Economics Unit 1 Test Review

What is the definition of Economics?

• The study of how to make money

• The study of choices we make in a world of scarcity

• The study of government systems

• The study of natural resources

Which of the following best defines scarcity?

• Having unlimited resources

• The limited nature of society’s resources

• The ability to make choices

• The process of producing goods

What is opportunity cost?

• The money you spend on a product

• The next best alternative given up when a choice is made

• The total cost of all options

• The cost of producing goods

Which of the following is NOT one of the three basic economic questions?

• What to produce?

• How to produce?

• Where to sell?

• Who are we producing for?

What is an economic system?

• A way a society organizes the production and distribution of goods and services

• A type of government

• A method of saving money

• A way to increase scarcity

Which of the following is a characteristic of capitalism?

• Government ownership of resources

• Private ownership and free markets

• No competition

• Central planning

What is a public good?

• A product sold in private markets

• A good or service provided by the government for everyone

• A luxury item

• A good only available to the wealthy

Which of the following best describes free enterprise?

• Complete government control of the economy

• An economic system with private ownership, choice, and some government regulation

• No private property allowed

• Only public goods are produced

Which of the following is a characteristic of socialism?

• Private ownership of all resources

• Government ownership or control of major industries

• No government involvement

• Only private goods are produced

How are scarcity and choice related?

• Scarcity forces people to make choices

• Scarcity eliminates the need for choice

• Choice creates scarcity

• They are not related