Economics Final Review 1

The basic idea of choice presents which of the problems in economics?

• People get to decide what they want.

• Choice is a way of life.

• Decisions produce costs.

• Business can sell what they want.

What is the fundamental problem of economics

• Production

• Scarcity

• Labor

• Capital

In economic terms, specialization refers to-

• arranging work so that individual workers do fewer tasks then before.

• perfoming one task relatively more efficiently thatn another.

• the use of the four factors of production.

• the process of creating goods and services.

What is economics interdependence?

• the ability to produce all goods and services

• peoples reliance on each other to provide goods and services

• the result of a division of labor.

• the relationship between the four factors of production.

You are in the clothing store. You see a pair of pants and a T-shirt that you like. However, you have only enough money for one item of clothing. You decide to buy the pants. Wat is the opportunity cost of your choice?

• the price of the pants

• the difference between the price of the pants and the t-shirt

• the t-shirt

• the cost of both items of clothing

Which of the following is NOT a characteristic of a production possibilities frontier/

• It illustrates the concept of opportunity costs.

• It is used by economists as a tool for description and analysis.

• It is based on full employment of all resources.

• It indicates the ideal production levels for goods and services.

All of the following are weaknesses of a command economy EXCEPT:

• lacks the flexibility to deal with minor problems.

• can change direction drastically in a short time.

• provides few incentives for people to work hard.

• requires a large decision-making bureaucracy.

Which of these best represents participation in a market economy?

• worker deciding to leave his job early because his quota has been met.

• government official deciding how much wheat to plant this season.

• hunter deciding where to hunt to provide his family with a meal.

• teenage girl deciding how to spend the extra money she earned working overtime.

Why are entrepreneurs important in a free enterprise economy?

• Entrepreneurs start new businesses.

• Entrepreneurs do not pay taxes

• Entrepreneurs pay high wages to their employees.

• Entrepreneurs help define the seven economic and social goals.

The Law of Demand states that

• More will be purchased at low prices than at high ones.

• Less will be purchased at low prices than at high ones.

• All people have the ability, desire, and willingness to buy.

• Approximately the same amount will be purchased at higher prices.