Understanding Economic Concepts and Systems

What is the primary difference between a need and a want in economics?

• A need is a luxury, while a want is a necessity.

• A need is a requirement for survival, while a want is a way of expressing a need.

• A need is always more expensive than a want.

• A need is something desired, while a want is something required.

Which of the following best describes the concept of scarcity in economics?

• Unlimited resources to meet limited wants.

• Limited resources to meet unlimited wants.

• Unlimited resources to meet unlimited wants.

• Limited resources to meet limited wants.

How do entrepreneurs contribute to the economy?

• By consuming goods and services.

• By deciding how to combine resources to create goods and services.

• By providing labor for production.

• By regulating market prices.

Explain the concept of opportunity cost with an example.

• The cost of producing one more unit of a good.

• The most desirable alternative given up as the result of a decision.

• The total cost of all alternatives.

• The cost of not having enough resources.

What does the production possibilities curve illustrate?

• The maximum possible output of two goods or services an economy can achieve.

• The minimum resources needed for production.

• The total cost of production.

• The average cost of production.

Analyze how a command economy differs from a market economy.

• In a command economy, decisions are made by individuals; in a market economy, decisions are made by the government.

• In a command economy, decisions are made by the government; in a market economy, decisions are made by individuals.

• Both economies rely on government intervention.

• Both economies rely on individual decision-making.

What role does specialization play in a market economy?

• It decreases efficiency by spreading resources thinly.

• It increases efficiency by allowing individuals and companies to focus on a specific good or service.

• It leads to a decrease in competition.

• It results in higher prices for consumers.

Evaluate the impact of self-interst on consumer behavior.

• an incentive have no impact on consumer behavior.

• an incentive that encourages consumers to behave in a certain way by offering rewards or punishments.

• an incentive always lead to negative outcomes.

• an incentive that only affect producers, not consumers.

What is the "invisible hand" in a free market economy?

• Government intervention in the market.

• The self-regulating nature of the market.

• The role of monopolies in controlling prices.

• The influence of international trade.

How does the concept of "guns or butter" illustrate trade-offs in economics?

• It shows the trade-off between military and consumer goods production.

• It explains the trade-off between saving and spending.

• It describes the trade-off between imports and exports.

• It highlights the trade-off between labor and capital.