38 Questions
What are goods?
Physical objects that can be purchased
What is cost-benefit analysis?
An approach that weighs the benefits of an action against its costs
What is opportunity cost?
The value of something that is given up to get something else that is wanted
What is trade off?
The alternative you give up when you make an economic choice
Which economic system involves the government owning some of the factors of production?
Command
Which economic system involves individuals owning the factors of production?
Market
Which economic system answers the basic economic questions according to tradition?
Pure traditional
What do economic goals provide?
The operational framework for managing and distributing scarce resources
True or false: Scarcity refers to a situation where there are more resources than human wants.
False
True or false: In a pure command economic system, the individual has significant influence over how the economic questions are answered.
False
True or false: In a mixed economic system, elements of both the market and command systems are present.
True
What are goods?
Physical objects that can be purchased
What is trade off?
The alternative you give up when you make an economic choice
Which economic system involves the government owning some of the factors of production?
Command
Which economic system answers the basic economic questions according to tradition?
Pure traditional
Which economic system involves individuals owning the factors of production?
Market
What do economic goals provide?
The operational framework for managing and distributing scarce resources
Which economist is known as the father of economics?
Adam Smith
Which of the following is NOT one of the three types of economic systems mentioned in the text?
Mixed economies
In a traditional economy, how are goods and services produced and distributed?
According to customs handed down from generation to generation
Which economic system is characterized by individual choice and voluntary exchange directing economic decisions?
Market economy
Which of the following is an advantage of a market economy?
It allows individuals to make their own economic choices
What is a disadvantage of a pure market economy?
It cannot provide public goods and services
What type of economic system does the United States have?
Mixed economy
What does the term 'global economy' refer to?
The economic interactions that cross international boundaries
What is a centrally planned economy?
An economic system in which central government officials make all economic decisions.
What role does the government play in a command economy?
The government makes all economic decisions.
What are the disadvantages of a command economy?
All of the above.
Which of the following best defines economics?
The study of how people choose to use scarce resources to satisfy their unlimited wants
What is the definition of scarcity?
The situation that exists when there are not enough resources to meet human wants
What are wants?
Desires that can be satisfied by consuming a good or service
According to the text, what are the three basic economic questions that every society must address?
What will be produced, How will it be produced, From whom will it be produced
According to the text, how do countries and individuals determine 'what will be produced'?
By relying on natural resources
According to the text, what are the four factors of production and their definitions?
Land, Labor, Capital, Entrepreneurship
Which of the following best defines marginal cost?
The additional cost of using one or more units of a product
Which of the following best defines marginal benefit?
The additional satisfaction from using one more unit of a product
What does the production possibilities curve (PPC) illustrate?
The maximum number of goods and services that can be produced using limited resources
What does the law of increasing opportunity costs state?
As production switches from one product to another, increasing amounts of resources are needed to increase the production of the second product
Study Notes
Basic Economic Concepts
- Goods are products or services that satisfy human wants
- Cost-benefit analysis is a method of comparing the advantages (benefits) and disadvantages (costs) of a decision
- Opportunity cost is the value of the next best alternative given up when choosing one option over another
- Trade-off is the sacrifice of one thing in order to obtain another
Economic Systems
- Command economy: the government owns some of the factors of production
- Market economy: individuals own the factors of production
- Traditional economy: answers the basic economic questions according to tradition
- Mixed economy: combines elements of both market and command systems
Economic Goals and Scarcity
- Economic goals provide a framework for making decisions about how to allocate resources
- Scarcity refers to a situation where there are limited resources and unlimited human wants
- Wants are unlimited desires for goods and services
Traditional Economy
- Goods and services are produced and distributed based on tradition and custom
Market Economy
- Characterized by individual choice and voluntary exchange directing economic decisions
- Advantage: promotes efficiency and innovation
- Disadvantage: can lead to income inequality
Command Economy
- Government plays a central role in allocating resources and making decisions
- Disadvantages: lack of incentives, innovation, and individual freedom
Global Economy and Economics
- Global economy refers to the economic system that encompasses all countries and their economic activities
- Economics is the study of how individuals, businesses, governments, and societies allocate resources to meet their unlimited wants and needs
- The three basic economic questions that every society must address are: what to produce, how to produce, and for whom to produce
Production Possibilities Curve (PPC)
- Illustrates the various combinations of two goods that can be produced given the available resources and technology
- Law of increasing opportunity costs states that as the production of one good increases, the opportunity cost of producing that good also increases
Test your knowledge on scarcity and the factors of production with this exam review quiz. Explore the concept of scarcity and how it relates to the limited availability of resources to fulfill human wants. Learn about the factors of production, including land, labor, capital, and entrepreneurship, and their roles in the production of goods and services. Challenge yourself with this quiz and enhance your understanding of these important economic concepts.
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