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Economics Test 1
Why are all goods and services scarce?
An example of a safety net is...?
Economics Test 1
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Unit 1 Chapters 1-3
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Answers
1
An example of a safety net is...?
unemployment compensation
paying corporate tax
making a profit
2
Why are all goods and services scarce?
Some people want to have more goods than others.
Some goods cost more than others
All resources are scarce.
3
What is a factory building an example of?
an economic trade-off
physical capital
human capital
4
___________ is the financial gain made in a transaction
Tax
Profit
Trade
5
The resources used to make all goods and services are the
production possibilities.
factors of production.
production trade-offs.
opportunity costs.
6
A noisy military air base is an example of what?
negative externality
production factor
market failure
7
What incentive motivates a manufacturer to sell a product?
putting others out of business
making profits on sales
pleasing the consumer
8
What type economy does the United States have?
Traditional Economy
Centrally Planned Economy
Mixed Economy
9
The term laissez faire means what?
"Government help"
"Lazy fair"
"Let them be"
10
Human capital includes
the equipment used by a mechanic to fix a car.
the salary paid to a waiter
a ship's captain's knowledge of the river
11
How many choices are involved in a decision?
2
4
1
3
12
Which of the following is NOT characteristic of a centrally planned economy?
The central government makes all economic decisions.
Each collective or factory sets its own goals.
The central government owns all land and capital.
13
An efficient economy is one that
uses its resources to make the most goods and services.
waste resources to make a product
takes a long time to make goods
14
What is the motivating force behind the free market?
self-interest
competition
specialization
15
What is the struggle among various producers for the consumer’s business called?
competition
exploitation
arguing
16
What is an example of a traditional economy?
a high standard of living.
government assigns jobs
farmers trading goods made with local resources
17
Term is used to describe the interaction of buyers and sellers without a central plan.
Government Intervention
Laissez-faire
Invisible Hand
18
A person who drives on the highway but pays no taxes is called what?
exemption
free rider
speeder
19
Why does even a free market economy need some government intervention?
to tax all goods
to protect buyers and sellers against unfair circumstances
to control production
20
What is the function of an economic system?
to ensure laws are not broken
to produce and distribute goods and services
everyone waiting for subsidies
21
What is one of the most important advantages of a free market?
It encourages growth and variety.
opportunity for entrepreneurship
freedom of choice
22
Which of the following is a public good?
an airport
a park
In-and-out restuarant
23
Any resources that are made by humans and used to create other goods and services are called
services
capital
production
labor
24
Term for the total value of all goods and services produced in a particular economy?
capital gains
grand profit total
gross domestic product
