Scarcity and Opportunity Costs
What is scarcity?
A) Having limited resources and unlimited wants
B) Having unlimited resources and limited wants
C) Not enough money to buy things
A) Having limited resources and unlimited wants
What is a characteristic of a free enterprise system?
A) Government sets prices
B) Economic freedom for producers and consumers
C) Wealth is distributed equally
B) Economic freedom for producers and consumers
What is a benefit of free enterprise?
A) Lack of consumer choice
B) Creation of wealth
C) Equal distribution of income
B) Creation of wealth
In the circular flow model, who provides labor?
A) Firms
B) Resource owners
C) Government
B) Resource owners
What are the three basic economic questions?
A) Why, how, and when to produce?
B) What, how, and for whom to produce?
C) Where, when, and how to produce?
B) What, how, and for whom to produce?
What does socialism emphasize?
A) Individual property rights
B) Equal wealth distribution
C) Competition among businesses
B) Equal wealth distribution
What motivates producers in a free enterprise system?
A) Profits
B) Government quotas
C) Charity
A) Profits
What do firms provide in the circular flow model?
A) Products and wages
B) Land and capital
C) Taxes
A) Products and wages
Which of the following is an example of opportunity cost?
A) Choosing to study instead of watching a movie
B) Buying a car with a loan
C) Earning interest on savings
A) Choosing to study instead of watching a movie
What role does government play in communism?
A) Minimal intervention
B) Ownership of all resources
C) Protecting private property
B) Ownership of all resources
How does private property benefit the U.S. economy?
A) Reduces competition
B) Encourages investment and entrepreneurship
C) Limits access to resources
B) Encourages investment and entrepreneurship
How does government interact in the circular flow model?
A) By supplying resources
B) By collecting taxes and providing public services
C) By creating wealth for consumers
B) By collecting taxes and providing public services
What does the production-possibilities curve represent?
A) Economic freedom and competition
B) Maximum output and opportunity costs
C) Circular flow and government intervention
B) Maximum output and opportunity costs
Which philosopher emphasized limited government in free markets?
A) Friedrich Hayek
B) Karl Marx
C) John Maynard Keynes
A) Friedrich Hayek
What role does economic freedom play in the U.S. economy?
A) Limits consumer choices
B) Allows individuals to make their own financial decisions
C) Reduces competition
B) Allows individuals to make their own financial decisions
What is the purpose of the circular flow model?
A) To show how resources are distributed
B) To explain economic philosophies
C) To describe the flow of goods, services, and money in the economy
C) To describe the flow of goods, services, and money in the economy
What is one factor of production?
A) Money
B) Land
C) Technology
B) Land
What does competition encourage in a free enterprise system?
A) Higher prices
B) More innovation and variety
C) Restricted consumer choices
B) More innovation and variety
What does responsive pricing in free enterprise mean?
A) Prices adjust based on government intervention
B) Prices change based on supply and demand
C) Prices stay constant over time
B) Prices change based on supply and demand
How does government spending affect the circular flow model?
A) It increases the flow of money and goods
B) It decreases the production of goods
C) It eliminates competition in the market
A) It increases the flow of money and goods