Economics & Personal Finance Benchmark Review

What is scarcity?

• Unlimited wants and limited resources

• Limited wants and unlimited resources

• Equal supply and demand

• A government-controlled market

The basic purpose of a budget is to:

• Track spending and saving

• Increase taxes

• Reduce income

• Set government goals

What are the four main types of economic systems?

• Command, Market, Mixed, Traditional

• Free, Socialist, Democratic, Federal

• Private, Public, National, Global

• Open, Closed, Local, Regional

What is opportunity cost?

• The money spent on wants

• The value of the next best alternative given up

• The total cost of all choices

• The amount of time used for production

On a Production Possibilities Curve (PPC), any point inside the curve represents:

• Efficient use of resources

• Unattainable production

• Inefficient use of resources

• Economic growth

Scarcity affects individual decision-making by:

• forcing people to make choices about how to use limited resources

• allowing unlimited access to all resources

• eliminating the need for prioritizing wants and needs

• ensuring everyone gets everything they want

In a command economy, who typically makes the major economic decisions?

• Consumers

• Private businesses

• The government

• The market

• $4,000

• $5,000

• $6,000

• $10,000

One benefit of a market economy is economic efficiency, and one drawback is income inequality.

• Economic efficiency is a benefit, and income inequality is a drawback of a market economy.

• Government control is a benefit, and equal wealth distribution is a drawback of a market economy.

• Central planning is a benefit, and lack of innovation is a drawback of a market economy.

• Price controls are a benefit, and consumer choice is a drawback of a market economy.

If a student chooses to study for an exam instead of working extra hours at their job, what is the opportunity cost of that decision?

• The time spent studying

• The money they would have earned working

• The grade they receive

• None, since studying is beneficial