Economics Exam

Scarcity exists because:

• Resources are unlimited

• Wants exceed available resources

• People cannot make decisions

• Governments regulate production

Opportunity cost is defined as:

• The monetary cost of goods

• The value of the next best alternative forgone

• The resources used in production

• The benefits received from a choice

Which of the following is NOT a factor of production?

• Land

• Labor

• Capital

• Technology

A market economy is characterized by:

• Central government control

• Private property and competition

• Collective ownership of resources

• Traditional decision-making methods

The production possibilities curve demonstrates:

• Unlimited production capacity

• Opportunity costs and trade-offs

• Equal distribution of goods

• Efficient pricing strategies

The law of demand states that:

• Higher prices lead to higher demand

• Higher prices lead to lower demand

• Lower prices lead to lower demand

• Price does not affect demand

Equilibrium price is achieved when:

• Supply exceeds demand

• Demand exceeds supply

• Quantity demanded equals quantity supplied

• Prices are set by the government

Comparative advantage means:

• Producing more than others

• Producing at a lower opportunity cost

• Producing all goods equally well

• Specializing in non-essential goods

A tariff is a:

• Tax on exported goods

• Tax on imported goods

• Limit on goods produced

• Subsidy for local businesses

Free trade agreements aim to:

• Increase tariffs

• Reduce trade barriers

• Limit imports

• Support local monopolies