BMS Economics and Trade Quiz 2

Which statement best explains why scarcity is a problem for all societies?

• Governments do not distribute resources fairly.

• People have unlimited wants, but resources are limited.

• Prices are always increasing.

• Some resources are more valuable than others.

If a student chooses to spend an hour playing video games instead of studying for a test, what is the opportunity cost?

• The fun of playing video games

• The time spent on schoolwork

• The grade they could have improved by studying

• The money spent on the video game

Which of the following choices is an example of scarcity affecting a government decision?

• A family decides to buy a used car instead of a new one.

• A student chooses between playing soccer and basketball.

• A city must choose between building a new school or improving roads.

• A company hires more workers to increase production.

In which type of economy do businesses and individuals decide what to produce and sell?

• Command economy

• Mixed economy

• Free market economy

• Traditional economy

How does a mixed economy differ from a command economy?

• A mixed economy has no government involvement.

• A command economy allows more private ownership.

• A mixed economy blends private business with government control.

• A command economy allows consumer sovereignty.

Which type of economy relies most on tradition and customs?

• Free market economy

• Mixed economy

• Command economy

• Traditional economy

What role does the government play in a free market economy?

• The government makes all production decisions.

• The government owns all businesses.

• The government sets prices for all goods and services.

• The government has limited involvement in the economy.

What is most likely to happen if the price of a popular product suddenly rises?

• More people will buy it.

• Demand for the product will decrease.

• Supply of the product will decrease.

• The product will become a public good.

A drought reduces the amount of wheat that farmers can grow. What is the most likely economic effect?

• The price of wheat-based products will decrease.

• The government will produce more wheat.

• The supply of wheat will decrease, leading to higher prices.

• Demand for wheat will increase, lowering prices.

Which statement best describes the law of demand?

• As prices decrease, people will buy more.

• As prices increase, businesses will produce less.

• As wages increase, people work less.

• As supply increases, demand decreases.