Understanding Economics Practice (Core Knowledge)

1. Which of the following is a need?

• a) water
• b) sports car
• c) diamond ring
• d) birthday cake

2. Which of the following is a human resource?

• a) a forest
• b) a factory
• c) a delivery truck
• d) an office worker

3. What is the difference between goods and services?

• a) Goods satisfy both needs and wants, while services satisfy only needs.
• b) Goods are created by producers, while services are carried out by consumers.
• c) Goods are tangible things that can be sold, while services are tasks people do for customers.
• d) Goods are produced with renewable resources, while services are produced with nonrenewable resources

4. When does scarcity occur in an economy?

• a) Scarcity occurs when wants and needs are the same.
• b) Scarcity occurs when supply is much higher than demand.
• c) Scarcity occurs when there is more of an item than people want or need.
• d) Scarcity occurs when there are not enough resources to meet people’s wants and needs.

5. Suppose you must choose between going to a movie that costs ten dollars and going to a carnival that costs seven dollars. You choose the movie. What is your opportunity cost?

• a) the movie
• b) ten dollars
• c) the carnival
• d) three dollars

6. What happens to supply and demand at the equilibrium price?

• a) Supply and demand are zero.
• b) Supply and demand are equal.
• c) Supply decreases and demand increases.
• d) Supply increases and demand decreases.

7. Which of the following is the best example of bartering?

• a) Estella bakes a cake, and Martin gives her ten dollars for it.
• b) Estella bakes a cake and gives it to Martin for his birthday.
• c) Estella bakes Martin a cake, and in return, Martin mows Estella’s lawn.
• d) Estella bakes a cake, and Martin borrows ten dollars from his mother to pay for it.

8. Why is the price of summer fruit usually lower in the summer than in the winter?

• a) The supply of summer fruit is elastic.
• b) The demand for summer fruit is inelastic.
• c) The supply of summer fruit is higher in the summer than in the winter.
• d) The demand for summer fruit is higher in the summer than in the winter.

9. The United States–Mexico–Canada Agreement (USMCA) demonstrates which economic principle?

• a) incentives
• b) economic interdependence
• c) the law of supply and demand
• d) the market value of goods and services

10. In economics, what is a market?

• a) a display of goods and services for sale
• b) the total amount of a product offered to consumers
• c) the price consumers are willing to pay for something
• d) an area where people go to buy, sell, and trade goods