Transcript Question 1

Economics EOC Review
What are the three key
economic questions?
 What are the three key economic
questions?
 What should be produced?
 For whom should we produce it ?
 How should we produce it?
What are the factors of
production?
What are the factors of
production?
Land
Labor
Capital
Any product that is man-
made and is used to make
other goods/services is
considered _____ when
discussing the factors of
production
Any product that is man-
made is considered
_capital_ when discussing
the factors of production
 Economics is the study of ____
 Economics is the study of ____
 How a society uses its resources
to satisfy its wants and needs
All resources are ___
All resources are ___
Scarce
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What is the function of an economic system?
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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
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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
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What is the struggle among various producers for
the consumer’s business called?
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A. socialism
B. incentive
C. competition
D. self-regulation
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What is the struggle among various producers for
the consumer’s business called?
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A. socialism
B. incentive
C. competition
D. self-regulation
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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.
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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.
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Which of the following was a free market
philosopher?
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A. Karl Marx
B. Vladimir Lenin
C. Adam Smith
D. Friedrich Engels
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Which of the following was a free market
philosopher?
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A. Karl Marx
B. Vladimir Lenin
C. Adam Smith
D. Friedrich Engels
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What is the motivating force behind the free
market?
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A. competition
B. self-interest
C. the invisible hand
D. specialization
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What is the motivating force behind the free
market?
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A. competition
B. self-interest
C. the invisible hand
D. specialization
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A person who believed in the doctrine of laissez
faire would disapprove of
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A. the invisible hand of the marketplace.
B. consumer sovereignty.
C. self-interest as the motivating force in the free
market.
D. government funding of education.
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A person who believed in the doctrine of laissez
faire would disapprove of
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A. the invisible hand of the marketplace.
B. consumer sovereignty.
C. self-interest as the motivating force in the free
market.
D. government funding of education.
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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
B. traditional economy
C. command economy
D. centrally planned economy
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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
B. traditional economy
C. command economy
D. centrally planned economy
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Households pay firms for goods and services.
Firms supply households with goods and
services. The purchase and supply of goods and
services takes place in the
A. product market.
B. after market.
C. factor market.
D. traditional market.
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Households pay firms for goods and services.
Firms supply households with goods and
services. The purchase and supply of goods and
services takes place in the
A. product market.
B. after market.
C. factor market.
D. traditional market.
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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.
B. capitalist.
C. communist.
D. authoritarian.
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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.
B. capitalist.
C. communist.
D. authoritarian.
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What does the process of specialization do for an
economy?
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A. It eliminates unemployment.
B. It fosters competition.
C. It makes it more efficient.
D. It makes it easier to control.
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What does the process of specialization do for an
economy?
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A. It eliminates unemployment.
B. It fosters competition.
C. It makes it more efficient.
D. It makes it easier to control.
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What is an important advantage of a free
market?
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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.
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What is an important advantage of a free
market?
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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.
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Government intervention in a modern economy
is useful because
A. the needs and wants of modern society are always
met by the marketplace.
B. the marketplace has many incentives to create public
goods such as parks and libraries.
C. governments are able to provide some goods and
services that the marketplace has no incentive to
produce.
D. the marketplace provides all of its own laws.
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Government intervention in a modern economy
is useful because
A. the needs and wants of modern society are always
met by the marketplace.
B. the marketplace has many incentives to create public
goods such as parks and libraries.
C. governments are able to provide some goods and
services that the marketplace has no incentive to
produce.
D. the marketplace provides all of its own laws.
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Why do markets exist?
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A. Markets ensure that government does not
intervene in the production of goods and services.
B. Markets provide self-sufficient people with public
places for the exchange of ideas.
C. Markets ensure economic equity for all people.
D. Markets allow people to buy what they need to
consume and sell the specialized goods and services
they produce.
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Why do markets exist?
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A. Markets ensure that government does not
intervene in the production of goods and services.
B. Markets provide self-sufficient people with public
places for the exchange of ideas.
C. Markets ensure economic equity for all people.
D. Markets allow people to buy what they need to
consume and sell the specialized goods and services
they produce.
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Who was the writer that introduced communism
and central planning to the former Soviet Union?
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A. Karl Marx
B. Vladimir Lenin
C. Joseph Stalin
D. Friedrich Engels
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Who was the writer that introduced communism
and central planning to the former Soviet Union?
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A. Karl Marx
B. Vladimir Lenin
C. Joseph Stalin
D. Friedrich Engels
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What factors create the phenomenon of the
“invisible hand”?
A. incentives and efficiency.
B. specialization and efficiency.
C. competition between firms.
D. competition and self interest.
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What factors create the phenomenon of the
“invisible hand”?
A. incentives and efficiency.
B. specialization and efficiency.
C. competition between firms.
D. competition and self interest.
What does the upper half of Figure 2.1, marked “1,”
represent?
According to Figure 2.1, what does the lower line of
monetary flow, marked “2,” show?
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The purpose of a production possibilities graph is to
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A. enable a country to mobilize to win a war.
B. keep an economy from having nonproductive
workers.
C. show alternative ways to use an economy’s
resources.
D. make it possible to increase an economy’s output.
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The purpose of a production possibilities graph is to

A. enable a country to mobilize to win a war.
B. keep an economy from having nonproductive
workers.
C. show alternative ways to use an economy’s
resources.
D. make it possible to increase an economy’s output.
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Production possibilities frontiers curve when they
are charted on a graph because they show
A. the underutilization of resources.
B. the maximum output of goods and services.
C. the increasing costs resulting in increasingly less
output.
D. the technological level of the economy’s
productivity.
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Production possibilities frontiers curve when they
are charted on a graph because they show
A. the underutilization of resources.
B. the maximum output of goods and services.
C. the increasing costs resulting in increasingly less
output.
D. the technological level of the economy’s
productivity.
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What is the opportunity cost of a decision?
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A. the series of alternative decisions that could have
been made
B. the best possible way the question could have been
decided
C. the different ways that a different person might have
made the decision
D. the most desirable alternative given up for the
decision
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What is the opportunity cost of a decision?
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A. the series of alternative decisions that could have
been made
B. the best possible way the question could have been
decided
C. the different ways that a different person might have
made the decision
D. the most desirable alternative given up for the
decision
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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
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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
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Which of the following would qualify as labor?
A. working for Habitat for Humanity to help build a
house for someone.
B. sweeping the floors as part of your household
chores.
C. taking orders at McDonald's for minimum wage.
D. studying for your tests and doing your
homework.
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Which of the following would qualify as labor?
A. working for Habitat for Humanity to help build a
house for someone.
B. sweeping the floors as part of your household
chores.
C. taking orders at McDonald's for minimum wage.
D. studying for your tests and doing your
homework.

Louisville Slugger, a company that makes
baseball bats, is underutilizing its resources.
What does this mean?
A. Louisville Slugger is running efficiently.
B. Louisville Slugger is running more efficiently than its
competitors.
C. Louisville Slugger should be making baseball gloves
rather than baseball bats.
D. Louisville Slugger is producing fewer bats than it
could be.
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Louisville Slugger, a company that makes
baseball bats, is underutilizing its resources.
What does this mean?
A. Louisville Slugger is running efficiently.
B. Louisville Slugger is running more efficiently than its
competitors.
C. Louisville Slugger should be making baseball gloves
rather than baseball bats.
D. Louisville Slugger is producing fewer bats than it
could be.
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The government of a country must make a
decision between increasing military spending
and subsidizing farmers. This kind of decision
is a matter of
A. guns or butter.
B. deciding on the opportunity cost.
C. a trade-off.
D. a basic economic decision.
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The government of a country must make a
decision between increasing military spending
and subsidizing farmers. This kind of decision
is a matter of
A. guns or butter.
B. deciding on the opportunity cost.
C. a trade-off.
D. a basic economic decision.
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What is the difference between a shortage and
scarcity?
A. A shortage can be temporary or long-term, but
scarcity always exists.
B. A shortage results from rising prices; scarcity results
from falling prices.
C. A shortage is a lack of all goods and services; scarcity
concerns a single item.
D. There is no difference between a shortage and
scarcity.
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What is the difference between a shortage and
scarcity?
A. A shortage can be temporary or long-term, but
scarcity always exists.
B. A shortage results from rising prices; scarcity results
from falling prices.
C. A shortage is a lack of all goods and services; scarcity
concerns a single item.
D. There is no difference between a shortage and
scarcity.