goes up
• it goes down
• it stays the same
• it is not effected

For the law of supply, as price rises, what happens to quantity supplied?

• it goes up
• it goes down
• it stays the same
• it is not effected