Unit 1 Assessment

What are the factors of production?

• goods and services

• risk and opportunity

• land, labor, and capital

• wages, salaries, and profits

Why are tradeoffs necessary?

• Resources are limited.

• Every product has flaws.

• People want different things.

• Advertisers promote products.

Which scenario best illustrates the law of diminishing marginal utility?

• A car breaks down more often as it gets older.

• A collector of china figurines is eager to get a new one.

• Someone who doesn't listen to music does not care about getting a new CD.

• A new toy is less exciting to a child with many toys than to a child with just a few.

The three fundamental economic questions are what to produce, ______________, and for whom.

• why

• how

• when

• Where

Which of these economic goals is most important in a traditional economy?

• growth

• stability

• freedom

• efficiency

Why are economies most efficient when they have full employment?

• No one person has to work too hard.

• Wages are spent for consumer goods.

• Unemployment offices can be closed.

• No productive resources are left unused.

Which kind of economy is most common today?

• command

• market

• mixed

• traditional

Which is the best example of specialization?

• A surf shop lowers the price on swimsuits.

• A dry cleaner spends extra time on grease spots.

• An assistant in a tailoring shop only replaces zippers

• An online clothing outlet offers customized monograms.

How does division of labor increase productivity?

• Workers require minimal training.

• Workers can be paid a lower wage.

• Workers become expert at one task.

• Workers move often from job to job.

What does it mean to say that Jen has a comparative advantage over Julian for weeding people’s gardens?

• Jen weeds more quickly than Julian does.

• Jen's expertise at weeding is greater than Julian's.

• Jen can charge more for weeding than Julian can.

• Jen's opportunity cost for weeding is lower than Julian's.