Intro to Economics Review

An example for each of the four factors of production (Land, Labor, Capital, Entrepreneur).

• Land - A farm used for agricultural production

• Labor - Workers in a factory manufacturing goods

• Capital - Machinery and equipment used in a bakery

• Entrepreneur - A person starting a tech startup

What is the fundamental economic problem?

• How to allocate resources efficiently

• How to maximize profits

• How to regulate markets

• How to reduce taxes

Describe the difference between a good and a service.

• Goods are tangible products, services are intangible actions

• Goods are sold by individuals, services are sold by businesses

• Goods are produced locally, services are produced globally

• Goods are necessities, services are luxuries

Why are entrepreneurs important in a free enterprise economy?

• They create jobs and new businesses

• They regulate the economy

• They distribute resources equally

• They provide government funding

In a market economy, the decisions of what to produce are often determined by who?

• The government

• The consumers

• The businesses

• The labor unions

Labor, entrepreneurship, natural resources, and capital are all examples of what?

• Factors of production

• Market demand

• Economic indicators

• Government regulations

One key to economic growth is the power of innovation and new ideas. Which factor of production is that?

• Labor

• Entrepreneurship

• Natural resources

• Capital

Which economic system allows the central authority (typically government) to answer the three basic economic questions?

• Market economy

• Command economy

• Traditional economy

• Mixed economy

What are considered needs vs. wants in our economic system?

• Needs are essential for survival, wants are not necessary but desired

• Needs are based on personal preferences, wants are essential

• Needs are determined by the government, wants are determined by individuals

• Needs and wants are the same in our economic system

Why are scarcity and choices the driving forces for understanding how economics works?

• Scarcity forces individuals to make choices and allocate resources

• Scarcity creates competition among businesses in the market

• Choices determine the level of government intervention in the economy

• Choices eliminate scarcity in the market