Basic Economic Problem (Scarcity)
Scarcity means:
A) Prices are too high
B) Resources are limited, wants unlimited
C) A product is temporarily unavailable
D) Too much money in circulation
B) Resources are limited, wants unlimited
What does the PPC show?
A) The amount of money spent in an economy on two goods
B) Maximum possible production combinations of two goods
C) The price of two goods in the market
D) The number of people willing to buy two goods
B) Maximum possible production combinations of two goods
What is an incentive?
A) Something that motivates behavior
B) A type of tax
C) A government regulation
D) A natural resource
A) Something that motivates behavior
Which of the following is NOT an economic system?
A) Traditional
B) Command
C) Market
D) Communism
D) Communism
Which situation BEST illustrates scarcity?
A) A new video game sells out on launch day
B) A farmer has to choose between planting corn or wheat
C) A store raises prices during the holidays
D) A celebrity endorses a product
B) A farmer has to choose between planting corn or wheat
A point inside the PPC represents:
A) Maximum efficiency
B) Unattainable production
C) Inefficiency/ unemployment of resources
D) Economic growth
C) Inefficiency/ unemployment of resources
Which is an example of a non-monetary incentive?
A) A cash bonus
B) A scholarship check
C) Employee of the Month recognition
D) Overtime pay
C) Employee of the Month recognition
In a command economy, who decides what to produce?
A) Consumers
B) Government planners
C) Businesses
D) International trade partners
B) Government planners
How is scarcity different from shortage?
A) Scarcity is temporary, shortage is permanent
B) Scarcity exists only in poor countries
C) Scarcity is permanent, shortage is temporary
D) They are the same
C) Scarcity is permanent, shortage is temporary
Which of the following would not shift the PPC inward
A) Natural Disaster
B) Discovery of new natural resources
C) A deadly pandemic
D) Decreased productivity
B) New natural resources
A fine for polluting is an example of:
A) Positive monetary incentive
B) Negative monetary incentive
C) Non-monetary incentive
D) Traditional economic control
B) Negative monetary incentive
In which system are decisions based on customs and might rely heavily on agriculture?
A) Market
B) Traditional
C) Command
D) Mixed
B) Traditional
Opportunity cost is:
A) The total cost of a choice
B) The money spent on a choice
C) The next best alternative given up
D) The benefit of a choice
C) The next best alternative given up
You can produce cars or grain in your economy. Point A you produce 50 cars and 100 lbs. grain. Point B = 60 cars and 70 grain. What is the opportunity cost of moving from point A to B?
A) 10 Cars
B) 10 Grain
C) 30 Grain
D) 30 Cars
C) 30 Grain
Monetary incentives are:
A) Based on recognition
B) Based on enjoyment
C) Based on financial rewards
D) Based on traditions
C) Based on financial rewards
The U.S. is best described as a:
A) Pure market
B) Command economy
C) Traditional economy
D) Mixed economy
D) Mixed economy
Which of the following best illustrates the concept of scarcity in economics?
A) A country with high unemployment
B) A business choosing between producing smartphones or laptops with limited resources
C) A store running out of PlayStation consoles before the holidays
D) A student saving money for a concert ticket
B) A business choosing between producing smartphones or laptops with limited resources
You can produce Textbooks or Laptops in your economy. Point A you produce 10 laptops and 100 textbooks. Point B = 12 laptops and 90 texts. Point C = 15 laptops and 75 texts. What is the opportunity cost of moving from point C to A?
A) 25 Textbooks
B) 2 Laptops
C) 10 Textbooks
D) 5 Laptops
D) 5 Laptops
A city introduces a tax on sugary drinks to reduce consumption. Which statement best describes the economic reasoning behind this policy?
A) The government wants to increase revenue only
B) The tax is a negative incentive intended to change consumer behavior
C) People will ignore the tax since wants are unlimited
D) The tax eliminates scarcity of healthy options
B) The tax is a negative incentive intended to change consumer behavior
All economic systems must answer the three basic economic questions. Which set correctly lists them?
A) What to produce? How to produce? For whom to produce?
B) What to trade? How to trade? Who to trade with?
C) How much to save? How much to spend? How much to tax?
D) Who owns resources? Who makes rules? Who sets prices?
A) What to produce? How to produce? For whom to produce?