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Econ Unit 1 Review Flashcards | StudBud
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Econ Unit 1 Review
Econ Unit 1 Review
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Questions
30
Answers
1
A state government builds a highway. This is an example of government fulfilling its role as what?
protector
regulator
provider
consumer
2
Dave gets a job at a grocery store, which pays him an hourly wage in exchange for his labor. He is participating in WHAT
human capital.
the factor market.
entrepreneurship.
the product market.
3
The efficient use of scarce resources leads to an increase in . . .
investment
capital
scarcity
productivity
4
Which of the following lists economic systems in order from least to most flexible?
free market, socialism, command
free market, command, socialism
command, socialism, free market
socialism, command, free market
5
The purpose of incentives in the free enterprise economy is
to have rivalry between producers and sellers to win more business
to provide rules and regulations to oversee economic activity.
to encourage people to work.
to maximize income and profit so the system will be efficient.
6
Which of the following is demonstrated by the Circular Flow Model?
Philip buys gold in the product market to produce jewelry for sale
businesses pay for resources
Gary buys an iPad in the factor market
the government pays taxes to businesses and individuals
7
Which of the following descriptions best explains the meaning of opportunity cost?
the risk associated with producing a new item
the cost of business failure
the cost of choosing one alternative over another
the initial cost of starting a new business
8
According to the basic characteristic of the free enterprise system, what role should the government play?
provide rules & regulations & infrastructure to encourage economic activity
no government interaction
distribute key resources for the country
protect resources from inefficient use
9
An Entrepreneur is a person who organizes and operates a business, taking on greater than normal financial risks.
True
False
10
Opportunity cost refers to
the cost of labor when production is expanded or changed
the value of the next best alternative.
the dollar amount attached to a good or service.
the cost of not expanding production.
11
An economy that is producing the maximum amount of goods and services is
Underutilization
Growing
Efficient
Trading off
12
The purpose of competition in the free enterprise economy is
to maximize income and profit so the system will be efficient.
to have rivalry between producers and sellers to win more business
to provide rules and regulations to oversee economic activity.
to encourage people to work.
13
Scarcity is when there are limited quantities to meet unlimited wants & shortage occurs when a good/service is available
True
False
14
Why is scarcity a problem faced by every society?
wants are unlimited and resources are limited
wants are unlimited and resources are unlimited
wants are limited and resources are unlimited
wants are limited and resources are limited
15
In what type of economy does the government decide whether houses or apartments will be built?
traditional
mixed
market
command
16
The three synonymous terms to describe the U.S. economic system are free enterprise, capitalism, and
limited role of government.
free market.
economic freedom.
competition.
17
What motivates people to work, save, and invest?
incentives
economic freedom
a variety of goods
government regulations
18
Which of these do economists use to illustrate all conceivable combinations of output?
a factor of production
a cost-benefit analysis
a division of labor
a production possibilities curve
19
In the Circular Flow Model...
factors of production flow from government to firms
income paid in the factor market flows from firms to households
goods and services flow from household to firms
spending on goods and services flows from firms to households
20
Which of these economic systems have the least in common?
market economy and capitalism
command economy and socialism
command economy and capitalism
free-enterprise economy and market economy
21
Which of the following explains why products made under a command economy are more likely to be low quality?
The workers who make them are left to manage production facilities
The workers who make them are forced by tradition to use old methods.
The workers who make them are not given quality-control guidelines.
The workers who make them have little incentive to make them well.
22
Which systems is the government most likely to provide people with goods and services they could not otherwise afford?
a socialist economy
a free-enterprise economy
a traditional economy
a market economy
23
Which of the following includes the best examples of three different factors of production?
oil, teachers, lawyers
builders, manufacturers, investors
coal, clerks, tractors
profit, clerks, trucks
24
An entrepreneur creates a new technology that makes manufacturing twice as efficient, how will production be affected?
It would change the shape of the frontier.
It would expand the frontier.
It would make the frontier smaller.
It would not change the frontier.
25
The purpose of government in the free enterprise economy is
to direct scarce resources into production of useful goods and resources.
to provide rules and regulations to oversee economic activity.
to provide benefits for companies so production will increase
to direct choices of consumers so scarce resources will not be wasted.
26
What gives people and businesses the opportunity to make their own decisions?
profit motive
free enterprise
command economy
economic freedom
27
Consumers are powerful because
their interests force producers to behave ethically.
they have more rights than corporations.
they help decide a business’s opportunity costs.
they drive decisions about what to produce.
28
Which of the following statements best describes the purpose of the production possibilities curve?
Shows which products are most profitable.
Predicts the future production of a nation.
Identifies all combinations of goods & services an economy can produce.
Identifies trends in production.
29
Which of the following statements best describes capital as a factor of production?
natural resources harvested with the sole purpose of developing other goods
already-produced goods used to produce other goods or services
intellectual and physical skills of workers
those who assume risk when using finances and business knowledge
30
In a free market economy, who answers the three basic questions?
consumers & producers
government
consumers
producers
