Economics Test 1

1. Scarcity is defined as the concept that people have unlimited wants and limited ________________. A. Time B. Finances C. Resources D. Intelligence

2. The study of the way in which people and organizations deal with scarcity. A. Economics B. Microeconomics C. Macroeconomics

D. Capitalism

3. Study of the way in which individuals and small businesses deal with scarcity. A. Economics B. Microeconomics C. Macroeconomics

D. Capitalism

4. Study of the way in which large nations and the world deals with scarcity. A. Economics B. Microeconomics C. Macroeconomics

D. Capitalism

5. All options passed up in order to acquire ones first choice. A. Factors of Production B. Opportunity Cost C. Goods D. Tradeoffs 6. Ones second favorite. The one thing one would have chosen had he not made the choice he did. A. Factors of Production B. Opportunity Cost C. Goods D. Tradeoffs 7. One way to measure a nations overall wealth or the state of its economy. A. Factors of Production B. Opportunity Cost C. Goods

D. Tradeoffs

8-11: Match the following terms with the correct definition: A. Land B. Labor C. Capital D. Entrepreneurship

E. Production Possibilities Curve 8. 9. 10. 11. 12. All man-made material used in the production of goods and services. Used by businesses to decide how much of different products it should produce. All materials which would exist without human interference. The act of producing goods and services. The concept that individuals will take risks to develop new products and start new businesses.

13. Products produced by labor. A. Goods B. Services C. Capital D. Economic Models

14. Acts performed for t he consumer. A. Goods B. Services C. Capital

D. Economic Models

15. The production and distributions of goods and services in a society. A. Economic Model B. Hypothesis C. Laissez-Faire

D. Economy

16. A theory or simplified representation which helps explain and predict economic behavior in the real world. A. Economic Model B. Hypothesis C. Laissez-Faire D. Economy 17. An assumption consisting of two or more variables which must be tested. A. Economic Model B. Hypothesis C. Laissez-Faire D. Economy 18. Economic system in which the government interferes very little. A. Economic Model B. Hypothesis C. Laissez-Faire

D. Economy

For the following questions, decide whether the situation fits more closely into the category of: A. Microeconomics or B. Macroeconomics:
19. An individual purchasing a hamburger_______ 20. A small business choosing what products to sell________ 21. A nation choosing what type of economic system to adopt._________ 22. Congress deciding whether or not to raise taxes_______ 23. The purchase of a car_____ 24. The United States trade with Mexico________

25. Which of the following situations most clearly serves as an example of scarcity? A. John would rather be at home than at school B. Rachel has enough money to buy both sweaters she wants, but decides to buy only one and save the rest of her money. C. Cletus wants to watch Country Strong and go to the Tractor Pull. He can only afford one or the other and must choose which he would rather go to. 26-29 Hunter has $1 and a major sweet tooth. He knows he can afford only one candy bar, but he Wants a Kit-Kat, a Reeses, a Hersheys, a Snickers, and a Milky Way. He decides the Milky way and the Kit-Kat are his two favorites, and eventually chooses to by the Kit-Kat. For the following questions, classify each candy bar as an: A. Trade-Off B. Opportunity Cost C. Neither. 26. Kit-Kat 27. Reeses 28. Snickers 29. Milky Way

30-37 Classify the following terms as being primarily A. Natural Resource, B. Product of Labor, C.Capital, or D. Entrepreneurship 30. 31. 32. 33. 34. 35. 36. 37. Pizza Pizza Delivery Advertising Campaign Tractor Oil Factory Ink Pen New Invention

38-41 Classify the following terms a being either A. Goods, or B. Services. 38. Oil Change 39. Pair of Shoes 40. Lawn Mower 41. Paying someone to mow your lawn

Read the Production Possibilities Curve below and use it to answer the following questions.

42. How many shoes can be made if no calibrators are produced? A. 0-50 B. 450 C. 425 D. 200 E. 50 43. How many shoes can be made if one calibrator is produced? A. 0-50 B. 450 C. 425 D. 200 E. 50 44. How many shoes can be made If three calibrators are produced? A. 0-50 B. 450 C. 425 D. 200 E. 50 45. How many shoes can be made if nine calibrators are produced? A. 0-50 B. 450 C. 425 D. 200 E. 50