CH 1.2 : The Basic Economic Problem
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Questions and Answers

What is labor in the context of economics?

  • Human effort provided in the creation of products and services (correct)
  • Government-controlled enterprises and services
  • Tools and machinery used to produce goods and services
  • Individuals who combine the other three factors to create goods and services

    • What sector of the economy involves manufacturing and processing activities?

  • Primary Sector
  • Secondary Sector (correct)
  • Informal Sector
  • Tertiary Sector

    • What is the main characteristic of the Public Sector?

  • Businesses owned by individuals or corporations
  • Government-controlled enterprises and services (correct)
  • Registered businesses whose activities are measured in official statistics
  • Unregistered businesses not included in official economic statistics

    • What kind of goods are consumed immediately or shortly after purchase?

    <p>Non-durable Goods</p> Signup and view all the answers

    What is the term for the portion of income available for spending or saving after taxes?

    <p>Disposable Income</p> Signup and view all the answers

    What is a key component of sustainable development?

    <p>Recycling</p> Signup and view all the answers

    What is a challenge to achieving sustainable development?

    <p>Pollution</p> Signup and view all the answers

    What is an example of a supportive measure for sustainable development?

    <p>Subsidies for environmentally friendly practices</p> Signup and view all the answers

    What sector of the economy provides services rather than goods?

    <p>Tertiary Sector</p> Signup and view all the answers

    Which of the following is a type of consumer group?

    <p>Businesses</p> Signup and view all the answers

    What is the fundamental economic challenge that requires individuals and societies to make choices?

    <p>Scarcity of resources</p> Signup and view all the answers

    What type of scarcity occurs when resources are insufficient to produce a good despite its availability?

    <p>Absolute scarcity</p> Signup and view all the answers

    Which of the following is an example of a free good?

    <p>Air</p> Signup and view all the answers

    What is the opportunity cost of a choice?

    <p>The benefit of the next best alternative</p> Signup and view all the answers

    What is an example of an economic good?

    <p>Potatoes</p> Signup and view all the answers

    What is the term for the primary processes that define economic activity within a society?

    <p>Production, exchange, and consumption</p> Signup and view all the answers

    What is an example of land, which is a factor of production?

    <p>Natural resources used to produce goods and services</p> Signup and view all the answers

    What is the term for the foregone benefit of choosing one option over another?

    <p>Opportunity cost</p> Signup and view all the answers

    What type of scarcity exists when resources are sufficient to satisfy needs but are inaccessible to most due to economic constraints?

    <p>Relative scarcity</p> Signup and view all the answers

    What is the result of the limited availability of resources?

    <p>The need to make choices</p> Signup and view all the answers

    What is the primary reason individuals and societies must make choices?

    <p>The limited availability of resources</p> Signup and view all the answers

    What is the difference between absolute and relative scarcity?

    <p>Absolute scarcity refers to the lack of availability, while relative scarcity refers to the lack of affordability</p> Signup and view all the answers

    What is the main characteristic of free goods?

    <p>They are naturally available without cost</p> Signup and view all the answers

    What is the result of choosing one option over another?

    <p>The foregone benefit of the next best alternative</p> Signup and view all the answers

    What are the primary processes that define economic activity within a society?

    <p>Production, Exchange, and Consumption</p> Signup and view all the answers

    What is an example of an economic good?

    <p>A loaf of bread</p> Signup and view all the answers

    Which of the following is a factor of production?

    <p>Land</p> Signup and view all the answers

    What is the significance of opportunity costs in economics?

    <p>It reflects the trade-offs involved in making choices</p> Signup and view all the answers

    What is the main difference between economic goods and free goods?

    <p>Economic goods require scarce resources to produce, while free goods do not</p> Signup and view all the answers

    What is the economic challenge that arises due to the limited availability of resources?

    <p>Scarcity</p> Signup and view all the answers

    What is the primary role of an entrepreneur in the economy?

    <p>To combine labor, capital, and entrepreneurship to create goods and services</p> Signup and view all the answers

    Which sector of the economy is responsible for providing services rather than goods?

    <p>Tertiary Sector</p> Signup and view all the answers

    What is the main difference between the formal and informal sectors?

    <p>The inclusion in official economic statistics</p> Signup and view all the answers

    What is the primary goal of sustainable economic development?

    <p>To achieve economic growth without depleting natural resources or harming human and environmental health</p> Signup and view all the answers

    Which of the following is a challenge to achieving sustainable development?

    <p>Pollution and greenhouse effects</p> Signup and view all the answers

    What is the primary role of households in the economy?

    <p>To consume goods and services</p> Signup and view all the answers

    What is the primary purpose of exchange rates?

    <p>To facilitate international trade</p> Signup and view all the answers

    What is the primary goal of government regulatory measures for sustainability?

    <p>To curb environmentally harmful activities</p> Signup and view all the answers

    Which of the following is an example of a durable good?

    <p>Vehicle</p> Signup and view all the answers

    What is the primary difference between businesses and households as consumers?

    <p>The purpose of consumption</p> Signup and view all the answers

    What is the main reason why individuals and societies have to make choices?

    <p>Because of the limited availability of resources</p> Signup and view all the answers

    What is the difference between absolute and relative scarcity?

    <p>Absolute scarcity is when resources are insufficient, while relative scarcity is when resources are sufficient but unaffordable</p> Signup and view all the answers

    Which of the following is an example of an economic good?

    <p>Potatoes</p> Signup and view all the answers

    What is the opportunity cost of a choice?

    <p>The foregone benefit of the next best alternative</p> Signup and view all the answers

    What are the primary processes that define economic activity within a society?

    <p>Production, exchange, and consumption</p> Signup and view all the answers

    What is the significance of opportunity costs in economics?

    <p>It reflects the trade-offs involved in making choices</p> Signup and view all the answers

    Which of the following is a factor of production?

    <p>Labor</p> Signup and view all the answers

    What is the main characteristic of free goods?

    <p>They are naturally available without cost</p> Signup and view all the answers

    What is the result of the limited availability of resources?

    <p>The necessity of making choices and facing opportunity costs</p> Signup and view all the answers

    What is the primary goal of economic activity?

    <p>To allocate resources in the most efficient way possible</p> Signup and view all the answers

    What is the primary function of entrepreneurship in an economy?

    <p>To combine labor, capital, and natural resources to create goods and services</p> Signup and view all the answers

    What is the main characteristic of the Tertiary Sector?

    <p>It provides services rather than goods</p> Signup and view all the answers

    What is the primary difference between the Formal and Informal Sectors?

    <p>Formal sector includes registered businesses, while informal sector includes unregistered businesses</p> Signup and view all the answers

    What is the primary goal of sustainable economic development?

    <p>To conduct economic growth without depleting natural resources or harming human and environmental health</p> Signup and view all the answers

    What is the primary role of households in the economy?

    <p>To consume goods and services</p> Signup and view all the answers

    What is the primary purpose of exchange rates?

    <p>To facilitate international trade</p> Signup and view all the answers

    What is the primary goal of government regulatory measures for sustainability?

    <p>To curb environmentally harmful activities</p> Signup and view all the answers

    What is the primary characteristic of non-durable goods?

    <p>They are consumed immediately or shortly after purchase</p> Signup and view all the answers

    What is the primary role of businesses in the economy?

    <p>To purchase capital goods to produce other goods and services</p> Signup and view all the answers

    What is the primary challenge to achieving sustainable development?

    <p>Pollution and exploitation of labor</p> Signup and view all the answers

    What is the underlying reason for the existence of opportunity costs?

    <p>The limited availability of resources</p> Signup and view all the answers

    Which of the following is an example of relative scarcity?

    <p>A lack of access to healthcare in a developing country</p> Signup and view all the answers

    What is the primary role of production in economic activity?

    <p>To allocate resources efficiently</p> Signup and view all the answers

    What is the term for the process of allocating resources to produce goods and services?

    <p>Production</p> Signup and view all the answers

    Which of the following is an example of an economic good that is not a free good?

    <p>Grain</p> Signup and view all the answers

    What is the primary reason why governments must make budget allocations?

    <p>To address economic constraints</p> Signup and view all the answers

    What is the term for the benefit given up when choosing one option over another?

    <p>Opportunity cost</p> Signup and view all the answers

    Which of the following is a factor of production that is naturally available?

    <p>Land</p> Signup and view all the answers

    What is the result of making a choice due to the limited availability of resources?

    <p>Opportunity costs arise</p> Signup and view all the answers

    What is the primary context in which individuals and societies must make choices?

    <p>Due to the limited availability of resources</p> Signup and view all the answers

    What is the primary reason why sustainable economic development involves integrating economic principles with ethical considerations?

    <p>To manage resources effectively and equitably</p> Signup and view all the answers

    What is the primary role of entrepreneurship in the economy?

    <p>To combine the other three factors of production to create goods and services</p> Signup and view all the answers

    What is the primary difference between the primary sector and the secondary sector?

    <p>The primary sector involves extraction of natural resources</p> Signup and view all the answers

    What is the primary goal of government regulatory measures for sustainability?

    <p>To curb environmentally harmful activities</p> Signup and view all the answers

    What is the primary difference between businesses and households as consumers?

    <p>Businesses purchase capital goods to produce other goods and services</p> Signup and view all the answers

    What is the primary purpose of exchange rates?

    <p>To determine how much of one currency can be exchanged for another</p> Signup and view all the answers

    What is the primary role of government in the economy?

    <p>To invest in public goods and services that benefit society as a whole</p> Signup and view all the answers

    What is the primary characteristic of the informal sector?

    <p>Includes unregistered businesses, which are not included in official economic statistics</p> Signup and view all the answers

    What is the primary goal of sustainable economic development?

    <p>To manage resources effectively and equitably</p> Signup and view all the answers

    What is the primary difference between durable goods and non-durable goods?

    <p>Durable goods are long-lasting goods</p> Signup and view all the answers

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