The Economic Environment

What is the fundamental concept that gives rise to the field of economics, as described in the source material?

• The interaction between unlimited human wants and scarce resources

• The process of distributing goods and services in a society

• The desire of individuals and nations to accumulate wealth

• The government's need to collect taxes and provide public services

A point located inside the Production Possibilities Frontier (PPF) represents what?

• The most efficient use of all available resources

• A production combination that is impossible to achieve with current technology

• The maximum possible output of one good if production of the other is zero

• A production combination that is attainable but involves inefficient use of resources

What does the downward slope of the Production Possibilities Frontier illustrate?

• That producing more of one good requires producing less of another

• That the economy is operating at an inefficient level

• That technology and available resources are fixed at a point in time

• That resources are scarce and human wants are unlimited

Which term is used to describe all the things used in producing goods and services, such as labor?

• Circular flow

• Economic systems

• Factors of production

• Opportunity cost

In a Command Economy, who owns the productive resources and makes the major economic decisions?

• Individual entrepreneurs and private corporations

• Families and tribal leaders based on tradition

• A combination of government agencies and private businesses

• A central authority, typically the government

Which of the following is a primary characteristic of a Market Economy?

• Economic decisions are based on customs passed down through generations

• The central government makes all decisions regarding production and distribution

• Productive resources are privately owned and operated for profit

• The main goal is the equal distribution of income among all citizens

A society where children commonly follow in their parents' footsteps for their occupation and economic role is most likely operating under which system?

• Traditional Economy

• Market Economy

• Command Economy

• Mixed Economy