Economics Final Exam Review

Which of the following best explains why scarcity is a basic economic problem?

• Governments often mismanage available resources.

• Businesses prioritize profits over meeting consumer needs.

• People's unlimited wants exceed the limited resources available to satisfy them.

• Technology has not advanced enough to produce everything people desire.

A local government decides to build a new park instead of repairing existing roads due to limited funds. The repair of the roads represents the:

• Marginal benefit of building the park.

• Marginal cost of building the park.

• Opportunity cost of building the park.

• Absolute cost of building the park.

Which of the following is an example of allocating scarce concert tickets using a "first-come-first-served" strategy?

• Selling tickets at an auction to the highest bidders.

• Holding a lottery where randomly selected individuals can purchase tickets.

• Allowing the first people in line to buy tickets until they are sold out.

• Giving a certain number of tickets to influential community members.

• Not hire the employee because there is an additional cost.

• Hire the employee because the marginal benefit exceeds the marginal cost.

• Hire the employee because it will increase the total revenue of the company.

• Not hire the employee because it will increase the total costs of the company.

In a market economy, the fundamental economic questions of what to produce, how to produce, and for whom to produce are primarily answered by:

• Government regulations and planning.

• The traditions and customs of the society.

• The interactions of supply and demand in the marketplace.

• Decisions made by large corporations.

Which of the following is a primary role of government in a mixed economy?

• Owning and controlling all major industries.

• Making all decisions about resource allocation.

• Providing public goods and services and regulating certain economic activities.

• Having no involvement in the economy whatsoever.

How does investment in human capital typically impact a nation's standard of living?

• It usually leads to a decrease in overall productivity.

• It usually leads to an increase in overall productivity.

• It has no impact on productivity.

• It only benefits a small portion of the population.

In the circular flow model, households primarily provide which of the following to businesses through the resource (factor) market?

• Goods and services.

• Money for products.

• Land, labor, and capital.

• Taxes and fees.

According to the law of demand, as the price of a good or service increases:

• The quantity demanded will also increase.

• The quantity supplied will decrease.

• The quantity demanded will decrease.

• The quantity supplied will increase.

If the price of a popular video game console is set below the equilibrium price, what is most likely to occur?

• A surplus of the console.

• A shortage of the console.

• The quantity supplied will increase to meet demand.

• The demand for substitute goods will decrease.