Unit 1 Pre-Test

Why might some historians consider Adam Smith one of the most influential people in history?

• He taught that all people should be economic equals.

• He introduced a way of thinking about economic ideas.

• He argued for a larger role for the government in the economy.

• He wrote the economic argument for American independence.

Which statement is the best example of thinking at the margin?

• John has six shirts and is trying to decide whether to buy a seventh.

• Mary observes that the average cost of shoes is higher than last year.

• David decides to volunteer this summer instead of working for pay.

• Jane wants to buy a car but decides she cannot afford the insurance.

What are the factors of production?

• goods and services

• risk and opportunity

• land, labor, and capital

• wages, salaries, and profits

Ocean waves can be used to generate energy. Ocean waves are considered which type of resource?

• A. capital

• B. nonrenewable

• C. perpetual

• D. renewable

Which of these items is a measure of productivity?

• years of education

• bushels of corn per acre

• number of workers employed

• dollars invested in new equipment

Why are tradeoffs necessary?

• Resources are limited.

• Every product has flaws.

• People want different things.

• Advertisers promote products.

Choose the best word to fill in the blank. The three fundamental economic questions are what to produce, ____________, and for whom.

• A. why

• B. how

• C. when

• D. 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