2023 Economics Test 1

You bought two CDs with your last $30 instead of going to the movies with your friends. What is the opportunity cost?

• the difference between the cost to make the CDs and the price you paid
• the $30 that you gave the clerk for the CDs
• the movie with your friends that you now cannot afford
• the joy of knowing you are the first to have these CDs

Which of the following is physical capital?

• a college degree
• a factory building
• learning to sew
• playing the violin

Which group lists the key principles of the free enterprise system?

• profit motive, legal equality, consumer protection, public interest
• profit motive, legal equality, private property, voluntary exchange
• private property, taxation, public interest, patriotism
• profit motive, private property, eminent domain, voluntary exchange

A free market system has fewer _____ than a mixed economy does.

• product markets
• factor markets
• business regulations
• voluntary exchanges

Which would a company do to increase its human capital?

• build a company cafeteria
• hire more part-time workers
• pay for employees’ education
• lease cars for employees

If a student volunteers at a nursing home after school, which of the following might be a negative externality?

• A student might volunteer to spend more time with the residents.
• A student might learn a new skill.
• A student might be unable to work at her part-time job on that afternoon.

Why does every decision involve trade-offs?

• Incomes are not equal.
• Resources are limited.
• Decisions are all different.

Which of these economic goals is concerned with using resources wisely and reducing waste?

• economic security
• economic equity
• economic freedom
• economic efficiency

The law of increasing costs means that as production shifts from one item to another,

• the cost of production gets cheaper and cheaper.
• the cost of producing an item stays the same no matter how many are produced.
• more and more resources are necessary to increase production of the second item.
• the land costs of increasing production rise much more steeply than do the labor costs.

As a factor of production, the instruction provided by a teacher is considered—

• labor
• resources
• capital
• physical capital