Unit 1 Economics Study Guide

Study the graph. In what time period did hydroelectric power usage reach its peak? 1970-1980 1980-1990 1990-2000 2000-2010

1990-2000

Which statement best describes the impact of scarcity? People are able to meet most of their needs. Consumers must pay higher prices for many items. Governments must try to meet the wants of citizens. Economies can work to provide more goods and services.

Consumers must pay higher prices for many items.

Which nation has a command economy? Cuba Norway South Korea the United States

Cuba

Gabriela owns a company that makes silk scarves. She buys the silk from an overseas supplier and is subject to a tax on imported goods. Gabriela most likely lives in a closed economy with limited government regulation. a pure market economy with no government regulation. a command economy with heavy government regulation. a mixed market economy with some government regulation.

a mixed market economy with some government regulation.

Opportunity cost occurs because of a producer's need to limit resources. protect resources. allocate resources. spend resources.

allocate resources.

Most resources are nonrenewable, and wants and needs are unlimited. This is an example of production scarcity labor devaluation

scarcity

What is one possible effect of high unemployment in a mixed market economy? The government will intervene to appoint new jobs to workers. A lack of income will weaken the buying power for many people. New government-run farms and factories will open to provide work. The wealth gap between the upper and lower classes will decrease.

A lack of income will weaken the buying power for many people.

This graph shows the division of wealth in the United States in 2010. Based on this graph, how much wealth did the top 20 percent of the population hold? about 35 percent about 55 percent about 80 percent about 90 percent

about 90 percent

One of the three economic questions deals with deciding what goods and services should be produced. what the costs of production should be. how goods and services will be marketed. how consumers will receive products.

what goods and services should be produced.

Which of the following could be considered both a renewable resource and a nonrenewable resource? iron ore sea water solar energy wheat crop

wheat crop

In a free-enterprise system, consumers decide how to set prices. which goods to export. which services to buy. how to use materials.

which services to buy.

The questions of economics address which of the following? Check all that apply. who what where when why how

who what how

What does the concept of scarcity explain? Check all that apply. why a product could lose significant value over time. why people continue to purchase different products. why consumers are willing to pay high prices for items. why decisions must be made on how to use resources why resources can be both renewable and nonrenewable. why a single resource has more value than another resource.

why consumers are willing to pay high prices for items. why decisions must be made on how to use resources why a single resource has more value than another resource.

Read the graph. Which power source has been least consumed? wood wind biofuel hydroelectric

wind

Zahara Smith is wondering how she can make her check stretch enough to afford her monthly cable, water, grocery, and cell phone bills. Zahara is concerned with needs. limits. needs and wants. wants and limits.

needs and wants.

What is the fundamental problem producers and consumers face? services scarcity resources inadequacy

scarcity

Venya and Kari own a flower shop that specializes in custom bouquets. Wanting to expand into selling potted plants, they create a production possibility chart to assess whether the potted plants are a good idea. Study their chart: How many potted plants should they be able to produce on Day 3? 25 30 50 75

50

How does a high unemployment rate affect the economy? A high unemployment rate has no effect. A high unemployment rate has little effect. A high unemployment rate has a very positive effect. A high unemployment rate has a very negative effect.

A high unemployment rate has a very negative effect.

Which of these statements demonstrate the economic concept of scarcity? Check all that apply. All useful resources are in limited in their supply. Everyone is able to meet all of their needs and wants. The wants and needs of people are unlimited. Resources are scarce, which explains why we are willing to pay for them. A large economy is able to eliminate the effects of scarcity. Because of scarcity, individuals must make choices.

All useful resources are in limited in their supply. The wants and needs of people are unlimited. Resources are scarce, which explains why we are willing to pay for them. Because of scarcity, individuals must make choices.

Which of the following illustrates an opportunity cost? James has enough money to buy some socks and a book. Alyssa does not have enough time to study for her test. Amir only has time to study or to play basketball. Lydia does not have enough money to buy a new shirt.

Amir only has time to study or to play basketball.

Which of the following best illustrates the importance of addressing the three questions of economics? People's desires and needs are always changing. Businesses need to use limited resources wisely. Traditional methods of production are outdated. Businesses need to limit production.

Businesses need to use limited resources wisely.

What is one way a market economy affects the lives of private citizens? Citizens can change jobs relatively easily. Citizens cannot choose their own careers. Citizens do not have to pay for their housing. Citizens have little freedom and independence.

Citizens can change jobs relatively easily.

What is one way a command economy affects the lives of private citizens? Citizens cannot make most economic decisions. Citizens can only work in factories or on farms. Citizens must pay for their own health care. Citizens have limited access to education.

Citizens cannot make most economic decisions.

What is one downside for consumers to competition in a free-enterprise system? Consumers must be knowledgeable. Consumers have limited choices. The quality of goods often suffers. The price of goods often decreases.

Consumers must be knowledgeable.

What are some reasons for studying economics? Check all that apply. Economics has an impact on everyday life. Economics helps people learn to manage resources. Economics describes the reasons products are scarce. Economics explains the roles of producers and consumers. Economics shows how people work together to make money.

Economics has an impact on everyday life. Economics helps people learn to manage resources. Economics explains the roles of producers and consumers.

Which of these statements accurately describe economics? Check all that apply. Economics is the study of how goods are and services are made and sold. The principle of scarcity is a driving force of economic decisions. Services are things like groceries, cars, and office buildings. Government regulations rarely influence economic decisions. Producers and consumers interact to influence the economy.

Economics is the study of how goods are and services are made and sold. The principle of scarcity is a driving force of economic decisions. Producers and consumers interact to influence the economy.

Which statements correctly identify limitations of the factors of production? Check all that apply. Economies must consider their limitations when answering the three questions of economics. Land is a factor of production that is limited only by the amount available. Capital includes all money and physical facilities needed to create a product. Labor is a factor driven by the size of the population, education, and standard of living. An economy can function well when producing outside its limitations.

Economies must consider their limitations when answering the three questions of economics. Capital includes all money and physical facilities needed to create a product. Labor is a factor driven by the size of the population, education, and standard of living.

three questions of economics are based on decisions made by economies. What statement best describes why economies must make these decisions? Economies must make these decisions because resources are unlimited, but production must be limited. Economies must make these decisions because resources are limited. Economies must make these decisions because consumers cannot make decisions on their own. Economies must make these decisions to prevent producers from overproducing.

Economies must make these decisions because resources are limited.

How does the economy of Cuba differ from the economy of North Korea? In North Korea, the government's control of the economy has begun to loosen. In Cuba, the government maintains a tight hold over the economy. In Cuba, the government's control of the economy has begun to loosen. In North Korea, the government maintains a tight hold over the economy. In North Korea, there is economic uncertainty in exchange for individual choice. In Cuba, there is economic security in exchange for government control. In Cuba, there is economic uncertainty in exchange for individual choice. In North Korea, there is economic security in exchange for government control.

In Cuba, the government's control of the economy has begun to loosen. In North Korea, the government maintains a tight hold over the economy.

How does a command economy differ from a mixed market economy? In a command economy, citizens have fewer property rights. In a mixed market economy, citizens have more property rights. In a command economy, citizens have more property rights. In a mixed market economy, citizens have fewer property rights. In a command economy, citizens own all public property. In a mixed market economy, the government owns all private property. In a command economy, citizens own all private property. In a mixed market economy, the government owns all public property

In a command economy, citizens have fewer property rights. In a mixed market economy, citizens have more property rights.

What is one counter-argument to the premise that the wealth gap is a serious problem which needs to be addressed? The lower classes have the opportunity to invest. Poor people can easily move into the middle class. Investments by the upper class create lower-class jobs. Buying power sharply increases for the working class.

Investments by the upper class create lower-class jobs.

How does a production possibility chart assist in outlining opportunity cost? It compares profit potential of one product to another. It compares production cost of one product to another. It compares production numbers of one product to another. It compares consumer demand of one product to another.

It compares production numbers of one product to another.

Failure to address the three questions of economics will have what kind of impact on an economy? It will have no consequences. It will help meet citizens' needs and wants. It will have negative consequences. It will help contribute to the success of the society.

It will have negative consequences.

Which nation has a communist command economy? Norway North Korea South Korea the United States

North Korea

Which statements accurately describe the roles of producers and consumers? Check all that apply. Producers make and sell things. Consumers buy goods and services. Producers buy goods and services. Consumers make and sell things. Producers provide services to consumers.

Producers make and sell things. Consumers buy goods and services. Producers provide services to consumers.

What is regulation in an economic system? Regulation is the placing of limits or restrictions on business activity by the government. Regulation is the placing of limits or restrictions on business activity by producers. Regulation is the removal of limits or restrictions on business activity by the government. Regulation is the removal of limits or restrictions on business activity by producers.

Regulation is the placing of limits or restrictions on business activity by the government.

Which statement best describes a pure market economy? Producer intervention in economic choices is strictly forbidden. The government determines economic choices and makes most decisions. The decisions made by producers and consumers drive all economic choices. Producers and consumers make some economic choices while the government makes others.

The decisions made by producers and consumers drive all economic choices.

How can the government reduce the wealth gap in a mixed market economy? The government can control income levels by placing limits on how much citizens can earn. The government can eliminate minimum wages for workers to account for economic differences. The government can improve education to provide new opportunities for workers in the lower class. The government can tax members of the wealthy class at a lower rate to address differences in income.

The government can improve education to provide new opportunities for workers in the lower class.

What restriction would the government impose in a closed economy? The government would prohibit trade with other nations. The government would set the prices for imported goods. The government would preserve traditional customs only. The government would prevent private ownership of property.

The government would prohibit trade with other nations.

How would a manufacturer benefit by using fewer scarce resources? The product would be less expensive to produce. The product would better satisfy consumer needs. The product would be popular and readily available. The product would provide a more satisfactory profit.

The product would be less expensive to produce.

Which statements accurately show the concept of scarcity? Check all that apply. There is a drought in the middle of growing season that has affected corn crops. An individual is not able to purchase a newly released video because of limited supply. A family is selling apples they have grown on their farm because they have too many to eat themselves. An individual wants to buy a new car because his is old. An individual decides that she needs to obtain a second job to save money to buy a new house.

There is a drought in the middle of growing season that has affected corn crops. An individual is not able to purchase a newly released video because of limited supply. An individual decides that she needs to obtain a second job to save money to buy a new house.

What are the pros of a mixed market economy for most citizens? CHECK ALL THAT APPLY. The government provides most basic necessities for citizens. There is a great deal of independence and personal choice. There may be less of a gap between rich and poor people. The government cannot dictate which jobs citizens hold. There may be greater opportunity to become wealthy. The economic system works to promote equality.

There is a great deal of independence and personal choice. The government cannot dictate which jobs citizens hold. There may be greater opportunity to become wealthy.

Based on the lesson, how are individuals and economies similar? They both must decide how to allocate resources. They both must carefully categorize available resources. They both must recognize the issues with nonrenewable resources. They both must choose whether to use more renewable resources.

They both must decide how to allocate resources.

Every economic decision has only positive benefits. gained opportunities. unavoidable limitations. a consequence or tradeoff.

a consequence or tradeoff.

On a production possibility curve, data points that fall outside of the curve represent an inefficient allocation of resources. a balanced allocation of resources. ideal production. a currently unattainable production.

a currently unattainable production.

Which individual is a producer? a host who seats customers in a busy restaurant a mother who demands quality produce for her family a farmer who grows only what his family needs to survive a student who builds a bookcase from bricks and boards

a host who seats customers in a busy restaurant

Which of the following uses a nonrenewable energy source? a wind mill a power plant a fruit orchard a swimming pool

a power plant

Which object is likely to have the most value based on the concept of scarcity? a flowering plant a silver necklace a new coffee table a crop of oranges

a silver necklace

Read the paragraph below, and then decide which type of economy is being described. In this economy, community members typically use simple tools to plant and harvest crops. Food supplies are supplemented by hunting animals and gathering plant materials. Members trade with each other to obtain needed goods, as few people hold currency. Little economic growth occurs. What type of economy is being described? a traditional economy a free market economy a mixed-market economy a command economy

a traditional economy

Based on economic theory, if a person wants to purchase a large stereo system, what must necessarily occur? creation of resources analysis of resources allocation of resources production of resources

allocation of resources

A society decides that it needs to produce more corn to feed the growing population. What must it do before it begins the production process? analyze existing resources, such as water availability determine how people will receive the surplus crops study the profitability of increasing corn production understand who is in a position of authority to produce more

analyze existing resources, such as water availability

If a specific economy has extra capital resources available, it will be able to produce top-quality goods and services. continually look to expand and invest. be able to produce more goods and services needed and wanted by society. have additional labor available to focus on production.

be able to produce more goods and services needed and wanted by society.

A company manufacturing shirts for a department store decides to create a new style of cotton shirt. The company would most likely produce shirts that will sell at a high price. be less costly to create. use a nonrenewable resource. satisfy the wants and needs of consumers.

be less costly to create.

Which best describes the role of a consumer? buying goods making products providing products supplying services

buying goods

In a mixed market economy, property owned by the government can be used by many citizens. can cause economic inequality. can help promote personal wealth. can be used for private businesses.

can be used by many citizens.

In a mixed market economy, property owned by an individual can be used by all citizens. can be run by a city or state. can help promote personal wealth. can be used by government workers.

can help promote personal wealth.

Read the following scenario. A clothing company wants to expand into new regions. It is looking at an urban area with a large number of vacant warehouses. The population is made up of people with average educations and a lower standard of living. The company is experiencing slower sales but has hopes that product will take off and be successful. Which of the factors of production will the company need to address most closely when making its decision to expand? land capital land and labor labor and capital

capital

A person studying economics can make better choices about purchases if that person understands goods. services. production. consequences and tradeoffs.

consequences and tradeoffs.

The goal of a command economy is to sustain self-sufficiency. preserve traditional customs. create equality within a society. promote free economic choices.

create equality within a society.

One of the main questions of economics involves deciding upon the method for distributing goods and services. creating goods and services. pricing goods and services. enhancing goods and services.

creating goods and services.

A mixed market economy tends to exist under a communist government that provides little regulation. democratic government that provides some regulation. representative government that provides no regulation. socialist government that provides a lot of regulation.

democratic government that provides some regulation.

A wealth gap is an economic difference between nations. economic classes. businesses. governments.

economic classes.

Critics of the wealth gap might argue that economic growth will likely decline over time. the upper classes cannot help create new jobs. the wealthy become unable to make investments. buying power exceeds the supply from producers.

economic growth will likely decline over time.

Which activity would a consumer most likely perform? filling a lawn mower with gas answering phones in an office growing vegetables in a home garden helping mow lawns in the neighborhood

filling a lawn mower with gas

Which of the following will be accomplished by efficient allocations of the factors of production? guaranteeing economic success understanding whether a product will fail fulfilling many needs and wants of society replenishment of limited resources

fulfilling many needs and wants of society

Studying economics best helps an individual determine how to achieve economic regulation goals dependency weakness.

goals

Which group creates regulations in mixed-market economies? consumers governments monopolies producers

governments

An economist most likely spends time studying methods for spending and saving money. reasons producers experience scarcity. ways to balance time between work and leisure. interactions between producers and consumers.

interactions between producers and consumers.

Which of the following has the largest impact on opportunity cost? consumer wants tight deadlines consumer needs limited resources

limited resources

Ricardo works part time at a local computer store. One day, his manager approaches him about moving from cashier to floor supervisor. Ricardo is excited because the promotion comes with a raise; however, the extra work hours would take away from time with his friends. In the end, he decides to take the promotion.What is Ricardo's opportunity cost? losing extra time to spend with his friends being able to use the extra money for summer football camp losing the ability to spend any time with his friends receiving another promotion in six months

losing extra time to spend with his friends

Which resource is both renewable and inexpensive? gold coal lumber minerals

lumber

Assessing opportunity cost involves making choices and dealing with consequences. choosing consequences over rewards. reviewing past decisions and changing them. minimizing profit and loss.

making choices and dealing with consequences.

The citizens of the United States live and work in a closed economy. command economy. mixed market economy. pure market economy.

mixed market economy.

The most common economic system in the world is a closed economy. command economy. mixed market economy. traditional economy.

mixed market economy.

When compared to a mixed-market economy, a command economy typically has more private ownership. more government control over production. strong consumer-buying power. a greater chance for a high income.

more government control over production.

Demonstrating opportunity cost is done through production analysis. possibility. calculation. research.

possibility.

Look at the equation framework. Which of the following lists the proper placement of terms, from left to right, to complete the equation? revenue, profit, opportunity cost profit, revenue, production cost production cost, profit, revenue opportunity cost, revenue, profit

profit, revenue, production cost

Rescooperate Ice Cream Shop recently analyzed their books. They found that in the past year, they made $100,000 selling ice cream and spent $75,000 on supplies and factory space. The remaining $25,000 represents profit. loss. revenue. expense.

profit.

The goal of a market economy is to sustain self-sufficiency. preserve traditional customs. create equality within a society. promote free economic choices.

promote free economic choices.

Producers can create their maximum combination of goods, as long as they address consumer desires. guarantee a profit. properly allocate resources. keep up with demand.

properly allocate resources.

A company makes $200,000 in a year and has $150,000 in production costs, leaving them with $50,000. The $200,000 represents opportunity costs revenue profit resource costs.

revenue

Becoming informed about economics helps a person understand the reasons a command economy is ideal. role of government in regulating production. why consumers receive tax revenue. reasons an economy must always be completely regulated.

role of government in regulating production.

A resource has value, and people are willing to pay for it most likely because the resource is renewable inexpensive abundant scarce

scarce

A producer would most likely buy books and music. shop for groceries. purchase cookies. serve in a coffee shop.

serve in a coffee shop.

This graph shows the changing unemployment rate in the United States. From 2001 to 2011, unemployment in the United States stayed the same. slightly changed. sharply increased. sharply decreased.

sharply increased.

A command economy tends to exist under a communist government that provides little regulation. democratic government that provides some regulation. representative government that provides no regulation. socialist government that provides a lot of regulation.

socialist government that provides a lot of regulation.

The idea of supply and demand is based on the development of business decisions in a thriving economy. sufficient products to meet consumer wants. governmental laws that regulate the economy. business efforts to improve product appeal to consumers.

sufficient products to meet consumer wants.

Based on the lesson, what would most affect the price a consumer is willing to pay for a newer version of a laptop computer? the materials used in its construction the demand for the added performance elements the quality of goods produced by the manufacturer the numbers of previous models stored in the warehouse

the demand for the added performance elements

Which factor should be most important if you are considering purchasing a new video game? the number of games available for purchase the quality of the games produced by that manufacturer the popularity of the video game with your friends the other things you could do with your money instead

the other things you could do with your money instead

What is prohibited in a command economy? CHECK ALL THAT APPLY. the control of prices and income levels the rationing of manufactured goods the personal ownership of property the influence of consumer demand the intervention of the government

the personal ownership of property the influence of consumer demand

In a mixed market economy, a fire breaks out in a sneaker factory. The repair work most likely will be paid by the government group that runs the factory. the state agency that operates the factory. the city official who manages the factory. the private citizen who owns the factory.

the private citizen who owns the factory.

What determines the value of an item? the amount of goods that are produced the capital required to build the factory the unlimited wants of the consumers the resources consumed in production

the resources consumed in production

In a communist command economy, workers are employed by the agencies. the consumers. the producers. the state.

the state.

School band members need to raise money for new uniforms. Some members want to sell energy drinks at a football game, but others want to organize a car wash in the school parking lot. Based on economics, what would be most influential in making the decision? the labor needed the consumer demand the capital needed the value of the resources

the value of the resources

The difference in income between the richest and poorest citizens is called a command economy. unemployment. private property. the wealth gap.

the wealth gap.

Which of the following are examples of limited resources on the part of consumers? product and space money and product time and money space and time

time and money

One method for studying opportunity cost is to think in terms of risk and ability. pros and cons. tradeoffs trial and error.

tradeoffs