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Unit 1 Fundamental Economic Concepts Flashcards | StudBud
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Unit 1 Fundamental Economic Concepts
Unit 1 Fundamental Economic Concepts
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1
Which of the following statements is true regarding the relationships in the circular flow of the economy?
Government pay wages to firms who buy physical capital from households
Households pay interest to business in exchange for factor of production
Government buys goods from households in exchange for taxes
Businesses pay wages to households in exchange for factor of production
2
Circular Flow Model.
D represents which segment of the Circular Flow Model?
Resource Market
Goods & Services/ Products
Service/Payments
Product Market
3
Which statement best explains the importance of economic decision making when scarcity is a factor?
Each choice must be made with incomplete information.
Economic decisions are made by the majority.
Economic decisions provide access to more resources.
Each choice results in an opportunity cost.
4
What does point D represent on the production possibility curve?
unattainable
Efficient economy
inefficient economy
5
Circular Flow Model. What term represents C?
Product Market
Government
Households
Businesses
6
How would this graph most likely change if the price of a complementary good were to increase?
The supply curve would shift to the left.
The demand curve would shift to the right.
The demand curve would shift to the left.
The supply curve would shift to the right.
7
Demand for a good will most likely decrease when
Consumer income rises by ten percent.
The price of it decreases.
There are many substitutes for it.
Producers develop a new technology that produces goods more efficiently
8
Which of the following provides services and collects taxes?
Businesses/Firms
Households
Private Sector
Government
9
Which statement best explains the movement from
S
1 to
S
2 shown on this graph?
higher costs for natural resources
an increase in workers’ salaries
technological improvements in production
a decline in the production of a substitute good
10
Which statement best describes the role of households within the circular flow model?
They sell labor to businesses and pay taxes to government
They pay wages to government
They produce goods and services to sell to consumers
They collect taxes from businesses and individuals
11
Which statement best explains the move from
D
1 to
D
2 shown on this graph?
A research study finds that Product X has health benefits.
There is a decrease in the price of a complementary good.
The cost of Product X increases.
There is an increase in personal income taxes.
12
A production possibilities curve illustrates the ____________ facing an economy that ___________ only two goods.
trade-offs, produces
shortages, produces
prices, sells
trade-offs, consumes
13
College graduates are a segment of which factor of production?
land
labor
profit
goods
14
What does point A represent on the production possibility curve?
unattainable
inefficient
Efficient economy
15
Which of these most directly contributes to the problem of economic scarcity?
People must earn money to provide for their families.
People must take risks to create and improve technology.
People have to pay taxes to governments for services.
People have unlimited wants for goods and services.
16
What does point F represent on the production possibility curve?
Efficient economy
unattainable
inefficient
17
Circular Flow Model. What term represents B?
Income / $$$ / Rent, Wages, Interest, Profit
Businesses
Government
Goods & Services
18
Which statement best explains the economic concept of demand?
It varies because of political instability.
It depends on government intervention.
It is influenced by changes in price.
It is caused by an excessive supply.
19
Shift Factors of ____?____ 1. input 2. Technology 3. Expectations of future prices 4. Government Regulation
demand
marginal benefit
consumption
supply
20
Which factor can cause a shift on the demand curve?
Improved manufacturing efficiency
Investment capital
Prices of other goods
Government Regulations
21
Which government action would most likely increase the flow of money from households to businesses?
an expansion of public services
an increase in interest rates
a reduction of personal income tax
an increase in workplace regulations
22
Circular Flow Model. What term represents A?
Government
Product market
Businesses
Households
23
Which term is a factor of production?
Consumer Demand
Regulation
Entrepreneurship
Urban Growth
24
A freeze destroys the annual orange harvest. What will happen to Orange juice prices?
The price of orange juice will increase as the supply decreases.
The price of orange juice will remain the same as the demand increases.
The demand for orange juice will increase as the price decreases
The supply of orange juice will remain the same as the price decreases.
25
The lack of enough resources to produce everything people want is which central economic problem?
scarcity
productivity
production possibilities
allocation
26
Circular Flow Model. E represents which market?
Businesses
Taxes
Resource Market
Product Market
