Economics Final Review, Part 1

Which of the following best defines economics?

• The study of supply and demand

• The study of microeconomics and macroeconomics

• The study of how to best allocate scarce resources amongst unlimited wants

• The study of how to best extract resources from citizens

Which of the following best defines scarcity?

• Insufficiency or smallness of supply; not enough to go around

• Something must be wanted or have value and be scarce

• Quantity demanded is greater than quantity supplied

• Quantity supplied is greater than quantity demanded

Which of the following best defines opportunity cost?

• The cost of producing a good or service

• The value of the next best alternative forgone by choosing another alternative

• The value of all alternatives forgone by choosing a single alternative

• The cost of consuming a good or service

In figure 1 shown above, at point B the trade-off (opportunity cost) is:

• 2 military bases

• 2 housing projects

• 2 military bases AND 2 housing projects

• None of the above

In figure 1 shown above, to move from point A to point B:

• Less military bases can be established

• More military bases can be established

• Less housing projects

• None of the above

Which of the following best defines factors of production?

• Resources used to produce goods and services: land, labor, capital, entrepreneurship

• Resourced used to consume goods and services: land, labor, capital, entrepreneurship

• Resources used to produce or consume goods and services

• Resources used to maximize the amount of goods produced

Which of the following best defines an economic system?

• The way a society organizes itself to decide what and how much will be produces, the way goods and services will be produced, and how the output will be distributed.

• A group of countries or regions within a country which are connected economically.

• The “invisible hand” that allows supply and demand automatically set the proper price and quantity for every good and service produced in an economy.

• None of the above

Which of the following best defines a traditional economic system?

• Political leaders organize production and distribution.

• Everyone is involved in organizing production and distribution.

• Cultural customs are used to organize production and distribution.

• None of the above.

Which of the follow best defines a command economic system?

• Political leaders organize production and distribution.

• Everyone is involved in organizing production and distribution.

• Cultural customs are used to organize production and distribution.

• None of the above.

Which of the following best defines a market economic system?

• Political leaders organize production and distribution.

• Everyone is involved in organizing production and distribution.

• Cultural customs are used to organize production and distribution

• None of the above