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Economics Unit 1 Review

Total questions: 130

Worksheet time: 1hrs 12mins

Name
Class
Date
1.

While the wants and needs of consumers are unlimited, productive resources are limited, forcing consumers and producers to make choices. This concept is known as

a)

Borrowing

b)

Surplus

c)

Scarcity

d)

budgeting

2.

In economics, the term “scarcity” is best illustrated by which of the following situations?

a)

Producers lack the productive resources needed to produce goods and services.

b)

Consumers lack the money needed to buy goods and services.

c)

Entrepreneurs lack the customers needed to earn a profit.

d)

Laborers lack the skills needed to earn a promotion.

3.

What are the factors of production?

a)

Land, labor, capital, entrepreneurship

b)

Land, needs, wants, capitals

c)

Rent, wages, interest, profit

d)

Land, labor, scarcity, entrepreneurship

4.

In the production of loaves of bread, which best represents the factor of capital?

a)

The flour used in the dough

b)

The retailer who sells the bread

c)

The oven used to bake the bread

d)

The worker who kneaded the dough

5.

George decides to go back to school to earn an advanced degree. Which productive resource is most directly affected by George’s decision?

a)

Entrepreneurship

b)

Human capital

c)

Natural resources

d)

Physical capital

6.

People’s education, skills/abilities, health, and motivation are all part of _________ capital.

a)

Physical

b)

Natural

c)

Financial

d)

Human

7.

Which topic would a macroeconomist most likely study?

a)

Supply and demand

b)

Production costs

c)

Inflation

d)

Labor markets

8.

Microeconomics focuses on

a)

the economic impact of implementing fiscal and monetary policy.

b)

the big picture, looking at the economy as a whole.

c)

international trade and finance.

d)

small economic units, such as individuals, firms, and markets.

9.

Which description below best describes the relationship between opportunity costs and trade-offs?

a)

Trade-offs are the opposite of opportunity cost.

b)

Trade-offs decrease the opportunity cost of any decision.

c)

Opportunity costs occur when trade-offs are made.

d)

The opportunity costs of and trade-off are constant.

10.

Imagine you have decided to buy a movie ticket for $15. Which of the following best describes the opportunity cost of your decision?

a)

The $5 you pay for popcorn

b)

The time spent watching previews before the movie

c)

The money and time you spend on the movie

d)

The time you spent deciding which movie you should watch

11.

When one choice is made over another, the next best use of time, money, and/or resources is called a/an

a)

rational decision

b)

opportunity cost

c)

favorable outcome

d)

efficient outcome

12.

In order to classify a decision as rational,

a)

the decision is lawful.

b)

the marginal cost outweighs the marginal benefit.

c)

the producer makes a profit.

d)

the marginal benefit outweighs the marginal cost.

13.

Which of the following best describes marginal cost?

a)

The additional expenses or effort you expend when performing one more unit of action

b)

The additional benefit you receive from performing one more unit of action

c)

The amount you pay for a good or service

d)

When consumers wants and needs exceed scarce productive resources

14.

Which of the following best describes marginal benefit?

a)

The benefit you get when you sell a good or service

b)

The additional expenses or effort you expend when performing on more unit of action

c)

When scarce productive resources meet the needs of consumers

d)

The additional benefit you receive from performing one more unit of action

15.

Which of the following is the best example of an implicit cost?

a)

The price of a movie ticket.

b)

The homework you could have completed instead of going to see a movie

c)

The cost of fuel to drive to the movie theater

d)

The cost of popcorn and a drink.

16.

Freedom of choice and competition are most commonly associated with which type of economic system?

a)

Command

b)

Market

c)

Traditional

d)

Communist

17.

In a command economy, the role of the government is to

a)

Make major economic decisions

b)

Promote competition

c)

Encourage entrepreneurs

d)

Meet the needs and wants of consumers

18.

Which of the following is a common role of government in a mixed economy?

a)

Guarantee that all incomes are equal

b)

Prevent regulators from interfering with markets

c)

Provide public goods

d)

Set production quotas

19.

Which of the following lists the three basic economic questions?

a)

What to produce, How to produce, Why to produce What to produce,

b)

When to produce, For whom to produce When to produce

c)

How to produce, For whom to produce What to produce

d)

How to produce, For whom to produce

20.

The way in which a society answers the three basic economic questions determines its:

a)

Market Structure

b)

Political system

c)

Marketing system

d)

Economic system

21.

Private ownership and voluntary exchange are characteristics of which type of economic system?

a)

Command

b)

Traditional

c)

Market

d)

Planned

22.

Which term below is a command economy most commonly associated with?

a)

Capitalism

b)

Government regulation

c)

Competition

d)

Private property

23.

The concept of the invisible hand refers to which of the following?

a)

Congress passing a new law

b)

Government regulation

c)

Individuals seeking their own self-interests

d)

The Federal Reserve adjusting interest rates

24.

A mixed economy allocates resources through

a)

demand, but not supply.

b)

by bartering.

c)

government directives only.

d)

supply, demand, and government intervention.

25.

Which of the following is a common role of government in a market economy?

a)

Provide public goods

b)

Own the factors of production

c)

Prevent competition

d)

Encourage central planning

26.

How are public goods and public assistance programs paid for in the United States?

a)

Profits earned by corporations

b)

Tax revenue collected from consumers and producers

c)

Charitable donations

d)

Income earned from the sale of stocks

27.

Congress moved to pass a new antitrust (anti-monopoly) law. This new law is an example of which role of government?

a)

Discouraging negative externalities

b)

Promoting competition in the market

c)

Protecting the environment

d)

Preventing labor unions

28.

Congress passed a new law that taxes car producers based on the amount of pollutants their factories release into the atmosphere. This new law is an example of which role of government?

a)

Discouraging negative externalities

b)

Promoting competition in the market

c)

Protecting producers

d)

Preventing labor unions

29.

A negative externality results in a ________ for a different person other than the original decision-maker, while a positive externality results in a ________ for a different person other than the original decision-maker.

a)

loss, cost

b)

cost, benefit

c)

gain, benefit

d)

benefit, cost

30.

Of the choices below, which role would the United States government least likely play?

a)

A central planner determining what products to make

b)

A regulator preserving competition in the market

c)

A consumer of goods and services

d)

A protector from negative externalities

31.

Investing in technology and physical capital is most related to

a)

Opportunity costs

b)

Economic freedom

c)

Supply and demand

d)

Economic growth

32.

Which of the following is an example of LAND.

a)

Coal

b)

Office Building

33.

House: Goods or Service?

a)

Goods

b)

Service

34.

Things purchased by consumers

a)

goods

b)

consumer

c)

producer

d)

supply

35.

A person who provides a good or service

a)

producer

b)

need

c)

want

d)

consumer

36.

A person who purchases a good or service

a)

consumer

b)

taxes

c)

supply

d)

good

37.

Which of the following is not a good?

a)

Clothes

b)

Food

c)

Dog Walker

d)

Toys

38.

A _____________ is a person who starts a business.

a)

Teacher

b)

Entrepreneur

c)

Actor

d)

Student

39.

The table shows your total benefits from consuming different quantities of gas each week.

What is the marginal benefit of one more gallon of gas, when you currently have 0 gallons?

a)

1

b)

2

c)

3

d)

4

e)

5

40.

The table shows your total benefits from consuming different quantities of gas each week.

What is the marginal benefit of one more gallon of gas, when you currently have 1 gallon?

a)

1

b)

2

c)

3

d)

4

e)

5

41.

The table shows your total benefits from consuming different quantities of gas each week.

What is the marginal benefit of one more gallon of gas, when you currently have 2 gallons?

a)

1

b)

2

c)

3

d)

4

e)

5

42.

The table shows your total benefits from consuming different quantities of gas each week.

What is the marginal benefit of one more gallon of gas, when you currently have 3 gallons?

a)

1

b)

2

c)

3

d)

4

e)

5

43.

The table shows your total benefits from consuming different quantities of gas each week.

What is the marginal benefit of one more gallon of gas, when you currently have 4 gallons?

a)

1

b)

2

c)

3

d)

4

e)

5

44.

The table shows your total benefits from consuming different quantities of gas each week.


The price of gasoline is $2.50/gallon.


Given this information, the optimal number of gallons of gas to consume each week will be:

a)

2

b)

3

c)

4

d)

5

e)

6

45.

A deep-sea diver can sell each pearl he retrieves for $20 in the seaside market.


However, each time he dives in search of a pearl, it is harder to find than the one he found before. The table below describes the cost (in time and effort) of retrieving each successive pearl.


At what number of pearls harvested should the diver stop diving for more pearls?

a)

1

b)

2

c)

3

d)

4

e)

5

46.

An opportunity cost is entailed in which of the following situations?

I. A student decides to attend college full-time.

II. A family uses its $20,000 savings to purchase an automobile.

III. A farmer decides to grow more wheat and less corn.

a)

I only

b)

II only

c)

III only

d)

I and III only

e)

I, II, and III

47.

Katia is an accountant in a government-run business where she was placed after graduation.

a)

Command

b)

Traditional

c)

Free Market

d)

Mixed

48.

Ted is working towards his dream of becoming a lawyer by working at a law firm as a legal clerk.

a)

Free Market

b)

Traditional

c)

Command

49.

Sarah would like to become a doctor when she grows up. Unfortunately, she lives in a country where her job will be decided for her by the government.

a)

Traditional

b)

Free Market

c)

Mixed

d)

Command

50.

Sally works in a private company that has to follow government rules for public safety.

a)

Free Market

b)

Command

c)

Mixed

d)

Traditional

51.

Who or what answers the basic economic questions in a mixed economy?

a)

Individuals and Businesses

b)

Government

c)

Custom

d)

Individuals, Businesses, and Government

52.

What type of economy do most countries in the world have?

a)

Market economy

b)

Command economy

c)

Traditional economy

d)

Mixed economy

53.

Which of the following is NOT one of the three basic questions of economics when looking at economic systems?

a)

What goods and services will be produced?

b)

What is the price of the goods?

c)

Who is responsible for producing goods and services?

d)

How will goods and services be distributed to customers?

54.

If my government is selling me bread for $5 a loaf, and I have no choice but to buy that type of bread, I live in a _____ economy.

a)

Traditional

b)

Market

c)

Command

d)

Mixed

55.

Nike and Under Armour sell similar products. This leads to a decrease in price and an increase in quality.

a)

Free Market

b)

Command

c)

Traditional

56.

Driving a car on crowded highway produces

a)

a negative externality.

b)

a positive externality.

57.

Apartment dwellers who buy fire alarms or fire extinguishers generate a

a)

negative externality.

b)

positive externality.

58.
Economic system where government controls everything.
a)
Market
b)
Command
c)
Mixed
d)
Free Enterprise
59.
Type of Economy that is half command and half market
a)
Traditional
b)
Command
c)
Market 
d)
Mixed
60.

What is the free rider problem?

a)

scarcity even when you pay for a good

b)

Reaping all the benefits without contributing

c)

Common goods that don't have a price

d)

none of the above

61.

What statement best explains why the government provides goods and services to its citizens?

a)

To provide benefits to small groups of people in certain areas of the country.

b)

To provide goods and services that would not be available if individuals had to provide them.

c)

To compete with businesses in the private sector.

d)

To make a large profit by providing certain goods and services to it's citizens.

62.

The government pays for public goods and services through —

a)

donations from wealthy politicians

b)

donations from foreign nations

c)

revenue from sales and income taxes

d)

revenue from the lottery

63.

What is one reason that local law enforcement is considered a public good?

a)

Everyone in the community benefits from it.

b)

Nobody in the community has to pay for it.

c)

Private firms make a profit from producing it.

d)

Individual citizens pay directly for it.

64.

Which of the following is an example of a positive externality resulting from an outdoor band concert?

a)

An elderly woman in her apartment hears a song that she liked as a child.

b)

A pair of endangered birds leave their nest in a nearby tree when the concert starts.

c)

A pizza parlor closes early, because all of its customers are at the concert.

d)

A traffic jam occurs as drivers hunt for parking spots near the concert.

65.

Which of the following explains why a city fireworks display on the Fourth of July is provided as a public good?

a)

Fireworks displays usually take place in a public area.

b)

Fireworks are a scarce resource.

c)

Nonpayers cannot be prevented from seeing the fireworks.

d)

Each consumer pays a fee to see the fireworks.

66.

The part of the economy that involves the transactions of the government.

a)

Private sector

b)

Free rider

c)

Public sector

d)

Externality

67.

Someone who would not choose to pay for a certain good or service,but who would get the benefits of it anyway if it were provided as a public good.

a)

Market failure

b)

Externality

c)

Public good

d)

Free rider

68.

The part of the economy that involves the transactions of individuals and businesses.

a)

Public sector

b)

Externality

c)

Private sector

d)

Public good

69.

Is a situation in which the market, on its own, does not distribute resources efficiently.

a)

Public good

b)

Private sector

c)

Externality

d)

Market Failure

70.

An Economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume.

a)

Public good

b)

Free rider

c)

Externalities

d)

Private sector

71.

An example of a public good is...

a)

Firefighters

b)

police officers

c)

parks

d)

all of thee above

72.

What does non-rival mean?

a)

More than one person can use it

b)

Only one person can use it

c)

There are direct competitors for a product

d)

None of the above

73.

Excludable means:

a)

Someone can deny access to a good

b)

Everyone is able to access a good

c)

Multiple people can use something at the same time

d)

Only one person can use something at one time

74.

Public goods are

a)

rival and excludable

b)

non-rival and non-excludable

c)

rival and non-excludable

d)

non-rival and excludable

75.

TRUE or FALSE: We can have everything that we want because we have unlimited resources.

a)

TRUE

b)

FALSE

76.
Economics is the study of how people seek to satisfy their needs and wants by making choices.
a)
True
b)
False
77.
What is the fundamental problem of economics? 
a)
How to keep consumers out of debt?
b)
How to fulfill our unlimited wants and needs with limited resources?
c)
How to figure out the way to make the most money?
d)
How do we ensure all people get a college education?
78.

things purchased by consumers

a)

goods

b)

consumer

c)

producer

d)

supply

79.

A person who provides a good or service

a)

producer

b)

need

c)

want

d)

consumer

80.

A person who purchases a good or service

a)

consumer

b)

taxes

c)

supply

d)

good

81.

It is the study of the nations economy as a whole.

a)

Microeconomics

b)

National economy

c)

National output

d)

Macroeconomics

82.

Macroeconomis could be defined as ...

a)

the part of economics concerned with large-scale or general economic factors and policies that affected millions of people.

b)

is the study of what is likely to happen (tendencies) when individuals make choices in response to changes in incentives, prices, resources, and/or methods of production.

83.

Microeconomics can be defined as ...

a)

the part of economics concerned with large-scale or general economic factors, such as interest rates and national productivity.

b)

the study of what is likely to happen (tendencies) when individuals make choices in response to changes in incentives, prices, resources, and/or methods of production.

84.
Which of the following is an example of a positive statement?
a)
Unemployment is higher this year than it has been in the last 5 years.
b)
Unemployment benefits help lift people out of poverty.
c)
Free education helps alleviate the problem of unemployment.
d)
The government should provide jobs to those who are unemployed to lower the unemployment rate.
85.
Which of the following is not a factor of production?
a)
Land
b)
Labor
c)
Enterprise
d)
Capital
86.
Which of the following economic systems answers the three economic questions with laws or force?
a)
Market
b)
Command
c)
Traditional
d)
Mixed
87.
Which of the following is not one of the three economic questions?
a)
How to produce?
b)
For whom to produce?
c)
When to produce?
d)
What to produce?
88.

WHAT ARE THE 4 FACTORS OF PRODUCTION?

a)

Land, Capital, Need & Want

b)

Land, Labor, Capital, Entrepreneurs

c)

Water, Air, Food & Shelter

d)

Land, Capital, Good & Service

89.

_______________ IS KNOWN AS THE NATURAL RESOURCES USED TO PRODUCE GOODS AND SERVICES

a)

Entrepreneurs

b)

Capital

c)

Labor

d)

Land

90.

_______________ IS KNOWN AS THE MANMADE RESOURCES USED TO PRODUCE GOODS AND SERVICES.

a)

Entrepreneurs

b)

Capital

c)

Labor

d)

Land

91.

Which of the factors of production is this?

a)

capital

b)

entrepreneur

c)

land

d)

labor

92.

Which one of the factors of production is this?

a)

capital

b)

entrepreneur

c)

land

d)

labor

93.

Steve Jobs the founder of Apple is holding up an I-phone. What is another name for someone who starts a business?

a)

capital

b)

entrepreneur

c)

land

d)

labor

94.

Which factor of production is this?

a)

capital

b)

entrepreneur

c)

land

d)

labor

95.
Any technology/machinery involved in the production process:
a)
Human Capital
b)
Physical Capital
c)
Investment Capital
d)
Enterprise Capital
96.
An individual's knowledge or skills that make production of a good/service more efficient
a)
Human Capital
b)
Physical Capital
c)
Investment Capital
d)
Enterprise Capital
97.
An individual's knowledge or skills that make production of a good/service more efficient
a)
Human Capital
b)
Physical Capital
c)
Investment Capital
d)
Enterprise Capital
98.

In Economics, Trade-off and Opportunity Cost mean the same thing.

a)

True!

b)

False!

99.

Because of scarcity, people are forced to make _________ about how to use resources.

a)

Choices

b)

Opportunities

c)

Analyses

d)

Investments

100.

A Trade-off is

a)

a purchase in a marketplace.

b)

an alternative that we sacrifice when we make a decision.

c)

any good or service a consumer needs.

d)

a factor of production.

101.

What is the most basic problem of economics?

a)

scarcity

b)

productivity

c)

money

d)

resources

102.

Economics is the study of money and how to get rich.

a)

True

b)

False

103.

Economics is the study of people and how they make decisions.

a)

True

b)

False

104.

Every decision you make has a cost.

a)

True

b)

False

105.

What name is given to the value of the next best alternative that you give up when you make a decision?

a)

Trade-offs

b)

Opportunity cost

c)

Lost opportunities

d)

Options

106.

Juan came up with the following priority (in order) list of what he could do Friday after school.


1) Go to work (what he did)

2) Go to a football game

3) Go to a friend's house

4) Go home and sleep


What are the Trade-offs of Juan's decision to go to work?

a)

Go to work

b)

Go to a football game

c)

Go to a friend's house

d)

Go home and sleep

107.

When you make a choice, all the options that you have are called...

a)

Trade-offs

b)

opportunity cost

c)

lost opportunities

d)

options

108.

Opportunity cost can also be called the ____ of your decision.

a)

Cost

b)

Reward

c)

Evaluation

d)

Lost opportunity

109.

Juan came up with the following prioritize (in order) list of what he could do Friday after school.


1) Go to work (what he did)

2) Go to a football game

3) Go to a friend's house

4) Go home and sleep


What is the opportunity cost of Juan's decision to go to work?

a)

Go to work

b)

Go to a football game

c)

Go to a friend's house

d)

Go home and sleep

110.

The table shows your total benefits from consuming different quantities of gas each week.

What is the marginal benefit of one more gallon of gas, when you currently have 0 gallons?

(a)  

111.

The table shows your total benefits from consuming different quantities of gas each week.

What is the marginal benefit of one more gallon of gas, when you currently have 1 gallons?

(a)  

112.

The table shows your total benefits from consuming different quantities of gas each week.

What is the marginal benefit of one more gallon of gas, when you currently have 2 gallons?

(a)  

113.

The table shows your total benefits from consuming different quantities of gas each week.

What is the marginal benefit of one more gallon of gas, when you currently have 3 gallons?

(a)  

114.

The table shows your total benefits from consuming different quantities of gas each week.

What is the marginal benefit of one more gallon of gas, when you currently have 4 gallons?

(a)  

115.

The table shows your total benefits from consuming different quantities of gas each week.


The price of gasoline is $2.50/gallon.


Given this information, using the principle of Optimization at the Margin, the optimal number of gallons of gas to consume each week will be:

(a)  

116.

A deep-sea diver can sell each pearl he retrieves for $20 in the seaside market.


However, each time he dives in search of a pearl, it is harder to find than the one he found before. The table below describes the cost (in time and effort) of retrieving each successive pearl.


At what number of pearls harvested should the diver stop diving for more pearls?

(a)  

117.

Using cost-benefit analysis, a local government would decide to build a new bridge if

a)

The additional tax paid by an individual resident is greater than the additional benefit of building the bridge for all residents.

b)

The toll paid by an individual resident crossing the bridge is less than the resident’s benefit from crossing the bridge.

c)

The total costs of building the bridge are less than the total benefits from building the bridge.

d)

The total costs of building the bridge are greater than the total benefits from building the bridge.

e)

Total costs are at a minimum and total benefits are at a maximum.

118.

Assume a worker can either cut grass or wash windows in a given day. It takes 5 hours to mow a one-acre lawn and 2.5 hours to wash all the windows in a house. When a worker chooses to wash the windows of four houses in a neighborhood, what is the opportunity cost of this decision?

a)

The pay the worker receives for washing the windows in the four houses

b)

The pay the worker would receive for cutting one lawn

c)

Cutting the grass at the same four houses

d)

The pay the worker would have received from cutting the grass at two houses

e)

The pay the worker would receive for cutting .25 lawns

119.

I bougt a cup of Starbucks coffee for $1.50. I decided to have another cup. What was my cost?

a)

My opportunity cost was $1.50

b)

My Marginal Cost was $1.50

c)

There was no marginal or opportunity cost

120.

The additional amount of an individual gets from consuming another good or service

a)

Marginal Utility

b)

Opportuntity Costs

c)

Negative Utility

d)

Law of Diminishing Marginal Utility

121.

As an individual consumes an additional good or servce, their satisfaction decreases

a)

Marginal Utility

b)

Law of Diminishing Marginal Utility

c)

Utility

d)

Negative Utility

122.

Amount of personal satifisfaction or pleasure one gets from consuming a good or service

a)

Utility

b)

Marginal Utility

c)

Marginal costs

d)

Negative Utility

123.

The additional benefit of the use/comsumption of an additonal good or service

a)

Marginal benefit

b)

Marginal cost

c)

Utility

124.

You made a good decision if:

a)

Marginal cost is greater then marginal benefit

b)

Marginal cost is less than marginal benefit

c)

Marginal benefit is greater then marginal cost

d)

Marginal benefit is less then marginal cost

125.

Ava paid $10 for 14 pencil sharpeners and paid $2.00 for shipping. She sold them for $2 each. How much profit did Ava make when she sold all of the pencil sharpeners?

a)

$16.00

b)

$28.00

c)

$10.00

d)

$14.00

126.

Donovan made a picnic table to sell for profit. He made a list about what he did:

*price paid for wood: $45

*price paid for nails: $5

*cost of paint: $10

*selling price: $100

What was Donovan's profit from selling the table?

a)

$55

b)

$60

c)

$40

d)

$50

127.
Which best describes a public good?
a)
A good provided by the government 
b)
A good purchased by individuals
c)
A good that exists only in a free market
d)
A good that produces no externalites
128.
Government regulations exist to
a)
Increase economic freedom
b)
Protect consumers from negative externalities
c)
Punish people who intervene in the free market
d)
Provide incentives to privatize
129.
Getting a flu shot is an example of a ________ externality
a)
Negative
b)
Neutral
c)
Positive
130.
When the government creates a law used to protect individuals this is know as:
a)
Deregulation
b)
Regulation
c)
Positive Externality
d)
Preventing a market failure

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