Scarcity
1. Why does scarcity exist?
A. Because there are unlimited resources and limited wants
B. Because people choose not to work
C. Because resources are limited but wants are unlimited
D. Because businesses don’t produce enough goods
C. Because resources are limited but wants are unlimited
What is a trade-off?
A. The cost of producing a good
B. The next-best alternative you give up
C. A choice between two or more options
D. A situation where resources are unlimited
C. A choice between two or more options
1. Which of the following is not one of the three key economic questions?
A. What to produce?
B. How to produce?
C. Who gets the goods and services?
D. How much money should workers earn?
D. How much money should workers earn?
In a free market economy, most economic decisions are made by:
A. The government
B. Consumers and producers
C. The military
D. Foreign countries
B. Consumers and producers
A mixed economy is best described as:
A. An economy fully controlled by the government
B. An economy with no government involvement
C. A blend of free market decisions and government involvement
D. An economy where only producers make decisions
C. A blend of free market decisions and government involvement
2. Which of the following is an example of scarcity?
A. A store has unlimited supplies of sneakers
B. A family cannot afford to buy both a new phone and a new TV
C. A student gets a free laptop from school
D. A factory produces more than what consumers want
B. A family cannot afford to buy both a new phone and a new TV
Opportunity cost is best defined as:
A. All the possible choices you didn’t choose
B. The value of the next-best alternative you gave up
C. The money you spend on something
D. The total number of choices available
B. The value of the next-best alternative you gave up
2. The question “What to produce?” refers to:
A. Deciding which goods and services an economy should make
B. Determining who will buy the products
C. Choosing the price of the product
D. Figuring out how to advertise the product
A. Deciding which goods and services an economy should make
Which of the following is a key feature of a free market?
A. Government sets all prices
B. Businesses are owned and operated by the government
C. Individuals and businesses can make voluntary exchanges
D. Consumers must buy only government-approved goods
C. Individuals and businesses can make voluntary exchanges
Which of the following is an example of government involvement in a mixed economy?
A. Setting all prices
B. Providing public goods like roads and schools
C. Owning every business
D. Making all production decisions
B. Providing public goods like roads and schools
3. Scarcity forces people to make choices because:
A. Resources can be created easily
B. People never have to give anything up
C. Wants are limited
D. Resources are limited and people must prioritize what they want most
D. Resources are limited and people must prioritize what they want most
Which situation shows opportunity cost?
A. A school builds a new gym and also gets a free library
B. A student chooses to study instead of going to a party
C. A store gives away free candy
D. A country has unlimited oil
B. A student chooses to study instead of going to a party
3. The question “How to produce?” focuses on:
A. Choosing the workers, technology, and resources used
B. Deciding which consumers get the product
C. Choosing how much profit a company earns
D. Deciding whether to open new stores
A. Choosing the workers, technology, and resources used
In a free market, competition between businesses usually leads to:
A. Higher prices and lower quality
B. Lower prices and better quality
C. Fewer choices for consumers
D. Government deciding what is produced
B. Lower prices and better quality
In a mixed economy, individuals are mainly responsible for:
A. Choosing what goods and services to buy and produce
B. Running all government services
C. Limiting competition between businesses
D. Deciding how taxes are spent
A. Choosing what goods and services to buy and produce
Which resource below is considered scarce?
A. Free sunshine
B. Air available outdoors
C. Time
D. Unlimited internet videos
C. Time
4. You decide to buy a video game instead of saving your money. What is the opportunity cost?
A. The amount of money you spent
B. The video game you bought
C. The savings or future items you could have bought
D. Everything you’ll ever want in the future
C. The savings or future items you could have bought
4. When a country decides “Who consumes the goods and services?,” it is deciding:
A. How many factories to build
B. How products will be distributed among the population
C. Which products are free
D. How companies choose their workers
B. How products will be distributed among the population
Which statement best describes the role of government in a free market?
A. Government controls all resources
B. Government owns most businesses
C. Government creates laws to protect property rights and enforce contracts
D. Government sets quotas for production
C. Government creates laws to protect property rights and enforce contracts
Why do most countries today have mixed economies?
A. Because they want only the government to make decisions
B. Because a mix of market freedom and government regulation works best
C. Because free markets cannot exist
D. Because individuals cannot make economic choices
B. Because a mix of market freedom and government regulation works best
When resources are scarce, economists say people face:
A. No trade-offs
B. Unlimited production
C. Opportunity costs
D. No decision-making
C. Opportunity costs
When making a trade-off, what must people do?
A. Choose the option with no cost
B. Give up one thing to get something else
C. Avoid making decisions
D. Increase the number of resources
B. Give up one thing to get something else
5. Different economic systems answer the three key economic questions:
A. In the exact same way
B. Based on their values, goals, and type of economy
C. Only by allowing businesses to decide
D. Only by letting the government decide
B. Based on their values, goals, and type of economy
Why do free markets encourage innovation?
A. Because the government rewards all new ideas
B. Because businesses compete to create better products and earn profits
C. Because consumers must buy whatever is offered
D. Because resources are unlimited
B. Because businesses compete to create better products and earn profits
5. Which of these shows how a mixed economy balances freedom and government control?
A. Government bans competition
B. Businesses cannot set their own prices
C. Individuals can start businesses, but the government sets safety rules
D. Government owns all factories
C. Individuals can start businesses, but the government sets safety rules