Practice Questions – Sections 1.1–1.6

What is the fundamental problem of economics?

• Scarcity

• Taxes

• Supply

• Money

Scarcity means:

• Having more than enough of everything

• Unlimited resources

• Limited resources and unlimited wants

• An economic system

What is a need?

• A luxury item

• Something you must have to survive

• Something you want

• Something expensive

What do economists study?

• Government rules

• How people make choices about resources

• War strategies

• Science experiments

What causes people to make trade-offs?

• Inflation

• Scarcity

• Profit

• Productivity

A trade-off means:

• A business deal

• Choosing one thing and giving up another

• A type of trade

• Borrowing money

Opportunity cost is best defined as:

• The cost of making a good

• The next best thing you give up

• The price of a product

• The money you make from a sale

Which of the following is NOT a factor of production?

• Capital

• Land

• Labor

• Money

What are the four factors of production?

• Land, Labor, Money, and Time

• Land, Labor, Capital, Entrepreneurship

• Trade, Profit, Workers, and Taxes

• Supply, Demand, Market, and Goods

Which of these is an example of capital?

• A computer used in a factory

• Trees in a forest

• A farmer

• A manager’s idea