ECONOMICS REVIEW TEST 1
1. All economic choices involve:
trade offs
2. What is the goal of economic freedom ?
to control his or her own labor and property
3. What is the fundamental economic problem of economics?
the issue with the scarcity of resources but unlimited wants
4.. What contributes to the problem of economic scarcity?
Growing demand and inadequate supply
5. People who use goods and services are called:
consumers
6. What are the 4 factors of production?
land, labor, capital and entrepreneurship
7. Who is the Father of Modern Economics and Capitalism?
adam smith
8. List two characteristics of a pure market economy:
Private property, freedom,
9. What is a good intended for final use by a consumer rather than a business called?
consumers goods
10. Give an example of entrepreneurship:
A single-location restaurant, one grocery shop, or a retail shop to sell goods or services
11. Every time we make an economic choice, what two things occur?
we weigh the benefits and the opportunity cost.
12. What is a natural resource?
to value natural resources to aid in the optimization of the production of goods and services
13. A company’s fleet of trucks represents which kind of factor of production?
capital goods
14. Give an example of a country or group that has a traditional economy?
Bhutan and Haiti
15. The United States can best be described as having this type of economic system? market economy
16. What is another name for a free enterprise system? Who makes decisions in this system?
individual
17. Who is the Father of Communism as an economic system?
karl marxs
18. What are the basic economic questions every economic system must answer?what will be produced, how
will it be produced, and how will the output society produces be distributed?
19. Give an example of an economic service?
job searching service
20. What is the purpose of government in a command economy ?
dictates the level of production of goods and controls their distribution and prices.
21. Manufactured goods needed to produce other goods and services are called:
capital goods
22. Who makes economic decisions in the US?
consumers and producers
23. What are the reasons to study economics?
it affects our everyday lives through important areas such as tax, interest rates, wealth, and inflation.
24. Economic system : Command, Traditional, or Market
A. Decisions are based Customs or traditions / traditional
B. Decisions are made by Individuals or businesses / market
C. Decisions are made by the government / command
25. Why do most command economies fail or have problems?
the government feels no pressure from competitors or price-conscious consumers to cut costs or streamline
operations.
26. What are the economic goals of the US?
efficiency, equity, economic freedom, full employment, economic growth, security, and stability.
27. Give an example of each goal
Complete a fitness routine
28. Why are most economic systems in the world today mixed?
A mixed economy permits private participation in production, which in return allows healthy competition that
can result in profit.
29. What is Microeconomics?
the part of economics concerned with single factors and the effects of individual decisions.
30. What is Macroeconomics?
the part of economics concerned with large-scale or general economic factors, such as interest
rates and national productivity.
31. A sandwich maker at Subway is considered an employee and earns a wage or salary working for Subway.
32. Give an example of a worker in a command economy , and a market economy:
33. What influences the production of goods in a market economy?
consumer demand
profitability
resource availability
technological advancements
market signals
34. How is the value of each purchase or choice we make decided?
by looking at what was given up for each choice made.
35. What determines the type of economic system a country uses?
The way scarce resources get distributed within an economy
36. Give a weakness for a command and a market economy.
command - lack of individual freedom and limited consumer choice
market- potential for income inequality
37. Explain the difference between being rich and being wealthy.
being rich is more about the present moment while being wealthy is about longterm financial well being and
stability
38.What are durable and non durable goods?
durable goods are longlasting products while nondurable goods are products that are used up or consumer
relatively quickly
39. Why are economic services hard to measure?
they are intangible and often involve complex interactions between providers and consumers
40. Give an example of each:
A. Good- smart phone
B. Service- haircut
C. Non durable good- disposable water bottle
D. Durable good- car
E. Country with Command economy- North Korea
F. Country with Market Economy- the united states
G. Group with a Traditional economy- the Amish
