Unit 3 Review

What is scarcity in economics?

• A surplus of goods

• Unlimited resources

• Limited resources and unlimited wants

• No consumer interest

Which of the following is an example of a capital resource?

• A forest

• A worker's skill

• A factory machine

• A business owner

The value of the next best alternative when a decision is made is called:

• Scarcity

• Profit

• Opportunity cost

• Trade-off

Which of the following is NOT a factor of production?

• Labor

• Money

• Capital

• Entrepreneurship

Entrepreneurs play a key role in the economy by:

• Only managing existing resources

• Consuming products

• Taking risks and organizing production

• Limiting the labor market

What does the circular flow model illustrate?

• Only government spending

• How goods and money move through the economy

• The production of one company

• A closed economy

Why do people make economic choices?

• To avoid work

• Because resources are limited

• To spend less

• Because of low taxes

In the circular flow, households provide what to firms?

• Goods

• Money

• Factors of production

• Final products

What happens when the price of a product increases, according to the law of supply?

• Quantity supplied decreases

• Quantity demanded increases

• Quantity supplied increases

• Demand remains the same

If demand increases and supply remains constant, what happens to price?

• It decreases

• It increases

• It stays the same

• It disappears