Concepts and Factors of Production

1. Which of the following best defines scarcity in economics?

• A) The unlimited wants and needs of society
• B) The limited resources available to fulfill society's wants and needs
• C) The excess supply of resources in the economy
• D) The equitable distribution of resources among individuals

2. Opportunity cost refers to:

• A) The total cost of producing a good or service
• B) The cost of the next best alternative foregone when making a decision
• C) The monetary value of goods and services produced in an economy
• D) The cost of raw materials used in production

3. How do limited resources influence economic decisions?

• A) Limited resources encourage individuals to prioritize their wants and needs
• B) Limited resources lead to an overproduction of goods and services
• C) Limited resources have no impact on economic decisions
• D) Limited resources result in an equal distribution of wealth

4:Which of the following factors of production refers to the physical and mental effort put into the production process?

• A) Land
• B) Capital
• C) Labor
• D) Entrepreneurship

5:What role does capital play in an economy?

• A) Capital refers to the money available for investment in businesses
• B) Capital represents natural resources used in production
• C) Capital includes buildings, machinery, and equipment used in production
• D) Capital refers to the skills and knowledge of workers

6: Incentives influence choices that may result in policies with different costs and benefits for various groups. Which of the following is an example of an incentive?

• A) Subsidies provided by the government to businesses
• B) Taxes imposed on individuals to fund public services
• C) Laws and regulations enforced by the government
• D) Natural disasters affecting the economy

7:Identify the factor of production that includes all natural resources used in production.

• A) Land
• B) Capital
• C) Labor
• D) Entrepreneurship

8:How do trade-offs relate to economic decision-making?

• A) Trade-offs represent the total cost of producing a good or service
• B) Trade-offs involve choosing between two or more alternatives
• C) Trade-offs have no impact on economic decision-making
• D) Trade-offs refer to the monetary value of goods and services produced in an economy

9:Which of the following best describes entrepreneurship as a factor of production?

• A) The physical and mental effort put into the production process
• B) The money available for investment in businesses
• C) The skills and knowledge of workers
• D) The ability to organize and manage resources to create new products or services

10:What is the role of incentives in influencing economic decisions?

• A) Incentives encourage individuals to prioritize their wants and needs
• B) Incentives lead to an overproduction of goods and services
• C) Incentives have no impact on economic decisions
• D) Incentives result in an equal distribution of wealth