Unit 1 Test: The Economic Way of Thinking (2nd Tri 2024-2025)

Which of the following is true about scarcity? (Select all that apply.)

• It is a permanent situation
• It affects individuals, businesses, governments, and societies
• It forces people to make choices
• It exists because wants exceed resources
• Occurs when the quantity demanded by consumers is greater than the quantity supplied by producers.

Why do producers and consumers have to make choices about how they will use resources?

• People have unlimited wants and needs but limited resources
• Resources are unlimited
• People create governments to allocate resources
• It is easy to run out of basic needs

What makes a resource or good scarce? Check all that apply.

• Is limited in quantity
• Is desirable
• Has more than one use
• Is unlimited in quantity
• Does not satisfy human needs and wants

Scarcity or Shortage? I want steak for dinner but choose hamburger because it's cheaper.

• Scarcity
• Shortage

Scarcity or Shortage? Due to Covid, stores had no toilet paper on the shelves.

• Scarcity
• Shortage

Which term describes the SATISFACTION you receive from eating an ADDITIONAL slice of pizza?

• Marginal cost
• Marginal benefit
• Opportunity cost
• Diminishing utility

Which example shows gains from trade through voluntary exchange?

• Gave up playing a sport because I wanted to get an after-school job
• Was forced to work late because a coworker called in sick
• Studied more for a class after receiving lower than usual grades
• Swapped fruit for candy during lunch

Who gains in a voluntary trade?

• The buyer only
• The seller only
• Both the buyer and the seller
• Both the buyer and the seller, but the seller usually gains more

The focus of buyers and sellers on their own personal benefit is ________________.

• selfishness
• self-interest
• economic freedom
• voluntary exchange

The power of self-interest in a market economy often leads to good results for everyone. Adam Smith called this phenomenon the

• Original economic law
• The law of competition
• Invisible hand
• The law of demand