Chapter 1 Test
True/False
Indicate whether the statement is true or false.
____
1.
If everyone in the world were rich, scarcity would not exist.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
2.
Factors of production include which of the following?
a. land, labor, and capital
b.
c.
d.
____
3.
4.
5.
6.
d.
7.
d.
productivity.
labor.
d.
entrepreneurship.
values and objectives of a society
d.
methods of production
Entrepreneurship refers to the ability to
a. manage other people.
b.
c.
____
trade-off.
Economics is primarily concerned with which of the following?
a. future costs of goods
c. use of resources
b.
____
all of the products produced in an economy
A company's office buildings are an example of
a. capital.
c. land.
b.
____
goods and services
The value of the next best alternative that has to be given up for the action that is chosen is the
a. factor of production.
c. opportunity cost.
b.
____
technology products and entrepreneurship
adapt technology efficiently.
start new businesses, introduce new products and processes, and improve management
techniques.
borrow capital successfully and expand an existing business to meet customer demand.
a.
b.
____
8.
9.
c.
d.
everything that exists is limited.
c.
d.
lack of choice.
c.
d.
natural resources.
people need to share their resources.
overabundance of resources.
something other than a basic survival need.
something most people have.
machinery.
knowledge.
What trade-off is involved when you buy a CD?
a. exchanging time for money
c. exchanging one service for another
b.
____ 13.
entrepreneurship
something you must have to survive.
As an economic term, land includes
a. work people do.
b.
____ 12.
shortages.
d.
To an economist, a want is
a. something you do not have.
b.
c.
d.
____ 11.
shortages are a constant situation.
The basic problem of economics is
a. scarcity.
b.
____ 10.
land
The need to make choices arises because
a. some things are not limited.
b.
____
What factor of production do these images illustrate?
labor
c. capital
exchanging money for goods
d.
exchanging goods for services
The amount of military goods given up in a year is the opportunity cost for producing
a.
b.
____ 14.
make testing hypotheses unnecessary.
Judgments depend on values.
Models are not based on fact.
Economists do not test their hypotheses.
political leaders determine economic theories.
personal beliefs influence how economists apply facts to theories.
economists evaluate different kinds of data.
factories sometimes have difficulty producing enough goods.
there is not enough of all goods and services to satisfy everyone's needs and wants.
natural disasters, such as hurricanes and floods, destroy goods and property.
labor
d.
machinery
Economists build economic models
a. to describe how a business should combine the factors of production to produce goods.
b.
c.
d.
____ 20.
judge the value of economic events.
A company's fleet of trucks represents which kind of factor of production?
a. land
c. capital
b.
____ 19.
provide every detail about a problem to be studied.
Scarcity always exists because
a. stores cannot stock enough merchandise to keep up with customer demand.
b.
c.
d.
____ 18.
a production possibilities curve.
Different schools of economic thought exist because
a. economics deals with values.
b.
c.
d.
____ 17.
more civilian goods.
Why can't economic models judge whether policies are good or bad?
a. Models are not good enough.
b.
c.
d.
____ 16.
a balanced budget.
c.
d.
Economic models are useful because they
a. show the way people react to changes in the economy.
b.
c.
d.
____ 15.
more weapons.
to help analyze the way the world works.
to find out how high teenage unemployment is.
to be able to use graphs to show how the economy works.
A car used by a messenger service is a type of
a. capital.
c.
trade-off.
b.
____ 21.
labor.
d.
opportunity cost.
All the combinations of goods and services that can be produced in a given time with a fixed amount of
resources are called
a. factors of production.
c. opportunity costs.
b.
costs of production.
d.
production possibilities.
____ 22.
a.
b.
What factor of production do these images illustrate?
land
c. capital
labor
d.
entrepreneurship
Matching
Using Key Terms
Match each item with the correct statement below.
a. economics
f. productivity
b.
c.
d.
e.
____ 23.
____ 24.
labor
goods
capital
factors of production
g.
h.
i.
j.
entrepreneurship
scarcity
services
economic model
the amount of output that results from a given level of inputs
a situation in which people do not have enough resources to satisfy every desire
____ 25.
____ 26.
____
____
____
____
____
27.
28.
29.
30.
31.
____ 32.
land, labor, capital, and entrepreneurship
the study of how individuals, families, businesses, and societies use limited resources to fulfill their
unlimited wants
activities done for a fee
a simplified representation of the real world
manufactured goods used to make other goods and services
the work people do
the ability of individuals to start new businesses, introduce new products and processes, and improve
management techniques
tangible items that people buy
Chapter 1 Test
Answer Section
TRUE/FALSE
1. F
MULTIPLE CHOICE
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
A
C
A
C
C
B
C
A
C
C
B
C
A
B
C
C
C
B
A
D
C
MATCHING
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
F
H
E
A
I
J
D
B
G
C