econ self checks unit 1

choose which economic rule states that the additional satisfaction people get from consuming one more unit of a product will lessen with each additional unit they consume real income effect law of demand substitution effect law of diminishing marginal utility

law of diminishing marginal utility

As an economic term, land includes work people do. machinery. natural resources. knowledge.

natural resources

The four safeguards of Free Enterprise are: socialism, capitalism, communism, and traditional. corporation, partnership, sole proprietorship, and limited liability company. executive, judicial, legislative, and local. private property rights, competition, the price system, and entrepreneurship.

private property rights, competition, the price system, and entrepreneurship.

An individual buys a finished product for the purpose of consumption in a product market factor market demand market consumer market

product market

3. Which statement describes the critical role played by profits in a market economy? Profits tell government planners how much consumers are spending. Governments discourage profits due to inequality of income Profits cause inflation Profits encourage businesses to efficiently produce the things people want.

Profits encourage businesses to efficiently produce the things people want.

he person who starts a business and brings together and organizes land, labor, and capital in order to produce a product is known as a manager. an entrepreneur. a partner. a stockholder.

an entrepreneur

The four factors of production are the resources of land, labor, capital and work people do. technology. services. entrepreneurship.

entrepreneurship

The need to make choices arises because some things are not limited. everything that exists is limited. people need to share their resources. shortages are a constant situation.

everything that exists is limited

By limiting their wants, people can eliminate scarcity. true false

false

Economics is an exact science. true false

false

baker purchases flour so he can make goods and sell them in his bakery. The baker purchased the flour in a product market. true false

false

Scarcity is a problem only for economies that use money to coordinate decisions. true false

false Scarcity is the fundamental economic problem for all economies, not just economies that use money.

Goods that are naturally available to all are called capital goods free products consumer goods product goods

free products

You receive a coupon in the mail that gives you a free meal at your favorite restaurant. You go to the restaurant and enjoy your free meal. The next time you go to the restaurant, you notice the price of your favorite dish has been raised. This example illustrates the concept of utility opportunity cost scarcity "there is no such thing as a free lunch"

"there is no such thing as a free lunch"

Land, labor, capital, and entrepreneurship are the results of supply and demand opportunity costs of businesses factors of production results of production

factors of production

The opportunity cost of buying a slice of pizza for two dollars rather than a burrito for two dollars is the burrito there is no opportunity cost the pizza the two dollars spent on the pizza

the burrito

. Martha works at a retail store. She is paid by the store in a factor market and buys her clothing at the store in a product market. This cycle of individuals and businesses interacting is called the circular flow of economic activity the flow of factor markets scarcity an economic process

the circular flow of economic activity

Kelly, a rich businesswoman, finds that no matter how many pairs of shoes she buys, she can still find plenty more that she wants. Her salary only allows her to buy fifty pairs of shoes per year. She cannot buy as many shoes as she wants. Kelly is facing a small opportunity cost for her shoes a large opportunity cost for her shoes the fact that she cannot buy goods in a factor market the fundamental economic problem of scarcity

the fundamental economic problem of scarcity

entrepreneurs are the driving force of a market economy. Peter is an entrepreneur focused on becoming an owner of a successful business. Peter is motivated by consumer goods the fundamental economic problem the incentive of making profit and becoming wealthy opportunity cost

the incentive of making profit and becoming wealthy

Economics can be defined as the study of how people satisfy seemingly unlimited wants with scarce resources the problems and decisions of everyday consumers the limited description of economic activities the scientific study of interactions in production

the study of how people satisfy seemingly unlimited wants with scare resources

A businessman purchases flowers for his wife on the way home from work. The man purchased the flowers in a product market. true false

true

The fundamental economic problem is that we do not have enough resources to satisfy all of our wants. true The fundamental economic problem relates directly to the general definition of economics. false

true

The opportunity cost of taking an unpaid vacation from work is the amount of money you would have made if you would have worked. true false

true

Use the following story to answer the question. You are invited to a party on Thursday night. You have a test in economics on Friday. You make a list of all of the positives and negatives of studying and all of the positive and negatives of going to the party. You decide to go to the party. The opportunity cost of going to the party was studying for the economics test. true false

true

Choose which of the following describes a free enterprise system? There are no legal restrictions on freedom of enterprise Individuals are free to own and control the factors of production Businesses cannot make a profit Government owns and controls the factors of production a free enterprise system is also known as a market economy, where individuals control the factors of production.

Individuals are free to own and control the factors of production