Economics Practice 1

Why are goods and services considered scarce?

• People cannot agree on what they want

• Natural disasters create shortages

• All resources are scarce

Which of the following is an example of physical capital?

• A cashier working the register

• A delivery truck

• A wheat field

• An entrepreneur starting a bakery

Jessica chooses to spend her evening studying for an exam instead of going to the movies with her friends. What is the opportunity cost of her choice?

• going to the movies

• studying for an exam

Which allocation strategy is used when a raffle determines who wins a prize?

• authority

• contest

• lottery

• sharing

Which factor of production is being used when a farmer plants seeds on his land?

• land

• labor

• capital

• entrepreneurship

An inventor starts a company to sell her new type of water filter. This is an example of:

• land

• labor

• capital

• entrepreneurship

A rational decision is one in which…

• decisions are made with no trade-offs

• marginal costs are ignored

• marginal benefits equal or exceed marginal costs
  

• benefits are smaller than costs

Which of the following is an example of investment in human capital?

• A company builds a new factory

• A student completes a nursing degree

• A farmer buys more land

• A store buys new shelves

Specialization improves productivity because it…

• reduces the need for trade

• allows workers to focus on tasks they do best

• prevents competition between firms

• eliminates scarcity

Which broad social goal is achieved when workers are protected from losing all income if they lose their job?

• freedom

• equity

• security

• efficiency