Economics Unit 1 Test Practice

The basic idea of choice presents which of the problems in economics?

• People get to decide what they want.

• Businesses can sell what they want.

• Decisions produce costs.

• Choice is a way of life.

In a free market society, the answer to the question about how much to produce is determined by —

• census data

• profit projections

• consumer demand

• government quotes

Which of the following represents capital needed to start a tailoring or garment making business?

• Dressmakers

• Building space

• Marketing team

• Sewing machines

Which of the following economic philosophers is described by the information in the box?

• Adam Smith

• John Maynard Keynes

• Fredrich Hayek

• Milton Friedman

What basic economic question is addressed in the press release?

• How to produce?

• What to produce?

• For whom to produce?

• How much to produce?

The situation described in the excerpt is an example of a society addressing an economic question by —

• responding to shortages by increasing production

• reacting to consumer demands by importing more

• allocating resources through a government program

• distributing supplies to those willing to pay the most

How do households earn income according to the circular flow model?

• By investing in land and capital

• By supplying labor resources to firms

• By selling goods and services for a profit

• By collecting tax revenue from the government

Which factor of production completes the excerpt? "________ are a vital engine of economic development creating some of the largest firms in the world as well as small businesses. ________ prosper in economies where they have the freedom to start businesses and buy resources freely."

• Laborers

• Landlords

• Entrepreneurs

• Capital investors

Which resource would be considered the factor of production called land?

• Coal

• Factory

• Money

• Tractor

Which scenario is an example of how resource markets can affect the price of consumer goods?

• An online store raises the price of a popular item.

• A state government raises the sales tax on clothing.

• Miguel buys the ingredients for his dinner in a grocery store.

• Orange juice prices increase after a natural disaster destroys farmland.