A high school student buys a sweatshirtfrom a store on sale at 20% off.In this exchange,

the student and the store benefit

Economics is the study of how

people use their scarce resouces to satisfy unlimited wants

A basic role of entrepreneurs in the economy is to

take the risks associated with starting new businesses.

Which is the most essential for an efficient market economy?

active competition in the marketplace

Scarcity arises because all societies have

limited productive resources to satisfy unlimited wants

In every economic system, people must choose how to

make the best use of scarce resources

What does the circular flow model of the economy describe?

the flow of resources, products, income and revenue in an economy

Why do medical doctors generally earn more than farmers?

Medical doctors are more scarce, given the demand for their services

In a market economy, the public interest is likely to be served even when individuals pursue their own goals because of

the operation of competitve markets

The essential difference between a command economy and a market economy is that in a market economy

buyers and sellers determine resource allocation

Which is a basic economic question that must be answered by all economic systems?

What goods and services will be produced?

The opportunity cost of a new city park is the

best alternative use of resources given up for the park

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Econ Unit 1 Review

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Questions 20

Answers

1
Firms wish to sell their productsat high prices. We wish to buyproducts at low prices. In a marketeconomy this conflict
government regulation
collective bargaining
competition
lawsuits
2
A high school student buys a sweatshirtfrom a store on sale at 20% off.In this exchange,
the student benefits, but the store does not
the student and the store benefit
the store benefits, but the student does not
neither the student nor the store benefits
3
Economics is the study of how
gov't allocates scarce resources to satisfy people's unlimited wants
gov't supplies money to businesses to produce goods and services
businesses suppy unlimited goods and services with limited resources
people use their scarce resouces to satisfy unlimited wants
4
A basic role of entrepreneurs in the economy is to
take the risks associated with starting new businesses.
buy and sell the common stocks of new corporations.
show government what new products the economy can produce and sell.
create dividends for investors in new businesses.
5
the maximum output a nation could possibly produce in any one year is limited by its
unemployment rate
business investment
consumer income
productive resources
6
Which is the most essential for an efficient market economy?
Effective labor unions
responsible decisions by business leaders
active competition in the marketplace
strong government regulation
7
Which would most likely increase the productivity of labor?
investing in capital goods
increase in interest rates for business loans
decrease in the use of labor saving technology
decreasing pay of corporate executives
8
Scarcity arises because all societies have
limited productive resources to satisfy unlimited wants
unlimited needs and limited wants
unlimited productive resources to satisfy limited wants
limited needs and unlimited wants
9
In every economic system, people must choose how to
save money to reduce the national debt
make the best use of scarce resources
create an equal distribution of income
satisfy all wants of society
10
studying the "smaller picture" or the choices made by individuals within an economy is known as
macroeconomics
consumer economics
microeconomics
normative economics
11
Which do economists consider to be a productive resource (factor of production)?
money
profit
interest
labor
12
What does the circular flow model of the economy describe?
the flow of resources, products, income and revenue in an economy
the flow of profit in an economy
the flow of money in the foreign exchange market
the flow of international trade around the world
13
Why do medical doctors generally earn more than farmers?
There are fewer medical doctors than farmers in our economy.
Medical doctors are more scarce, given the demand for their services
Medical doctors are more efficient than farmers.
Medical doctors provide a service rather than make a product.
14
In a market economy, the public interest is likely to be served even when individuals pursue their own goals because of
the operation of competitve markets
central planning and coordination of market activity
the social responsibility of business leaders
individuals understanding of what is in the public's interest
15
Which of these productive resources includes factories, tools, trucks, machines and computers?
human resources
capital resources
agricultural goods
natural resources
16
A study of total consumption in the U.S. economy would involve
consumer economics
macroeconomics
microeconomics
normative economics
17
An economic system where all resources are gov't owned and production is directed by the central plans of the gov't
pure command economy
pure market economy
monopoly economy
mixed economy
18
The essential difference between a command economy and a market economy is that in a market economy
central planning creates an effective incentive system
prices are largely determined by gov't regulation of businesses
buyers and sellers determine resource allocation
shortages occur more than surpluses
19
Which is a basic economic question that must be answered by all economic systems?
How will corporations be organized?
What form of central planning will the government use?
How can markets be kept competitive?
What goods and services will be produced?
20
The opportunity cost of a new city park is the
increased congestion from traffic around the park
lack of personal incentive for people to take care of the park
cost of staff and maintenance for the park
best alternative use of resources given up for the park

Econ Unit 1 Review Flashcards | StudBud