True/False
Indicate whether the sentence or statement is true
or false. |
| | 1. | If everyone
in the world were rich, scarcity would not exist. |
| | 2. | Capital,
combined with land and labor, increases the value of all three factors of production. |
| | 3. | Doctors,
hairdressers, and Web page designers all perform services. |
| | 4. | Shortages
are always temporary. |
| | 5. | Entrepreneurship does not involve risk. |
| | 6. | Personal
opinions and beliefs may influence how an economist views facts and applies them to
theories. |
| | 7. | All
economists generally agree on the best solution to a problem. |
| | 8. | Much of the
work of economists involves predicting human behavior. |
| | 9. | The theories
that economists use are called economic models. |
| | 10. | When
applying models to real life, economists must take into account all factors that may influence
people's behavior. |
Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question. |
| | 11. | The need to
make choices arises because a. | some things are not limited. | c. | everything that exists is limited. | b. | shortages are a
constant situation. | d. | people need to share
their resources. | | | | |
|
| | 12. | The basic
problem of economics is a. | scarcity. | c. | lack of choice. | b. | shortages. | d. | overabundance of
resources. | | | | |
|
| | 13. | To an
economist, a want is a. | something you do not have. | b. | something you must have
to survive. | c. | something other than a basic survival need. | d. | something most people
have. | | |
|
| | 14. | The four
factors of production are the resources of land, labor, capital, and a. | productivity. | c. | technology. | b. | entrepreneurship. | d. | services. | | | | |
|
| | 15. | As an
economic term, land includes a. | work people do. | c. | natural resources. | b. | machinery. | d. | knowledge. | | | | |
|
| | 16. | All economic
choices involve a. | trade-offs. | c. | destruction of
resources. | b. | shortages. | d. | tax dollars. | | | | |
|
| | 17. | What
trade-off is involved when you buy a CD? a. | exchanging time for money | c. | exchanging one service for another | b. | exchanging money for
goods | d. | exchanging goods for
services | | | | |
|
| | 18. | In a
trade-off, opportunity cost is the value of the a. | factors of production. | c. | action that was chosen. | b. | scarce
resources. | d. | next best
alternative. | | | | |
|
| | 19. | Which of the
following is a visual aid that helps a business determine how best to use its
resources? a. | opportunity
cost | c. | trade-off | b. | production possibilities curve | d. | scarcity | | | | |
|
| | 20. | The amount
of military goods given up in a year is the opportunity cost for producing a. | more
weapons. | c. | more civilian
goods. | b. | a balanced budget. | d. | a production possibilities curve. | | | | |
|
| | 21. | The first
step in creating an economic model is to a. | evaluate the data. | c. | define the problem. | b. | form a
generalization. | d. | state a
hypothesis. | | | | |
|
| | 22. | Economic
models are useful because they a. | show the way people react to changes in the
economy. | b. | provide every detail about a problem to be
studied. | c. | judge the value of economic events. | d. | make testing hypotheses
unnecessary. | | |
|
| | 23. | Why can't
economic models judge whether policies are good or bad? a. | Models are not good
enough. | b. | Judgments depend on values. | c. | Models are not based on
fact. | d. | Economists do not test their hypotheses. | | |
|
| | 24. | Different
schools of economic thought exist because a. | economics deals with values. | b. | political leaders
determine economic theories. | c. | personal beliefs influence how economists apply facts to
theories. | d. | economists evaluate different kinds of data. | | |
|
| | 25. | Which of the
following describes what economists do? a. | predict which policies will be good or bad | b. | offer solutions to
economic problems | c. | consider every detail of a problem | d. | rely on public
opinion | | |
|
Completion
Complete each sentence or
statement. |
| 26. | Individuals,
families, businesses, and nations make ____________________ when they use their resources in one way
and not another.
|
| 27. | Economists
describe trade-offs in terms of the ____________________ of what a person gives up in order to get
something else.
|
| 28. | The
____________________ is the value of the next best alternative that had to be given up to do the
action that was chosen.
|
| 29. | If you
choose to buy a CD instead of a shirt, the shirt is the ____________________.
|
| 30. | A business
might use a _________________________ to determine the maximal combinations of goods it can produce
from a fixed amount of resources in a given time period.
|
Matching |
| | Match
each item with the correct statement below. a. | economics | b. | labor | c. | goods | d. | capital | e. | technology | | |
|
| | 31. | human effort
directed toward producing goods and services |
| | 32. | previously
manufactured goods used to make other goods and services |
| | 33. | the study of
how individuals and societies make choices about ways to use scarce resources to fulfill their needs
and wants |
| | 34. | advance in
knowledge leading to new and improved goods and services and better ways of producing
them |
| | 35. | tangible
objects that can satisfy people's wants |
| | Match
each item with the correct statement below. a. | trade-off | b. | opportunity cost | c. | production
possibilities curve | d. | guns versus butter | e. | time | | |
|
| | 36. | a scarce
resource |
| | 37. | graph
showing the maximal combinations of goods and services that can be produced from a fixed amount of
resources in a given period of time |
| | 38. | sacrificing
one good or service to purchase or produce another |
| | 39. | value of the
next best alternative given up for the alternative that was chosen |
| | 40. | production
possibilities involving choices between military defense and civilian goods |
| | Match
each item with the correct statement below. a. | economy | b. | economic model | c. | hypothesis | d. | constant factors | e. | values | | |
|
| | 41. | an
assumption involving two or more variables that must be tested for validity |
| | 42. | the
production and distribution of goods and services in a society |
| | 43. | the beliefs
or characteristics that a person or group considers important |
| | 44. | a theory or
simplified representation that helps explain and predict economic behavior in the real
world |
| | 45. | everything
in an economic model except the variables being analyzed |