Economics Study Guide Review-Assessment #2

In which system would a government seize a factory and convert it to public ownership for the benefit of all?

• market economy

• mixed economy

• command economy

• traditional economy

What are the four factors of production required for industrialization?

• specialization, trade, markets, consumerism

• interest, profit, demand, disposable income

• capital, entrepreneurs, labor, natural resources (land)

• goods, services, wages, technology

Use the information to answer the question.

A student must decide between going to the movies with friends or staying home and studying for a final exam. She chooses to stay home and study.

Which economic term describes going to the movies in this scenario?

• comparative advantage

• equilibrium price

• opportunity cost

• income effect

When an automobile manufacturer builds 200,000 units of its top selling model, the company is responding mainly to which question?

• How to produce?

• For whom to produce?

• When to produce?

• What to produce?

Which statement BEST describes a defining characteristic of traditional economies?

• Production is based on cultural customs.

• Businesses work with governments to set production goals.

• Production is mandated by the state.

• Consumer demand determines production levels.

No government has the assets to supply everything its citizens might want or need. What does this basic economic fact force governments to do?

• conserve resources to enable the manufacture of more goods

• make choices among goods and services currently on the market

• increase federal taxes so that more goods are affordable in the future

• save money by cutting current spending on goods and services

Which of the following economic activities are people free to do under the free enterprise system?

• engage in predatory competition

• own a state-operated business

• not pay taxes

• start their own business

College graduates are a segment of which factor of production?

• land

• goods

• labor

• profit

The lack of enough resources to produce everything people want is which central economic problem?

• allocation

• production possibilities

• scarcity

• productivity

Which of the following is a characteristic of a market economy?

• A profit motive makes individuals more willing to accept innovation

• Property is shared communally and tradition determines exchanges.

• Citizens in a market economy are guaranteed certain basic services.

• The government allocates resources and ensures efficient production.