Chapter 1 Test ~ What is Economics?

Which of the following is not an example of a want?

• A cell phone

• A certain type of car

• Water

• Tickets to a concert

What term refers to objects that exist to satisfy people’s needs and wants?

• Services

• Goods

• Human capital

• Factors of production

Which of the following is not an example of a need?

• Air

• Shelter

• Food

• Microwave oven

Economics is the study of how people do what?

• Calculate their income tax

• Choose from limited resources to satisfy their needs and wants

• Respond to war and drought

• Gain knowledge and skills from study and experience

Why must people make choices to satisfy their needs and wants?

• Because of shortages

• Because of scarcity

• Because of opportunity cost

• Because of the guns or butter trade-off

Which of the following is not an example of a service?

•  A barber that cuts hair

•  A dentist that repairs broken teeth

• A teacher that educates children

• A flat screen television

What term refers to actions that people perform for others in order to satisfy needs and wants?

• Services

• Trade-offs

•  Capital

• Entrepreneurs

Which of the following is not an example of a good?

• A CD player

• A bakery

• A pair of shoes

• A basketball

Which of the following explanations describe shortages?

• Producers cannot or will not supply goods and services at current prices.

• People build objects to use in the production of other goods and services.

• People use the factors of production to create new businesses.

• People have to make choices because there are limited amounts of resources to satisfy needs and wants.

What term refers to the fact that there is a limited amount of resources to satisfy unlimited wants?

•  Shortages

• Capital

• Scarcity

• Opportunity cost