ECON Unit 1 Review

Choose all of the statements that are TRUE regarding scarcity.

(Select all answers that apply.)

• We have unlimited wants, but our resources are limited.

• The goods and services we want exceed our ability to produce them.

• Scarcity forces consumers, producers, and governments to make difficult choices.

• Scarcity is defined as the ability to satisfy all wants at the same time. All resources and goods are unlimited.

Resources are factors of production that are used in the production of goods and services. Select all examples of resources.

• production

• capital

• supply

• natural

• human

Which term below is a selection of an item or action from a set of possible alternatives?

• opportunity cost

• choice

• production

• consumption

Which term below is what is given up when a choice is made (the second-best alternative)?

• opportunity cost

• choice

• production

• consumption

Which term below is the using of goods and services?

• opportunity cost

• choice

• production

• consumption

Which term below is the combining of human, natural, capital, and entrepreneurship resources to make goods or provide services?

• opportunity cost

• choice

• production

• consumption

How do producers determine what will be produced?

• They pay attention to consumer preferences and available resources.

• They produce only what the government suggests they produce.

• They roll the dice and hope for the best.

Consumer _____ and ____ determine what is purchased and consumed.

• supply and demand

• income and services

• preference and price

What are the three basic questions of economics? (Select 3.)

• How will it be produced?

• When will it be produced?

• Why will it be produced?

• For whom will it be produced?

• What will be produced?

Which of the following statements are TRUE regarding a traditional economy?

(Select 2.)

• Economic decisions are based on supply and demand.

• Economic decisions are based on custom and historical precedent.

• People often perform the same type of work as their parents and grandparents, regardless of ability or potential.

• People choose their careers based on skills and preferences.