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1 Physical objects such as clothes, books or furniture are defined as

A goods
B services

2 Which of the following is the best example of an entrepreneur?

A a lawyer for an insurance company who wins a medical malpractice lawsuit.
B a computer repair shop owner who opens a second shop across town.

3 The condition of limited resources to meet unlimited wants can be referred to as

A shortage
B scarcity

4 Why are scarcity and choice basic to the study of economics?

A because there is an endless supply of all resources
B because there is not an endless supply of all resources

5 Which of the following is NOT a factor of production?

A the amount of money required to buy a car
B the land required to operate a hog farm

6 Something such as air, food or shelter that is necessary for survival is a

A want
B need

7 Any human-made resource that is used to create other goods and/or services is
A land
B capital

8 How are trade-offs and opportunity costs different?

A an opportunity cost is the most desirable trade-off
B a trade-off is the most expensive opportunity cost

9 A trade-off is
A an alternative that we sacrifice when we make a decision
B a purchase made in the marketplace

10 Deciding whether to use or not use an additional unit of some resource is

A one of the factors of production
B thinking at the margin

11 Factors of production are

A all human made goods that are used to produce other goods and services
B land, labor and capital - the resources used to make all goods and services

12 An opportunity cost is
A any good or service that one can use to barter for another good or service
B the most desirable alternative given up as the result of a decision

13 Production possibilities graphs are important tools for

A showing ways to use an economy's productive resources
B comparing costs and profits of producing goods and services

14 Using fewer resources than an economy is capable of using is

A the law of decreasing costs
B underutilization

15 On a production possibilities graph, a point of underutilization would appear

A above or to the right of the production possibilities frontier
B below or to the left of the production possibilities frontier

16 The production possibilities frontier is

A the curve on a graph that shows the maximum possible output
B the points on a graph that show an underutilization of resources

17 The fundamental economic problem is

A scarcity
B opportunity cost

18 Scarcity always exists because

A machines and people are inefficient
B our needs and wants are not limited, but our resources are limited

19 A country's production possibilities depend on

A its technological level and its available resources
B the demands of the consumers

20 Which is NOT an example of capital at a book printing company?

A the office building where the printing company is located
B the oil used to heat the factory

21 The resources used to make goods and services are called

A factors of production
B the gross national product

22 A country's production possibilities will grow if it

A produces more guns than butter
B increases its resources

23 Shortages occur when

A many people are unemployed in an economy
B businesses have trouble supplying the goods and services to consumers

24 Economics is the study of how people

A choose from limited resources to meet their needs

B calculate their income tax liability

25 Each point on a production possibilities curve shows

A efficient utilization of resources
B underutilization of resources

26 Which of the following is NOT a factor of production?

A a woman who makes a quilt
B the children supported by the woman who makes the quilt

27 Skills and knowledge of a worker gained through education and experience are
A production possibilities
B human capital

28 Using resources in such a way as to maximize the production of goods is called

A underutilization
B efficiency

29 Entrepreneurs are people who

A put together land, labor and capital to create new business
B help settle labor disputes

30 Giving up one alternative for another is called

A underutilization
B a trade-off

31 The purpose of a production possibilities graph is to

A show how a factory can use its workers in different ways
B show alternative ways to use an economy's resources

32 All the goods and services that are produced in any economy are

A scarce
B expensive



Use the accompanying answer sheet to record your responses to the

questions and prompts contained in the following pages.
Good Luck!