Multiple Choice Identify the letter of the choice that best completes the statement or answers the question.

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1 Final day one Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. What is a factory building an example of? a. human capital c. an economic trade-off b. physical capital d. technology 2. The resources used to make all goods and services are the a. production possibilities. c. production trade-offs. b. factors of production. d. opportunity costs. 3. Which of the following lists would an economist consider to be land? a. factories, office buildings, assembly lines, workers b. farm fields, tractors, pesticides, fertilizers c. dams, bridges, rock quarries, oil wells d. iron ore, natural gas, fertile soil, water 4. An efficient economy is one that a. has very few people who do not work for a living. b. makes the best use of all its goods and services. c. uses its resources to make the most goods and services. d. makes the least costly use of its resources. 5. The lack of which of the following represents a scarcity? a. orange juice because the trucks carrying it are on strike b. enough workers to finish two jobs because there s a limited supply of workers c. enough workers to work at night because the pay is too low d. grapefruit juice because very few people want to buy it 6. The government of a country must make a decision between increasing military spending and subsidizing wheat farmers. This kind of decision is a a. guns or butter issue. c. global trade-off. b. decision at the margin. d. basic economic decision. 7. An example of a shortage is limited amounts of a. water available for irrigating a crop because it is used for other crops. b. labor available because the workers have other jobs. c. food available because the trucks carrying it are on strike. d. food available because few people want to buy it. 8. Why are all goods and services scarce? a. Some goods cost more than others. b. All resources are scarce. c. Some things are needs and others are wants. d. Some people want to have more goods than others. 9. One example of an entrepreneur is a. a writer who is hired by a film studio to adapt a novel into a screenplay. b. a lawyer in a high-profile law firm that specializes in business law. c. an Olympic ice skater who later decides to join a professional ice show. d. an artist who runs a business painting murals in office buildings and restaurants.

2 10. How would you describe an economy that uses its resources to make the greatest possible number of goods and services? a. efficient c. globally aware b. using opportunity cost well d. underutilized 11. A company that makes baseball caps is underutilizing its resources. What does this mean? a. The company is running more efficiently than its competitors. b. The company is paying its employees less than it should be. c. The company is making caps when it could be making t-shirts instead. d. The company is producing fewer caps than it could be. 12. Any resources that are made by humans and used to create other goods and services are called a. services. c. capital. b. production. d. labor. Matching Identifying Key Terms Match each term with the correct statement below. a. efficiency g. shortage b. goods h. opportunity cost c. trade-off i. underutilization d. production possibilities graph j. labor e. scarcity k. factors of production f. services 13. limited quantities of resources to meet unlimited needs or desires 14. physical objects that can be exchanged 15. actions or activities that one person performs for another 16. paid effort that people devote to a task 17. most desirable alternative given up when people choose one course of action over another 18. use of resources in a way that maximizes output of goods and services 19. representation of alternative ways to use an economy s resources 20. land, labor, and capital Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. What is the struggle among various producers for the consumer s business called? a. socialism c. incentive b. competition d. self-regulation 2. In which of the following lists of mixed economies does the market system dominate? a. France, Canada, South Africa, United Kingdom b. United States, United Kingdom, Singapore, Hong Kong c. Cuba, Greece, China, United States d. Russia, Peru, France, Canada 3. How could the Chinese economy be characterized? a. free market b. centrally planned c. mixed, but on the side of centrally planned d. mixed, but on the side of free market

3 4. What is one of the most important advantages of a free market? a. It can change rapidly. c. It is easy to regulate. b. It protects the less fortunate. d. It encourages growth. 5. What incentive motivates a manufacturer to sell a product? a. making profits on sales c. pleasing the consumer b. putting others out of business d. popularity of the product 6. Which of the following was a free market philosopher? a. Karl Marx c. Vladimir Lenin b. Adam Smith d. Friedrich Engels 7. Which of the following is characteristic of a traditional economy? a. Communities tend to be fast-growing. b. They are usually based on light industrial production. c. They have a high standard of living. d. Children tend to have the same jobs as their parents did. 8. In what kind of an economy does the government make all the decisions? a. socialist c. centrally planned b. laissez faire d. free enterprise 9. What is the purpose of competition? a. to act as a regulating force in the marketplace b. to cause producers to attempt to put each other out of business c. to cause buyers to have to be careful about spending their money d. to act as a motivating force behind the free market 10. Why does even a free market economy need some government intervention? a. to provide for things that the marketplace does not address b. to ensure that the government has the freedom to tax as necessary c. to make sure that the government can fulfill its needs for military personnel d. so that the government has some control over factor resources 11. How would the economy of Canada be likely to be characterized? a. free market b. centrally planned c. mixed, but on the side of centrally planned d. mixed, but on the side of free market 12. What is an important advantage of a free market? a. It does not change unless the government directs it. b. It offers a wide variety of goods and services. c. It is easy to regulate. d. It protects the less fortunate. 13. Who was the leader that introduced communism and central planning to the former Soviet Union? a. Karl Marx c. Vladimir Lenin b. Joseph Stalin d. Friedrich Engels 14. What does the process of specialization do for an economy? a. It eliminates unemployment. c. It fosters competition. b. It makes it more efficient. d. It makes it easier to control. 15. Which of the following does a government provide as part of a safety net for the people? a. general elections every four years c. a strong military defense b. unemployment compensation d. regulation of commerce

4 16. What is the function of an economic system? a. to make sure all people have equal access to goods b. to produce and distribute goods and services c. to give all producers the same access to consumers d. to make sure people are paid for their labor 17. Suppose there is a family in which all the boys are expected to become farmers when they are adults, just as their fathers and grandfathers did. In which kind of economy do they participate? a. false economy c. traditional economy b. command economy d. centrally planned economy 18. Which of the following is NOT a key economic question? a. What goods and services should be produced? b. How should these goods and services be produced? c. Who consumes these goods and services? d. How should it be ensured that goods and services are paid for? 19. A person believes that real equality can only exist when political equality is coupled with economic equality. This person believes that democratic means should be used to distribute wealth evenly throughout society. This person is a a. socialist. c. capitalist. b. communist. d. authoritarian. 20. Which of the following is NOT characteristic of a centrally planned economy? a. The central government owns all land and capital. b. The central government makes all economic decisions. c. Each collective or factory sets its own goals. d. Each person is assigned a job. Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Why does the government use its powers to make sure that businesses disclose so much information to the public? a. to make buyers more knowledgeable and safer b. to make it hard for businesses to make an excess profit c. to make it easier for consumers to save money d. to make it easy for businesses to have good information 2. Which of the following is a critical rule for determining whether something is a public good? a. The benefit to each individual who uses the facility is greater than the cost. b. The benefits of the facility are greater for the society than for the individuals using it. c. The total benefits to society are greater than the total cost. d. The total cost is small for each individual taxpayer. 3. What does the Temporary Assistance for Needy Families program provide? a. retirement income for the elderly b. cash to the states to help run their welfare programs c. compensation to all who lose jobs d. cash to workers injured on the job 4. What effect does new technology usually have on an economy? a. It makes the economy stronger and more efficient. b. It reduces the dependence of the economy on business. c. It slows an economy down for at least a while. d. It reduces the available jobs.

5 5. Each payday, some of your pay is withheld as payroll deductions for Social Security. What happens to the money that is withheld? a. It is redistributed as cash transfers to workers who are injured on the job. b. It is put into an account under your name to earn interest until you retire. c. It is used to provide medical benefits to Americans over 65. d. It is redistributed as cash transfers to elderly and disabled people. 6. What is the most effective way for consumers to make their desires known to businesses? a. through mail and phone surveys b. by protesting and boycotting products c. by the purchases they make d. by hiring lobbyists and joining consumer groups 7. What protections does OSHA give to people in the United States? a. regulations on workplace safety and information about hazards in the workplace b. consumer protection in buying foods c. regulations about clean environment d. protection for certain key industries such as logging 8. A person who consumes a good or service but does not pay for it is called which of the following? a. a free rider c. a private consumer b. a volunteer user d. an entrepreneur 9. What best describes the role of government in a free enterprise system? a. Control business activities. b. Decide what companies will be formed and then allow the managers to run them. c. Allow individuals to operate their businesses in ways they think will maximize their profits. d. Require companies to disclose information to consumers. 10. What is the term for the total value of all goods and services produced in a particular economy? a. net worth c. gross domestic product b. open market value d. standard of living 11. Automakers are required to comply with public disclosure laws. What is one example of a requirement of these laws? a. Salespeople must provide information about their competitors cars, so customers can make informed decisions. b. Car dealers must prominently display a sticker with the fuel efficiency in the car window. c. Salespeople must be willing to sell cars to anyone who can afford them, regardless of gender, race, or ethnicity. d. Automakers must test all car models regularly for crash-worthiness. 12. What is the difference between a business cycle and the day-to-day ups and downs of the market? a. The day-to-day ups and downs of the market can be much more extreme than a business cycle. b. The day-to-day fluctuations are more likely to have an impact on people s finances. c. A business cycle is usually more restricted, whereas market fluctuations are worldwide. d. A business cycle is a major, prolonged fluctuation rather than a day-to-day movement. 13. The U.S. Constitution guarantees certain rights that allow people to engage in business activities. Which of the following does the U.S. Constitution NOT guarantee? a. the protection against monopolies and oligopolies b. the recognition and protection of private property rights c. a limitation on the kinds of taxes that Congress can impose d. the right to make binding contracts

6 14. What is a positive externality? a. a way to generate trade that will benefit people who are from other countries b. an economic side effect that generates unexpected benefits c. a cash flow that will benefit both the government and the businesses who interact with it d. an extra payment to welfare recipients Matching Identifying Key Terms Match each term with the correct statement below. a. gross domestic product f. macroeconomics b. free rider g. poverty threshold c. public interest h. market failure d. private sector i. welfare e. in-kind benefits j. public disclosure laws 15. someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good 16. the part of the economy that involves the transactions of individuals and businesses 17. requirements for companies to provide full information about their products 18. an income level below that which is needed to support families or households 19. the concerns of the people as a whole 20. the study of the behavior and decision making of entire economies 21. the total value of all final goods and services produced in a particular economy 22. goods and services provided by the government for free or at greatly reduced prices