Economic Final Review 2025

Scarcity means that resources are limited while wants are unlimited.

• True

• False

Opportunity cost is the value of the worst choice you could have made.

• True

• False

Labor includes both mental and physical effort in the production process.

• True

• False

Capital only refers to money used in business.

• True

• False

Entrepreneurs take risks and innovate to start and manage businesses.

• True

• False

The circular flow model shows how goods, services, and money move between businesses and households.

• True

• False

In a market economy, the government decides what to produce and for whom.

• True

• False

If the price of a good goes up, demand for that good will typically go up too.

• True

• False

A substitute good can replace another good if its price becomes more attractive.

• True

• False

An increase in consumer income can lead to an increase in demand for goods.

• True

• False