Review Unit 1 Fundamentals

Question 1

A country in which the government owns all the industries, businesses, and farms.

Accepted Answer

command

Question 2

Jenny has money to buy either a CD or to go to a movie with her friends. Her decision involves

Accepted Answer

opportunity cost

Question 3

“There is no free lunch.” In economic terms, what does this mean?

Accepted Answer

everything must be paid for in some way

Question 4

Which type of economy produces the highest standard of living for its citizens?

Accepted Answer

market

Question 5

What is the primary incentive that motivates a manufacturer to sell a product?

Accepted Answer

making profits on sales

Question 6

In every economic system, what must people choose to do?

Accepted Answer

make the best use of scarce resources

Question 7

In which of the following economic systems are the “factors of production” privately owned?

Accepted Answer

capitalism

Question 8

What could cause a shift to point Y?

Accepted Answer

technology increases

Question 9

Rational decision making involves...

Accepted Answer

weighing the marginal costs and benefits

Question 10

This is the basic problem of all societies...

Accepted Answer

scarcity

Question 11

A company decides to install more machines and lay off workers. This is an example of...

Accepted Answer

How to produce

Question 12

Which point represents inefficient use of resources?

Accepted Answer

X

Question 13

Which characteristics best describes a traditional economy?

Accepted Answer

customs and religions

Question 14

Unlimited Wants + Limited Resources = ?????

Accepted Answer

scarcity

Question 15

Land, labor, capital and entrepreneurship are...

Accepted Answer

factors of production

Question 16

If the cost of speeding tickets increases, the number of speeders should decrease.

Accepted Answer

an example of a negative incentive

Question 17

The term “laissez faire” (hands off) refers to which of the following concepts?

Accepted Answer

limited government controls

Question 18

Which of the following is an opportunity cost of building a new public high school?

Accepted Answer

goods and services given up in order to build the school

Question 19

How does the process of specialization change an economy?

Accepted Answer

increases productivity

Question 20

Which of the following countries exhibit the characteristics of a market economy?

Accepted Answer

United States

Question 21

Scarcity causes societies to create...

Accepted Answer

economic systems

Question 22

What is the benefit of competition in a free market system?

Accepted Answer

create a variety of new and cheaper products

Question 23

In a market economy, what is the government’s role?

Accepted Answer

encourages competition among businesses

Question 24

Which is the main way to allocate resources in a market economy?

Accepted Answer

price

Question 25

Which of the following is a result of the specialization of labor?

Accepted Answer

increased output

Question 26

Which of the following is a main feature of a command economy?

Accepted Answer

central planning

Question 27

In general, what type of economy does the United States have?

Accepted Answer

mixed market

Question 28

What is the main idea behind the study of economics?

Accepted Answer

allocation of scarce resources

Question 29

Economic system in which customs of previous generations determine the economy...

Accepted Answer

traditional

Question 30

Why would an inefficient factory close down under capitalism?

Accepted Answer

low or negative profits

Question 31

Comparing a traditional economy with a command economy, which of the following is true of both?

Accepted Answer

slow economic growth

Question 32

A government sets quotas and distributes posters to inspire workers to increase productivity.

Accepted Answer

command economy

Review Unit 1 Fundamentals

Questions 32

Review Unit 1 Fundamentals

Questions 32