Economics Semester Exam

What is the primary focus of economics?

• How to eliminate scarcity

• How people and societies choose to use scarce resources to satisfy their needs and unlimited wants

• How to increase government spending

• How to reduce prices for all goods

Which of the following is NOT a requirement for something to be considered scarce?

• It must be limited

• It must be desirable

• It must have a price or cost

• It must be free

Who does scarcity affect?

• Only consumers

• Only producers

• Both consumers and producers

• Only the government

Which of the following is NOT a factor of production?

• Land

• Labor

• Capital

• Money

Which is an example of capital as a factor of production?

• Oil in the ground

• A factory building

• The workforce

• An inventor

What is entrepreneurship?

• The natural resources used in production

• The willingness to take risks and create new businesses

• The physical labor used to make products

• The money used to buy goods

What does a cost-benefit analysis help you do?

• Decide what to produce

• Examine the costs and expected benefits of a choice

• Set prices for goods

• Eliminate opportunity costs

What is the marginal cost?

• The cost of all units produced

• The cost of using one more unit of a good or service

• The total cost of production

• The cost of the first unit only

According to the Law of Diminishing Marginal Utility, what happens as you consume more units of a good?

• Marginal benefit increases

• Marginal benefit stays the same

• Marginal benefit decreases

• Marginal cost disappears

What is the opportunity cost of a decision?

• The price you pay for a good

• The value of the next-best alternative given up

• The total cost of all alternatives

• The profit earned