Economics quiz on Chapters 1 and 2

In a voluntary exchange between two people,

• both people lose.

• one person’s gain is other’s loss.

• both people believe that they are benefiting

• no one really benefits or loses.

In a market economy, what organizes and coordinates the production of goods and services?

• Scarcity

• Voluntary Exchange

• Banks

• All of the above

1. Which of the following would not be a service

• A haircut

• A pair of eye glasses

• A visit to a doctor

• Advice from a lawyer

Opportunity cost

• does not relate to the use of one’s time.

• is only related to money

• is defined as the amount of money spent to buy something.

• is the best alternative given up whenever someone makes a choice.

Which of the following is not one of the basic choices that people in all societies must make:

• What things to produce

• Who will receive the good and services that are produced

• How should things be produced

• What to do with extra resources

The circular flow model shows all of the following, except

• people earning money by exchanging their factors of production

• households exchanging with businesses in product markets or and resource markets

• consumers earning income by helping to produce goods and services

• businesses selling resources to house holds

The circular flow is simplified picture of our economy in which

• exchange depends on production

• production depends on exchange

• both a and b

• neither a or b

In a Free Enterprise system

• Everyone has the right to vote in election

• Goods are so plentiful that they are free

• Everything is controlled by government

• Individuals may start any lawful business

Competition can take many forms, but there will be no competition at all without

• Markets

• Scarcity

• Businesses

• Money

In resource market businesses compete against

• One another

• Households

• Private owners of resources

• No one