Personal Finance and Economics Review 2

Economics is the study of

• production technology

• consumption decisions

• how society decides what, how, and for whom to produce

• the best way to run society

How are economic questions answered in a command economy?

• by producers

• by consumers

• by the government

• by supply and demand

Money serves as a standard of value because

• we spend it

• we compare prices

• we save it

• we earn profits

Which basic economic problem does the U.S. share with all other nations?

• Scarcity of resources

• Lack of technology

• Lack of public services

• Too much government control

Which type of business organization has the advantage of limited liability but the disadvantage of less control over business decisions?

• Partnership

• Corporation

• Sole proprietorship

• Perfect competition

Which of the following is an example of entrepreneurship?

• A person who invests in computer stocks

• A person who starts a new online business

• A person who takes a job with a high-tech firm

• A person who buys land and builds herself a new house

Which of the following is true about a rational economic decision?

• Marginal costs exceed marginal benefits

• Marginal benefits exceed marginal costs

• Opportunity costs are less than marginal benefits

• Opportunity costs are balanced by total benefits

What is the MOST important function of government patents in a market economy?

• To protect consumers from being cheated

• To allow entrepreneurs to earn profits

Payment for the use of capital are called

• rent

• wages

• interest

• profit

Which kind of economy do MOST nations in the world have today?

• Command

• Market

• Mixed

• Traditional