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WorksheetsThinking Like an Economist
Total questions: 28
Worksheet time: 1hrs 24mins
What is the most basic economic issue for all societies?
scarcity
taxation
inflation
recession
A company decides to install more machines and lay off workers. Which economic question is addressed directly?
How to produce
What to produce
For whom to produce
Where to produce
In economic terms, what are land, labor, capital, and entrepreneurship?
production possibilities
factors of production
production trade-offs
opportunity costs
Jenny has enough money to buy either a CD or go to a movie with her friends. In economics, what is the choice that Jenny "gives up" called?
Positive Cost
Negative Cost
Opportunity Cost
Marginal Cost
What is the main idea behind the study of economics?
Monetary policy
Efficiency of production
Allocation of scarce resources
Business decisions
In economics terms, what does "there is no free lunch" mean?
someone must pay for everything
all production is designed to reduce scarcity
choices are never based on self-interest
people only think of others when making choices
How does the process of specialization change an economy?
eliminates unemployment
decreases competition
improves efficiency of production
increases government control
Unlimited Wants + Limited Resources = ????
scarcity
competition
savings
equilibrium
Unlimited Wants + Limited Resources =????
To deal with the problem in the above "equation," societies establish _________?
governments
economic systems
hierarchies
private business
In every economic system, what must people choose to do?
Satisfy ALL the wants of their society
Make the BEST use of scarce resources
Create an equal distribution of income
Save money to reduce the national debt
Which of the following is an opportunity cost of building a new public high school?
Cost of hiring teachers for all subjects at the new school
Change in the annual tax rate to pay for the new school
Cost of constructing the new school at a later date
Others goods and services given up in order to build the school
Which of the following is a result of the specialization of labor?
Increased inflation
Identical income
Increased output
Less interdependence
In which economic system are the factors of production privately owned?
Capitalism
Socialism
Command
Confucianism
In a market economy, what is the government's role?
Decides what goods are manufactured
Owns and operates major industries
Encourage competition among businesses
Sets prices on goods and services
There is a country in which the government owns all the industries, businesses, and farms. The government sets production and wages. The government provides all education, childcare, and medical care for all the people. What type of economy does this describe?
market
traditional
command
transitional
When comparing a traditional economy with a command economy, which of the following is true of both?
slow economic growth
freely fluctuating prices
private ownership of business
support of business competition
What is the economic system in which customs and religion of previous generations determine how the economy will use its scarce resources?
market
transitional
command
traditional
Which of the following is a characteristic of traditional economies?
Fast growing communities
high standard of living
light industrial production
slow economic growth
A government sets quotas and prints and distributes posters to inspire workers to increase their productivity. In which type of economy would this most likely take place?
command
traditional
market
transitional
What is the benefit of competition in a free market system?
Make sure everyone gets an equal share of resources
Create a variety of new and cheaper products
Cause producers to try and put each other out of business
Follow the traditional methods of production
In general, what type of economy does the United States have?
transitional
market
command
traditional
What is the PRIMARY incentive that motivates a manufacturer to sell a product?
Making profits on sales
Putting others out of business
Pleasing the government
Reputation of the product
Which type of economy produces the highest standard of living for its citizens?
transitional
market
traditional
command
Why would an inefficient factory close down under capitalism?
Low or negative profits
Government mandates
A central planner's decision
Adverse effects on income distribution
Which of the following countries exhibit the characteristics of a market economy?
United States
Cuba
North Korea
China
Which characteristic best describes a traditional economy?
Labor unions and wages
Customs and religions
Communism and inflation
Markets and systems
Which of the following is a main feature of a command economy?
Private ownership
Central planning
Heavy reliance on markets
Profit driven decision making
How are the basic questions of economics answered in a traditional economy?
People rely heavily on how things have always been done
Large corporations compete for business
The government generally owns all means of production
Technological advancements encourage growth
