Economics Quiz - Production Factors and Systems

The basic resources used to produce goods and services. These include land, labor, and capital.

A type of economy where individuals make their own decisions about what to buy and sell, and businesses compete for customers. It relies heavily on profit incentives.

A system where the government controls the factors of production and decides what goods and services are produced. The government decides how resources are allocated.

A combination of both market and command economic systems. Individuals can choose what to buy, but the government regulates certain industries and provides social services.

The fundamental challenges that all economic systems face include deciding what to produce, how to produce it, and for whom to produce it, given limited resources.

The maximum amount of money protected by the FDIC in case of bank failure.

A type of investment where you become a part-owner of a corporation and share in its potential profits.

A type of investment where you lend money to a corporation or government, and they promise to pay it back with interest.

The principle that the satisfaction gained from consuming each additional unit of a good or service decreases as consumption increases.

Goods that can be used in place of another good, often due to price differences.

The study of how people make choices under conditions of scarcity. It investigates how individuals, businesses, and governments make decisions about allocating limited resources to satisfy unlimited wants.

The value of the next best alternative that is forgone when a choice is made. It represents the cost of choosing one option over another.

The idea that as you consume more of a good, the additional satisfaction you receive from each additional unit decreases. This means the first unit gives you the most satisfaction, and each subsequent unit brings less joy.

All possible quantities of a product desired to be consumed by buyers at every possible price. It shows the relationship between the price of a good and the quantity buyers are willing and able to purchase at that price.

The total value of all goods and services produced in a country during a specific year. It measures the overall size of the economy.

A business organization that is considered a unique entity separate from its owners. It limits the liability of its owners to the amount of their investment in the company.

A good that can be used in place of another good. When the price of one good increases, the demand for its substitute increases.

A good that is used with another good. When the price of one good increases, the demand for its complement decreases.

A tax system where higher earners pay a larger percentage of their income in taxes, reducing income inequality.

A tax system where everyone pays the same percentage of their income in taxes, regardless of their income level.

A tax system where lower earners pay a larger percentage of their income in taxes, widening income inequality.

The principle that only those who directly benefit from public services should be required to pay for them.

A banking system where banks keep a fraction of deposits as reserves and lend out the rest, creating new money.

A business structure where two or more individuals share profits, responsibilities, and liabilities. Think of a restaurant where two chefs are partners.

The total value of all final goods and services produced within a country's borders in a specific period. It reflects the country's economic output.

A market structure where numerous firms sell identical products. No single firm can influence the market price and buyers have perfect information. Think of a farmers market with many vendors selling identical produce.

A market structure where a single firm dominates the entire industry. Think of a company that owns the only electric power plant in a city.

A point on the production possibilities curve (PPC) that represents the most efficient use of resources to produce both goods. Any point on the curve uses all available resources for maximum output, while a point inside the curve indicates wasted resources.

This occurs due to an increase in resources such as labor, capital, or land. This allows the economy to produce more of both goods.

It represents a point where the economy is producing the maximum possible output of one good, but none of the other good.

Moving from Point C to Point D on the PPC implies reallocating resources away from one good (in this case, farms) and towards the production of the other good (computers).

The curve represents the maximum combination of two goods an economy can produce given its resources and technology. Any point on the PPC represents an efficient allocation of resources. Points inside the curve represent inefficient use of resources. Points outside the curve are unattainable with current resources and technology.