Unit 1 Test Review

The tools, skills, knowledge, and machines created and used by humans is known as

• Business

• 
  Physical Capital

• Land

• Money

Andre enjoys playing video games, but there is not a video game about his favorite hobby: collecting stamps. Andre decides to make a video game, not his for his enjoyment but to sell to other stamp collectors.

In this situation, which productive resource is Andre?

• capital

• 
  entrepreneur

• 
  human resource

• 
  natural resource

What is the basic problem that all economies must deal with?

• how to satisfy limited wants with limited resources

• how to satisfy limited wants with unlimited resources

• 
  how to satisfy unlimited wants with limited resources

• how to satisfy unlimited wants with unlimited resources

In our modern economy, most scarce resources are allocated by

• majority rule.

• force.

• 
  price.

• authority.

If a certain combination of goods and services lies inside the production possibilities curve for an economy, which of these is true?

• That combination is an inefficient use of resources.

• Resources are being used more efficiently now than in the past.

• This economy must be realizing gains from specialization and trade.

• It is impossible for an economy to operate inside its production possibilities curve.

During World War II, what was an opportunity cost of the decision to increase production of military goods?

• The United States won the war.

• The amount of consumer goods increased.

• The amount of military goods increased.

• The amount of consumer goods was reduced.

Based on the information in the table and the cost of soda is $1.00, how many sodas should you drink?

• 1

• 2

• 3

• 4

What is a rational economic decision?

• One in which there are no opportunity costs.

• One in which marginal benefits exceed or equal marginal costs.

• One in which marginal costs exceed marginal benefits.

• One in which the benefits are unknown, but costs are low.

Despite a severely low amount of natural resources, Japan has a thriving economy. This is largely due to the freedom Japan's economy has had to explore and develop new technology. Such freedom is found in which type of economic system?

• Command

• 
  Market

• 
  Socialist

• Traditional

Economic growth in an economy will occur when there is an increase in which of these?

• consumption

• labor supply

• real interest rate

• corporate income tax rate