Lesson 2 Economic Decision Making

Why can't we always get what we want? Fill in the blank: Our wants always exceed our _________?

• resources

• needs

• desires

• abilities

Why do economists consider goods like cell phones to be scarce?

• Because not everyone wants them

• Because the materials and labor needed to build them are limited

• Because they are free for everyone

• Because they are always available

What is the difference between a shortage and scarcity?

• A shortage is temporary and occurs when the quantity of something desired is less than what is available at the current price, while scarcity is a permanent condition where resources are always limited.

• A shortage is a permanent condition, while scarcity is only temporary.

• Scarcity refers to a surplus of resources, while shortage means there is too much supply.

• A shortage means resources are unlimited, while scarcity means prices are always high.

What are inputs in the production process?

• The goods and services produced

• The resources that go into the production process

• The willingness to take risks

• The equation for production

Fill in the blank: The production equation in its simplest form is ______ + labor + capital = goods and services.

• land

• money

• technology

• energy

Which of the following is NOT considered a land resource?

• Air

• Solar energy

• Furniture

• Water

Entrepreneurship is best described as:

• The process of combining resources to produce goods

• The willingness to take risks involved in starting a business

• The goods and services produced

• The natural resources used in production

Fill in the blank: Outputs are the ______ produced using resources in the production process.

• goods and services

• raw materials

• wages and salaries

• machines

What is the main difference between human capital and financial capital?

• Human capital refers to the education, training, and skills of people, while financial capital refers to money used to invest in stocks, bonds, real estate, or businesses.

• Human capital refers to money used to invest in stocks, bonds, real estate, or businesses, while financial capital refers to the education, training, and skills of people.

• Human capital and financial capital both refer to physical assets owned by a company.

• Human capital refers to the amount of money a person earns, while financial capital refers to the number of people employed.

If you buy a car to deliver pizzas for a restaurant, is it considered a consumer good or a capital good?

• It is considered a capital good.

• It is considered a consumer good.

• It is considered a luxury good.

• It is considered a public good.