Economics Final Exam

What flows from businesses to households through the resource market?

• expenditures

• revenue

• income

• labor

Answer explanation

Labor flows from households to businesses through the resource market.

Income flows from businesses to households, which exchange productive resources such as labor for income, through the resource market.

Expenditures made by households are transformed into revenue for businesses through exchanges in the product market.

Expenditures made by households are transformed into revenue for businesses through exchanges in the product market

Why does the basic economic problem of scarcity exist?

• Because resources are unlimited and our wants are limited.

• Because resources are limited and our wants are unlimited.

The inability of society to satisfy all human wants because of limited resources is called?

• surplus

• deficit

• opportunity cost

• scarcity

Which should always be considered when making a rational decision?

• Marginal benefits and marginal costs

• The real dollar amounts of the items

• Whether to use fiscal or monetary policy

• How many opportunity costs there are

Which of the following is an example of division of labor?

• host

• waiter

• cook

• dishwasher

• all of these are examples

Which of the following questions is NOT one of the basic economic questions that must be asked in the production of goods?

• How to produce?

• When to produce?

• For whom to produce?

• What to produce?

The opportunity cost of moving from point A to point B is:

• 4 units of computers

• 7 units of computers

• 26 units of textbooks

• 39 units of textbooks

The opportunity cost of moving from point B to point A is:

• 4 units of computers

• 7 units of computers

• 26 units of textbooks

• 39 units of textbooks

Which statement BEST explains the roles of businesses and households in the Resource (factor) market?

• Both households and businesses sell resources.

• Both households and businesses buy resources.

• Households buy resources, while businesses sell resources.

• Households sell resources, while businesses buy resources.

Entrepreneurs seeking to start a new business face risk because of which of the following?

• the amount of personal time and money that is required

• the significant barriers to entry for most markets

• the amount of outside investment that is required

• the price-setting power held by existing firms in most markets