Basic Economics (55-61)

1. Joe has $100. He needs a new jacket and would like to buy a pair of tickets for Sunday’s game. He cannot afford both. He buys the jacket. What is the opportunity cost? A. The jacket B. The tickets C. The $100 D. The time spent at the game

2. In the above scenario, what is the scarce resource? A. The jacket B. The tickets C. Money D. None are scarce

3. Which of the following is a land resource? A. Teacher B. Bulldozer C. Coal D. A diamond ring

4. Which of the following is a capital resource? A. Teacher B. Bulldozer C. Coal D. A river

5. Which of the following is a labor resource? A. Coal B. Doctor C. Bulldozer D. Natural Gas

6. Which of the following is true concerning the division of labor? A. Productivity is not affected by it. B. Society does not benefit from it. C. Production increases and the standard of living improved. D. There are no examples of the division of labor within the schools.

7. Exchanging one item for the use of another is called a(n) _______________. A. Opportunity cost B. Trade-off C. Scarcity D. Factor of production

8. What forces individuals and nations to make decisions? A. Laissez-faire economics B. The invisible hand theory C. Scarce resources D. The unlimited resources

9. In which economic system would the government answer all of the basic economic questions? A. Traditional B. Command C. Mixed D. Free Market

10. Which economic system has the least amount of government regulation? A. Pure Command B. Mixed Economy that leans toward a command economy C. Mixed Economy that leans toward a pure market economy D. A pure free market

11. The Baka of Cameroon, Africa are a semi- nomadic people who rely heavily on custom and religion in determining who will produce what, how goods will be produced, and who will share in what is produced. What economic system best describes these people? A. Traditional B. Command C. Mixed D. Free Market

12. Of the following, which statement best describes the economic system in the U.S.? A. A traditional economy where men perform certain work that women cannot B. A mixed economy that has extreme government regulations C. A mixed economy that is closer to a free market than most D. A pure command economy

13. If the U.S. spends more money on military goods this year than last; which of the following will also occur? A. America is guaranteed it will not be attacked. B. Less money will be spent on Civilian goods (Social Programs). C. The military will be made weaker. D. The stock market will drop

14. The most common economic system is a _____________ economy. A. Command B. Market C. Mixed D. Traditional

15. Adam Smith advocated which economic system? A. Command B. Market C. Mixed D. Traditional

16. The invisible hand represents _______________. A. Laissez-faire economics B. Private property C. Freedom of choice D. Competition

17. Adam Smith advocated an economy that was free from government regulation. This is called __________________. A. Laissez-faire B. The invisible hand theory C. Profit incentive D. Communism

18. Which of the following statements best describes Adam Smith’s invisible hand theory? A. The government should provide for the welfare of all it’s people. B. Competition will improve economic conditions better than the government C. Greed is a necessary evil D. The love of money is the root of all evil

19. The desire one has to make money is called __________________. A. Private Property B. Free Enterprise C. Profit Incentive D. The invisible hand

20. Bartering is characteristic of which economic system? A. Traditional B. Command C. Free Market D. Mixed

21. Lower prices, better wages, and improved quality result from ________________. A. Government regulation B. Command Economy C. Traditions D. Competition

22. The basic problem in economics is ________________. A. Commodity Goods B. Supply and Demand C. Inflation D. Scarcity

23. Technology has what economic impact? A. Increases competition B. Increases production C. Slows economic growth D. Causes inflation

24. Breaking a job into several smaller jobs (such as carpenters do when building a house; some do the roof, others do the walls, ect…..)is called_____________. A. Profit incentive B. Entrepreneurship C. Division of Labor D. Factor of Production

25. The willingness and ability of consumers to purchase goods and services at different prices in the market? A. Supply B. Demand C. Law of demand D. Law of diminishing marginal utility

26. As the price of a product rises, what will happen to its’ demand? A. Remain the same B. Rise C. Drop D. Inflate

27. Which economic law is defined as follows? As the price of a good or service rises, so does its’ supply; as the price drops, so does the supply. A. The law of supply B. The law of demand C. The law of diminishing returns D. The law of elasticity

28. Which economic law is defined as follows? As the price rises the demand falls; as the price fall the demand rises. A. The law of supply B. The law of demand C. The law of diminishing marginal utility D. The law of diminishing returns

29. The willingness and ability of producers to provide goods and services at different prices in the market is called _______________. A. Elasticity B. Demand C. Supply D. Inelasticity of Demand

30. Which of the following is the best reason for producers providing more goods and services at higher prices? A. Profit Incentive B. Social consciousness C. Division of labor D. Competition

31. Which statement is true concerning goods with more elastic demand schedules? A. They have fewer substitutes B. They have more substitutes C. They are necessities D. Both A and C

32. The more of an item is consumed the less satisfaction is received with each additional unit. Which economic law is this? A. Law of supply B. Law of demand C. Law of Diminishing Returns D. Law of Diminishing Utility

33. The point where supply and demand meet is called the ______________. A. Surplus Price B. Shortage Price C. Market Price D. Elasticity

34. Which of the following is a substitute good for Chicken? A. Ice Cream B. Pepsi C. Pork D. All of the above

35. Which of the following is a complimentary good for taco shells? A. Beef B. Milk C. Honey D. Mustard

36. What will happen to the demand for Pepsi if coca-cola prices rise? A. The demand for Pepsi will decrease B. The demand for Pepsi will remain the same C. The demand for Pepsi will increase D. None of the above

37. The economic condition that occurs above the equilibrium price is called a _______________. A. Shortage B. Surplus C. Elasticity of Demand D. Real Income Effect

38. If the unemployment rate decreases, what will the impact be? A. Demand for goods and services will increase B. Demand for goods and services will decrease C. Supply will increase D. Supply will decrease

39. If S1 is the original supply curve; which curve represents a decrease in supply? A. S2 B. S3 S2 S1 S3

40. If S1 is the original supply curve; which curve is the likely result of an increase in the cost of production? A. S2 B. S3 S2 S1 S3

41. If S1 is the original supply curve; which curve is the likely result of a strike by employees? A. S2 B. S3 S2 S1 S3

42. If D1 is the original demand curve; which curve represents a increase in demand? A. D2 B. D3 D3 D1 D2

43. If D1 is the original demand curve; which curve is the likely result of a drop in the price of a substitute good? A. D2 B. D3 D3 D1 D2

44. If D1 is the original demand curve; which curve is the likely result from a decrease in the unemployment rate? A. D2 B. D3 D3 D1 D2

45. What is the market price? A..50 B..75 C D S1 D

46. What economic condition is occurring above the market price? A. Shortage B. Surplus C. Inflation D. Deflation S1 D

47. What economic condition is occurring below the market price? A. Shortage B. Surplus C. Inflation D. Deflation S1 D

48. The price where the supply and the demand of a product meet is called what? A. demand price B. supply price C. equilibrium price D. none of the above

49. If the demand does not change significantly due to a change in price, the item is said to be ________________ in demand. A. inelastic B. elastic C. surplus D. shortage

50. If the Articles of Incorporation are in agreement with state law the state will grant the business a _______. A. business license B. insurance C. corporate charter D. tax relief

51. One advantage of a sole proprietorship is the owner keeps the _______. A. records B. receipts C. profits D. complaints

52. What is the oldest, most common type of business organization? A. sole proprietorship B. partnership C. franchise D. corporation

53. Which business organization is owned and operated by it’s members for it’s members? A. Corporations B. Non-profit corporations C. Sole proprietorships D. Cooperatives

54. All of the following are examples of non-profit organizations except which? A. Goodwill B. McDonalds C. Salvation Army D. The Red Cross