Economics Final Exam Review

1. Definition: value of the next best alternative.

• a. Trade Off
• b. Opportunity Cost
• c. Scarcity
• d. Incentive

2. Mary is weighing her options for spending her time after school. She decides to attend basketball practice. In making this choice, she chose not to spend that time doing homework, spending quality time with her friends, and studying for her Econ final; these forgone options are her

• a. trade offs.
• b. opportunity cost.
• c. scarce resources.
• d. incentives.

3. Scarcity forces people to make

• a. better use of their time.
• b. higher quality factors of production.
• c. trade offs.
• d. better use of incentives.

4. Studying incentives helps economists

• a. use the laws of supply and demand.
• b. teach students how to do their finances.
• c. manipulate people into buying more products.
• d. understand how people make decisions and use their scarce resources.

5. Which type of economy is known for using the barter system?

• a. Command Economy
• b. Market Economy
• c. Mixed Economy
• d. Traditional Economy

6. Which type of economy relies entirely on the “invisible hand” to guide the decisions of buyers and sellers to the benefit of the entire economy?

• a. Command Economy
• b. Market Economy
• c. Mixed Economy
• d. Traditional Economy

7. Which type of economy allows the government to control all the means of production?

• a. Command Economy
• b. Market Economy
• c. Mixed Economy
• d. Traditional Economy

8. Which type of economy best describes the United States?

• a. Command Economy
• b. Market Economy
• c. Mixed Economy
• d. Traditional Economy

9. When Luis goes to the public dog park, he notices that there is excrement everywhere. This phenomenon is best explained by

• a. the Tragedy of the Commons.
• b. market economies.
• c. scarcity.
• d. inferior goods.

10. Kiley went to school to become a nurse. She attained her degree and clinical experience. Kiley has invested in which factor of production?

• a. Physical Capital
• b. Human Capital
• c. Labor
• d. Land