Economics Topic 2

Which of the following is NOT one of the three basic economic questions societies must answer?

• What to produce?

• How to produce?

• For whom to produce?

• When to produce?

What factor payment is earned by workers in the factor market?

• Wages

• Rent

• Interest

• Profit

What is profit?

• Revenue minus costs

• Total revenue

• Total costs

• Revenue plus costs

What must occur for a nation's standard of living to increase?

• Economic growth

• Increased taxation

• Decreased production

• Higher unemployment

What is innovation?

• Introduction of new ideas or methods

• Repeating old processes

• Maintaining status quo

• Reducing production

What is a market?

• A place where buyers and sellers meet

• A government institution

• A type of currency

• A production facility

Why is specialization important to economic growth?

• It increases efficiency and productivity

• It decreases trade

• It limits production

• It reduces employment

What is the relationship between households and firms in the product market?

• Households buy goods and services from firms

• Firms buy goods and services from households

• Households produce goods for firms

• Firms provide labor to households

What is the concept of incentive in economics?

• A motivation to act

• A type of currency

• A government policy

• A market regulation

Which of the following best describes the 'invisible hand' of a free market?

• Self-regulating nature of the marketplace

• Government intervention

• Central planning

• Monopoly control