Unit 1 and 2 Econ Terms Test

What is the **Free Enterprise System**?

• A market system operating free from government intervention

• A market where the government controls all businesses

• A system where only a few firms dominate the market

• An economic model with fixed prices for goods and services

**Scarcity** refers to:

• The unlimited supply of resources

• A situation where there are more resources than needed

• The condition in which there are not enough resources available to produce everything that individuals demand

• A surplus of goods in the market

The term **Opportunity Cost** means:

• The cost of labor and capital in production

• The price paid for a good or service

• The value of goods and services that are given up in order to obtain an alternative good or service

• The profit earned from selling a product

**Factors of Production** include:

• Only land and labor

• Resources needed to produce goods and services, including land, labor, capital, and entrepreneurship

• Government policies and regulations

• Consumer demand and competition

In economics, **Resources** are defined as:

• The materials used to produce goods

• Supplies of something of value

• Only natural elements like water and minerals

• Surplus goods that remain unsold

An **Economic System** is:

• A strategy for investing in the stock market

• A process created to manage the production, consumption, and distribution of goods and services

• A government-controlled plan for wealth distribution

• A method for calculating a country's GDP

The **Circular Flow Model** shows:

• A visual representation showing the relationship between the factor market and the product market

• The path of money through the banking system

• The movement of goods through international trade routes

• The process of budgeting for households

**Choice** in economics refers to:

• The ability to select any product from a store

• The decision-making process by individuals, businesses, or governments about which needs and wants to satisfy with their limited resources

• The variety of goods available in the market

• The competition among firms

**Competition** is best described as:

• The government’s role in regulating markets

• The rivalry among businesses or individuals to attract customers and achieve market dominance

• The collaboration between companies to set prices

• A system where all firms share profits equally

What are **Firms** in economic terms?

• Non-profit organizations

• Business organizations that use resources to produce goods or services with the aim of making a profit

• Government agencies that regulate markets

• Banks and financial institutions