Pre-test- Econ exam

A bakery can use its last bag of flour to make either 20 cupcakes or 10 loaves of bread. The baker decides to make bread. The value of the 20 cupcakes represent the:

• A. Opportunity cost

• B. Marginal benefit

• C. Total utility

• D. Economic growth

11. Two smoothie shops open on the same street. Each tries to attract more customers by lowering prices, improving flavors, and offering deals. What free enterprise feature is this?

• A. Profit motive

• B. Competition

• C. Economic freedom

• D. Government regulation

A country discovers a large new oil field. As a result, it can produce more of all goods than before. What happens to its PPC?

• A. It shifts outward

• B. It shifts inward

• C. It becomes a straight line

• D. It does not change

1. What is scarcity in economics?

• A) A temporary lack of goods

• B) Limited resources and unlimited wants and needs

• C) A shortage caused by disasters

• D) When prices increase

Scarcity forces individuals, businesses, and governments to:

• A) Produce everything they want

• B) Avoid trade-offs

• C) Make choices

• D) Eliminate wants

A drought reduces the amount of farmland available for agriculture in a region. In economic terms, this directly affects which factor of production?

• A. Labor

• B. Capital

• C. Land

• D. Entrepreneurship

An economy is producing at a point inside its Production Possibility Curve. This indicates that the economy is:

• A. Experiencing economic growth

• B. Using resources efficiently

• C. Facing unavoidable scarcity

• D. Operating inefficiently

In the circular flow model, households earn income primarily by:

• A. Purchasing goods and services

• B. Selling resources to businesses

• C. Paying taxes

• D. Setting market prices

In a village where families produce goods using methods passed down through generations, and economic decisions are based on customs rather than profit, the economy is best described as a:

• A. Market economy

• B. Command economy

• C. Traditional economy

• D. Mixed economy

In an economy where the government owns factories, controls prices, and decides what goods should be produced and distributed, the system is a:

• A. Market economy

• B. Mixed economy

• C. Traditional economy

• D. Command economy