Unit 2 Exploring Economics Exam

What is scarcity in economics?

• The abundance of resources to satisfy all wants and needs.

• The lack of resources to satisfy all wants and needs.

• The surplus of goods and services.

• The unlimited availability of money.

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DOK Level 1: Recall

What happens to the price of a product if the supply increases while the demand remains constant?

• The price decreases.

• The price increases.

• The price remains the same.

• The price fluctuates randomly.

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DOK Level 1: Recall

Explain how supply and demand work together to determine the price of a product.

• Supply and demand are unrelated to price determination.

• Supply and demand together determine the price by balancing the quantity supplied and demanded.

• Only supply determines the price, demand has no effect.

• Only demand determines the price, supply has no effect.

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DOK Level 2: Skill/Concept

What is the definition of opportunity cost?

• The cost of all alternatives when making a choice.

• The value of the next best alternative you give up when making a choice.

• The total cost of all resources used.

• The financial cost of a decision.

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DOK Level 1: Recall

Which of the following is an example of an incentive?

• A penalty for not completing homework.

• A reward for completing a task.

• A rule that must be followed.

• A law that prohibits certain actions.

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DOK Level 1: Recall

Describe a scenario where inflation affects consumer purchasing power.

• Inflation increases purchasing power, allowing consumers to buy more.

• Inflation decreases purchasing power, making goods and services more expensive.

• Inflation has no effect on purchasing power.

• Inflation stabilizes purchasing power, keeping prices constant.

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DOK Level 2: Skill/Concept

What happens to the price of a product if the demand increases while the supply remains constant?

• The price decreases.

• The price increases.

• The price remains the same.

• The price fluctuates randomly.

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DOK Level 1: Recall

Identify the concept: "The amount of goods or services available that producers are willing to sell at different prices."

• Demand

• Supply

• Scarcity

• Inflation

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DOK Level 1: Recall

If a consumer chooses to buy a video game instead of saving for a bike, what economic concept does this decision illustrate?

• Inflation

• Scarcity

• Opportunity Cost

• Incentive

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DOK Level 1: Recall

How might a government use incentives to encourage businesses to reduce pollution?

• By imposing fines on businesses that pollute.

• By offering tax breaks to businesses that implement green technologies.

• By ignoring pollution issues.

• By increasing taxes on all businesses.

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DOK Level 2: Skill/Concept