1. Economics Review 1

2. What is the human effort that is used to produce goods called?
A profit
B capital
C labor
D stock

3. What is the human effort that is used to produce goods called?
A profit
B capital
C labor
D stock

4. Which of the following is an example of capital?
A land used to produce goods
B managers’ salaries
C machines used to produce goods
D government regulations

5. Which of the following is an example of capital?
A land used to produce goods
B managers’ salaries
C machines used to produce goods
D government regulations

6. The tools a self-employed electrician uses in his or her business are examples of which of the following?
A capital
B entrepreneurship
C land
D labor

7. The tools a self-employed electrician uses in his or her business are examples of which of the following?
A capital
B entrepreneurship
C land
D labor

8. Which of the following best describes the relationship between factors of production and people’s wants?
A Factors and wants are both limited.
B Factors are limited and wants are unlimited.
C Factors and wants are both unlimited.
D Factors are unlimited and wants are limited.

9. Which of the following best describes the relationship between factors of production and people’s wants?
A Factors and wants are both limited.
B Factors are limited and wants are unlimited.
C Factors and wants are both unlimited.
D Factors are unlimited and wants are limited.

10. Which of the following most directly determines the cost of the factors of production?
A supply and demand
B wants
C profit
D natural resources

11. Which of the following most directly determines the cost of the factors of production?
A supply and demand
B wants
C profit
D natural resources

12. A capital and entrepreneurship B labor and entrepreneurship
Workers in a shoe factory are voting on whether to accept the owner’s wage offer or hold a sit-down strike. Which two factors of production are most involved in this situation?
A capital and entrepreneurship
B labor and entrepreneurship
C natural resources and capital
D natural resources and labor

13. A capital and entrepreneurship B labor and entrepreneurship
Workers in a shoe factory are voting on whether to accept the owner’s wage offer or hold a sit-down strike. Which two factors of production are most involved in this situation?
A capital and entrepreneurship
B labor and entrepreneurship
C natural resources and capital
D natural resources and labor

14. What happens if the supply of a factor goes up while the demand for the factor goes down?
A Inflation sets in and leads to increased demand for the factor.
B The price that can be charged for the factor goes down.
C The cost of producing the factor goes up.
D Nothing changes and the price of the factor stays the same.

15. What happens if the supply of a factor goes up while the demand for the factor goes down?
A Inflation sets in and leads to increased demand for the factor.
B The price that can be charged for the factor goes down.
C The cost of producing the factor goes up.
D Nothing changes and the price of the factor stays the same.

16. What are people called who assume business risks and manage new businesses?
A producers
B executives
C entrepreneurs
D consumers

17. What are people called who assume business risks and manage new businesses?
A producers
B executives
C entrepreneurs
D consumers

18. By finding less expensive lumber overseas, a furniture manufacturer reduces which of the following?
A capital good costs
B profit
C natural resource costs
D demand

19. By finding less expensive lumber overseas, a furniture manufacturer reduces which of the following?
A capital good costs
B profit
C natural resource costs
D demand

20. What is the most direct cause of scarcity?
A pursuit of profit
B competition for resources
C the law of supply
D the law of demand

21. What is the most direct cause of scarcity?
A pursuit of profit
B competition for resources
C the law of supply
D the law of demand

22. What is a business called that provides goods or services?
A consumer
B labor
C producer
D monopoly

23. What is a business called that provides goods or services?
A consumer
B labor
C producer
D monopoly

24. What may happen if consumers have less money to spend on products?
A The economy may slow down, which may reduce prices for some factors.
B International trade increases because foreign goods are cheaper.
C Wages go up which increases labor costs.
D Tax rates go up.

25. What may happen if consumers have less money to spend on products?
A The economy may slow down, which may reduce prices for some factors.
B International trade increases because foreign goods are cheaper.
C Wages go up which increases labor costs.
D Tax rates go up.

26. Which statement best describes the circular flow model of the economy?
A It helps entrepreneurs decide where to locate their factories.
B It is the plan for how to raise government revenue.
C It helps entrepreneurs decide which goods to buy overseas.
D It demonstrates how exchanges for scarce resources are made in the U.S. economy.

27. Which statement best describes the circular flow model of the economy?
A It helps entrepreneurs decide where to locate their factories.
B It is the plan for how to raise government revenue.
C It helps entrepreneurs decide which goods to buy overseas.
D It demonstrates how exchanges for scarce resources are made in the U.S. economy.

28. Which of the following statements most correctly describes an economic relationship?
A Demand goes down when prices go down.
B A lack of competition tends to decrease supply.
C Scarcity has nothing to do with demand.
D Supply is greatest in command economies.

29. Which of the following statements most correctly describes an economic relationship?
A Demand goes down when prices go down.
B A lack of competition tends to decrease supply.
C Scarcity has nothing to do with demand.
D Supply is greatest in command economies.

30. Which term is used to describe the basic economic problem that forces people to make decisions about how to use resources wisely?
A profit
B opportunity cost
C scarcity
D comparative advantage

31. Which term is used to describe the basic economic problem that forces people to make decisions about how to use resources wisely?
A profit
B opportunity cost
C scarcity
D comparative advantage

32. What are wages? A money a business has left after paying expenses
B money used to pay for labor
C money used to buy capital goods
D money that is declining in value because of inflation

33. What are wages? A money a business has left after paying expenses
B money used to pay for labor
C money used to buy capital goods
D money that is declining in value because of inflation

34. How are goods different from services?
A Goods are manufactured.
B Labor produces goods.
C Demand influences a good’s cost.
D Goods are scarce.

35. How are goods different from services?
A Goods are manufactured.
B Labor produces goods.
C Demand influences a good’s cost.
D Goods are scarce.

36. What is one way in which wages are different from salaries?
A Wages impact profit.
B Wages are typically paid by the hour.
C Wages are taxed.
D Wages have a greater impact on economic growth.

37. What is one way in which wages are different from salaries?
A Wages impact profit.
B Wages are typically paid by the hour.
C Wages are taxed.
D Wages have a greater impact on economic growth.

38. Which of the following is a manufacturer’s most likely response to a shortage of skilled workers?
A change his or her product line
B increase wages to attract more of the scarce workers
C increase prices to make higher profits
D go out of business entirely

39. Which of the following is a manufacturer’s most likely response to a shortage of skilled workers?
A change his or her product line
B increase wages to attract more of the scarce workers
C increase prices to make higher profits
D go out of business entirely