No government has the assets to supply everything its citizens might want or need. What does this basic economic fact force governments to do?

• save money by cutting current spending on goods and services

• increase federal taxes so that more goods are affordable in the future

• conserve resources to enable the manufacture of more goods

• make choices among goods and services currently on the market

The lack of enough resources to produce everything people want is which central economic problem?

• Allocation

• Production possibilities

• Productivity

• Scarcity

Which reason explains the need for economic choices?

• Services are limited and quantities demanded are low.

• Consumer wants are limited and resources are limited.

• Services are unlimited and quantities demanded are unlimited.

• Consumer wants are unlimited and resources are scarce.

Which economic issue is illustrated in this graph?

• Choices must be made due to scarcity.

• Production of multiple goods creates inefficiency.

• The costs of food and clothing are equivalent.

• Production of food and clothing requires the same resources.

A student saved five hundred dollars from working at a local sandwich shop. He wanted to save enough for a down payment on a used car. During the summer, he decided to spend the five hundred dollars on a trip to the beach and to buy some music.

What is the opportunity cost of this decision?

• the trip to the beach

• music downloads

• one hundred dollars

• a used car

Which of these most directly contributes to the problem of economic scarcity?

• People have unlimited wants for goods and services.

• People must earn money to provide for their families.

• People have to pay taxes to governments for services.

• People must take risks to create and improve technology.

In which type of economic system does a central government exercise the most control?

• Command

• Market

• Mixed

• Traditional

How are production decisions made in a command economy?

• market forces

• profit incentives

• centralized planning

• resource rationing

The government's action stated in this newspaper headline is an example of which type of economy?

• Command

• Socialist

• Mixed

• Traditional

Which statement best describes a defining characteristic of traditional economies?

• Businesses work with governments to set production goals.

• Consumer demand determines production levels.

• Production is based on cultural customs.

• Production is mandated by the state.