Economics Unit 1 Review 1

Which of the following is an example of a land resource?

• Factory

• Cow

• Employee

• Tractor

Which of the following illustrates an opportunity cost?

• A. James has enough money to buy some socks and a book.

• B. Alyssa does not have enough time to study for her test.

• C. Amir only has time to study or to play basketball.

• D. Lydia does not have enough money to buy a new shirt.

Venya and Kari own a flower shop that specializes in custom bouquets. Wanting to expand into selling potted plants, they create a production possibility chart to assess whether the potted plants are a good idea. Study their chart: How many potted plants should they be able to produce on Day 3?

• 25

• 30

• 50

• 75

Ricardo works part time at a local computer store. One day, his manager approaches him about moving from cashier to floor supervisor. Ricardo is excited because the promotion comes with a raise; however, the extra work hours would take away from time with his friends. In the end, he decides to take the promotion. What is Ricardo’s opportunity cost?

• Losing extra time to spend with his friends.

• Being able to use the extra money for summer football camp.

• Losing the ability to spend any time with his friends.

• Receiving another promotion in six months.

In a mixed economy, producers decide how to produce by

• Checking government regulations first to make sure their production process doesn’t violate the law.

• Figuring out the cheapest way to produce the product.

• Decreeing that the product will be produced this or that way.

• Producing it the way it has always been produced.

In a traditional economy, producers decide what to produce based on:

• What they think they can sell.

• What is permitted under government regulations.

• Whatever they want because producers and the government are the same thing.

• Whatever it was that their parents produced.

There may be a strong emphasis on hunting and farming.

• Traditional

• Command

• Market

• Mixed

The most common economic system in the world is a

• Closed economy.

• Command economy.

• Mixed market economy.

• Traditional economy.

In a competitive market, a furniture company decides to use cheaper materials to decrease production costs so it can sell at a lower price. This is an example of

• following a federal regulation.

• price competition.

• reducing the risk for consumers.

• creating a new or better product.

Innovation allows producers to

• create goods that consumer want.

• follow restrictions that the government imposes.

• avoid competing with similar businesses.

• offer warranties.