Economics Review practice test

When manufactured goods are used to produce other goods and services, they are called capital goods.
true
A nondurable good lasts for less than five years when sued on a regular basis.
false, three
The paradox of value occurs when some necessities have little value, while some non-necessities have a much higher value.
true
Economic growth occurs when a nation’s total output of the goods and services increases over time.
true
The circular flow of economic activity describes an economy that is free of market.
false
In economics, land refers to the natural resources needed for production, such as forests, minerals, and climate.
true
The four factors of production are land, capital, labor, and financing.
false
Economics is a social science because it deals with how people behave while trying to satisfy their needs and wants through use of relatively scarce resources.
true
Economic products consist of both goods and services that are useful, relatively scarce, and transferable to others
true
A nation’s wealth refers to a worth that can be expressed in dollars and cents.
false
Both goods and services are counted as part of a nation’s wealth.
true
Division of labor increases efficiency because it allows workers to master many aspects of their jobs.
false, one
Economic interdependence limits a nation’s growth and usually reduces the efficiency of production.
false, encourages
Time is an opportunity cost when a manufacturer assigns workers to one task rather than to another.
true
The production possibilities frontier can be reached even if certain resources remain idle.
false
The situation in which some necessities have little value while some non necessities have a much higher value is known as
a. paradox of value
b. opportunity cost
c. trade-offs
a
Manufactured goods needed to produce other goods and services are called
a. nondurable goods
b. capital goods
c. consumer goods
b
To arrive at an economic decision, a decision making grid may be used to evaluate
a. productivity
b. only durable goods
c. alternative choices of action
c
Division of labor is a characteristic of
a. home craft businesses
b. assembly line production
c. classroom education
b
The study of economics is important because it enables us to
a. describe our standard of living
b. increase our consumption of consumer goods
c. become better decision makers
c
The dollar value of all final goods and services and the most comprehensive measure of a country’s total production output
a. financial capital
b. a cost-benefit analysis
c. Gross Domestic Product (GDP)
c
A popular model used to illustrate the concept of opportunity cost is
a. the production possibilities frontier
b. entrepreneurship
c. the paradox of value
a
An economy at its production possibilities frontier is operating
a. with slow economic growth
b. at full potential
c. without division of labor
b
The money used to buy the tools and equipment needed for production is known as
a. the factors of production
b. financial capital
c. wealth
c
Actions in one part of the country or world that have an economic impact on what happens elsewhere are examples of
a. trade-offs
b. specialization
c. economic interdependence
c
___ describes the concept that everything we do has a cost
TANSTAAFL
WHAT, HOW, and FOR WHOM to ___ are the three basic economic questions
produce
The ___ of production include land, labor, capital, and entrepreneurs
factors
___ is a key measure of a nation’s economic health
GDP
The study of ___ helps all of us to become more informed citizens and better decision makers
economics
A ___ grid can be used to evaluate alternatives
decision-making
The opportunity cost of doing something is the next best alternative, or ___, that you give up
tradeoff
A production possibilities frontier shows the various possible combinations of output that can be produced when all ___ are fully employed
resources
When economic growth takes place, the ___ production possibility shifts outward, showing that more products are produced than before
production possibility fronteir
The study of economics helps people make better __
decisions
worth that can be expressed in dollars and cents
value
study of how people try to satisfy their needs and wants through the used of limited resources
economics
tools, equipment, machinery, and factories used in the production of goods and services
capital
condition of not having enough resources to produce all the things people want
scarcity
cost of the next best alternative use of money, time, or resources when one choice is made rather than another
opportunity cost
sum of those economic products that are tangible, scarce, useful, and transferrable
wealth
people with all their efforts, abilities, and skills
labor
alternative choices made by consumers in the marketplace
trade-offs
quality of life based on the possession of the necessities and luxuries that make life easier
standard of living
item that is economically useful or that satisfies an economic want
good
manufactured goods that are used to produce other goods
capital good
process of using up goods and services to satisfy wants and needs
consumption
basic requirement for survival
need
way of expressing a need that leads to a preference for some goods over others
want
work that is performed for someone
service
diagram representing various combinations of goods and/or services that an economy can produce when all productive resources are fully employed
production possibilities frontier
process of creating goods and services
production
market where productive resources are bought and sold
factor market
any good that lasts three years or more when used regularly
durable good
economy is which consumers and privately owned businesses make the majority of the WHAT, HOW, and FOR WHOM decisions
free enterprise economy