Chapter 1 Review Principles of Business

Tangible products you can purchase to meet your wants and needs are called goods.

• True

• False

Answer explanation

Goods are things you can see and touch = tangible

When you decide to buy a jacket instead of a concert ticket, you are making a trade-off.

• True

• False

Answer explanation

A trade-off is not concerned with the value or cost of the item.

China is the largest producer of goods and services in the world.

• True

• False

Answer explanation

The United States is the largest producer and consumer.

The basic economic problem is

• deciding what goods and services to produce.

• having unlimited wants and needs but limited economic resources.

• identifying the goods and services available to you.

• determining how to satisfy needs and wants.

Water, trees, and minerals are examples of

• capital resources

• human resources

• natural resources

• consumer resources

Answer explanation

They are all raw materials that come from nature.

If you decide to purchase a digital copy of your favorite movie instead of a pair of jeans, the value of the jeans is the

• market price.

• profit.

• trade-off price.

• opportunity cost.

Answer explanation

Because you are considering the value of the item.

The basic economic problem results from

• opportunity cost.

• competition.

• scarcity.

• consumer choice.

Answer explanation

Scarcity is defined as not having enough resources to satisfy every need and want.

The means through which goods and services are produced are called

• economic resources.

• needs.

• spending opportunities.

• economic choices.

Answer explanation

All goods and services utilize one or more of the economic resources: Human, Capital, or Natural

All of the following are capital resources EXCEPT

• a pickup truck

• a factory

• lumber

• employees

Answer explanation

Employees are a Human Resource.

A video game is an example of a product that fulfills a need.

• True

• False

Answer explanation

Since you can live without a video game, it is a want not a need.