The Economic Problem

What is the fundamental economic problem that all societies face?

• The unequal distribution of income

• The unlimited wants and limited resources available

• The lack of government intervention in markets

• The failure of businesses to produce efficiently

Which of the following best describes the economic question "What to produce?

• Deciding which resources should be allocated to production

• Choosing the methods used in the production process

• Determining which goods and services should be produced

• Deciding how income is distributed among workers

What is the primary reason for the existence of opportunity cost in economics?

• The presence of government regulations

• The equal distribution of wealth

• The scarcity of resources

• The abundance of resources

Which economic question addresses the issue of "How to produce?"

• Deciding which goods and services should be produced

• Deciding how to distribute income among workers

• Choosing the methods and resources used in production

• Determining who will consume the goods and services

What does the economic question "For whom to produce?" primarily concern?

• Choosing the production methods

• Deciding the quantity of goods to produce

• Determining the distribution of goods and services among people

• Deciding which resources to use in production

In a market capitalist economy, how are resources allocated?

• Through government planning and control

• By a mix of government planning and market forces

• By private individuals and firms responding to price signals

• By a central authority distributing resources equally

Which of the following is a characteristic of a planned (socialist) economy

• Most production decisions are made by private firms

• Prices are determined by supply and demand

• Government owns and controls major industries

• Consumers determine what is produced through purchasing decisions

A point inside the production possibility curve (PPC) represents:

• An inefficient use of resources

• Full employment of resources

• An unattainable level of production

• A point of maximum efficiency

Which of the following is a consequence of scarcity in economics?

• Equal distribution of wealth

• Abundance of goods and services

• Need for making choices and trade-offs

• Unlimited resources for production

In a mixed economy, how are economic decisions made?

• Exclusively by the government

• Only by private individuals and firms

• Through a combination of market forces and government intervention

• By a central authority without market influence