Which statement best characterizes opportunity cost?

• The amount of a good that businesses are able to produce

• The amount of money left over after expenses have been paid

• The value of a product that you give up in a tradeoff with another product

• The number of people who are ready to buy a product at a certain price

How are natural resources, labor, capital, and entrepreneurs related?

• Their demand is limited.

• Their supply is unlimited.

• Their supply is limited.

• Their demand is unlimited.

Which of the following is NOT a factor of production?

• land and natural resources

• labor

• capital

• food chain

Suppose a farmer uses skills and tools to grow strawberries on a farm, and she sells them at a market. A drought destroys the farmland which results in fewer crops. Consumers have to buy strawberries at a higher price. This situation would cause

• contraction

• expansion

• profit

• opportunity cost

system of producing, selling, and buying goods and services

• scarcity

• economy

• profit

The money an individual or business has left after paying expenses is called

• capital

• scarcity

• profit

Nations that rely on trade with one another for supplies of scarce resources experience

• expansion

• scarcity

• economic interdependence

When a factor of production is increased, the result can be a(n) _______________________ of the business.

• contraction

• expansion

• downfall

The price of a good or service is usually determined by the laws of supply and demand.

• TRUE

• FALSE

Based on this graph, what happens to the demand for a product when the price increases?

• The demand stays the same.

• The demand decreases.

• The demand increases.

• There is no demand.