Unit 1 Exam Review

 How does scarcity affect economic decisions?

• It requires everyone to pick multiple alternatives regardless of the total cost.

• It requires everyone to pick the one alternative that best serves their needs.

• It requires everyone to pick multiple alternatives that best serve their needs.

• It requires everyone to pick the one alternative that costs the least amount of money.

Which decision was caused by scarcity?

• offering additional benefits at a factory to attract employees to a rural location

• paying property and business taxes on time to avoid fines

• placing funds in a savings account to prepare for emergency expenses

• removing several departments in a company because they were doing the same tasks

How do deciding to spend a day at the beach and deciding to buy sunscreen involve opportunity costs?

• One decision is based on a need and the other on a want.

• Both decisions prevent other uses of time and money.

• One decision is the direct result of the other decision.

• Both decisions result in an individual spending money.

What is the primary difference between a resource-based economy and a diversified economy?

• A resource-based economy relies on one limited resource, while a diversified economy relies on many resources.

• A diversified economy has one company producing goods and services, while a resource-based economy has many.

• A resource-based economy has a greater flexibility to adjust, while a diversified economy has less flexibility.

• • 
    

    A diversified economy has an increased amount of risk, while a resource-based economy has decreased risk.

Why does an increase in sales tax on basic goods affect lower-income people more than other groups?

• Lower-income people buy more basic goods than other groups.

• Lower-income people are more likely to avoid buying a basic good because of the increase.

• The sales tax rate is increased according to the consumer's level of income.

• The sales tax is a larger part of the lower-income person's earnings.

Which decision reflects the role of profit motive in a free market economy?

• an executive leaving for a different company due to a better work environment

• • 
    

    a shoe company using extra funds to start a scholarship fund

• a factory being fined by the government for polluting a local water source

• an airline changing policy due to a passenger boycott

A factory, a conveyor belt, and a computer are all forms of what factor of production?

• entrepreneurship

• land

• capital

• labor

Why might an increase in the cost of resource supplies lead to lower supply of a product?

• The producer would have less money available to produce the product.

• The producer would make more profit if they produced more product.

• The cost of each item would decrease and speed up the supply chain.

• The cost of each item would increase, and fewer customers would buy the product.

If a book by a popular author goes on sale for one dollar, what will happen to the supply of the books?

• The supply will remain unchanged.

• The supply will quickly decrease.

• The supply will quickly increase.

How is equilibrium price determined?

• by figuring out the price at which quantity demanded exceeds quantity supplied

• by figuring out the price at which supply exceeds demand

• by figuring out the price at which supply and demand move apart from each other

• by figuring out the price at which supply and demand meet