PFL Pretest

Who is the primary owner of labor as a factor of production in the circular flow model?

• Households

• Firms

• Governments

• None of the above

What is the best definition of demand?

• The amount of a good or service that producers are willing and able to offer for sale at a given price.

• The amount of a good or service that consumers are willing and able to purchase at a given price.

• The point when the quantity supplied and the quantity demanded are equal at a certain price.

• A graphical representation of the different combinations of two goods that a country, a firm, or an individual can produce given a fixed set of resources and technology.

What does the phrase “opportunity cost” refer to?

• The idea that resources are limited, and we cannot have everything we want.

• The act of selecting one option over another.

• The value of the next best alternative that we forgo when we make a choice.

• None of the above

What is an economic system?

• A way to troubleshoot failing economies.

• A market in which individuals can buy or sell equities from publicly traded companies.

• The computer system that tracks and monitors how an economy is functioning.

• The way in which a society organizes the production, distribution, and consumption of goods and services.

________ is a legal process in which individuals or organizations who are unable to repay their debts can seek protection from their creditors.

• Indebtedness

• Credit default

• Lender error

• Bankruptcy

What is the best definition of market equilibrium?

• The amount of a good or service that producers are willing and able to offer for sale at a given price.

• The amount of a good or service that consumers are willing and able to purchase at a given price.

• The point when the quantity supplied and the quantity demanded are equal at a certain price.

• A graphical representation of the different combinations of two goods that a country, a firm, or an individual can produce given a fixed set of resources and technology.

What is saving?

• The act of setting aside a portion of one's income or resources for future use.

• The act of allocating money or resources with the expectation of generating a profit or return in the future.

• The act of spending money now to fulfill needs.

• The act of purchasing property with the hope that it will appreciate in value at a later date.

What is investing?

• The act of setting aside a portion of one's income or resources for future use.

• The act of allocating money or resources with the expectation of generating a profit or return in the future.

• The act of spending money now to fulfill needs.

• The act of purchasing property with the hope that it will appreciate in value at a later date.

What is gross income?

• The total amount of income earned by an individual or business before any deductions or taxes are taken out.

• The amount of income that an individual or business has left over after all deductions and expenses have been taken out.

• The amount of income that is subject to taxation by the government. This is calculated by subtracting any allowable deductions, exemptions, and credits.

• None of the above.

What does the phrase “scarcity” refer to?

• The idea that resources are limited, and we cannot have everything we want.

• The act of selecting one option over another.

• The value of the next best alternative that we forgo when we make a choice.

• None of the above.