Unit 1 Review

What fundamental issue does the field of economics aim to solve?

• Scarcity of resources in relation to unlimited wants and needs.

• Abundance of resources and limited human desires.

• Unlimited resources and infinite human labor.

• Equal distribution of resources and limited human needs.

Which of the following best defines opportunity cost?

• the value of the next best alternative that is forgone when a decision is made.

• the total amount of money spent on a particular choice.

• the potential benefits that are lost when one option is chosen over another.

• the financial expense incurred when making a decision.

Which of the following is not typically considered a factor of production by economists?

• Retail stores

• Natural resources

• Labor

• Capital equipment

Which point represents the least efficient utilization of resources?

• A

• B

• C

• D

• E

Organize the following into the correct categories

Groups:

(a) Consumer Goods

,

(b) Capital Goods

,

(c) Services

• Industrial Oven
• IT Support

• Conveyor Belt
• Forklift
• Fitness Training

• Event Planning

• Plumbing

• Printing Press
• Coffee Maker
• Electric Kettle
• Blender
• Toaster

• Legal Consultation

• Crane
• Oil Rig

• Vacuum Cleaner
• Cleaning

• Microwave

What does point E on this model represent?

• Inefficient use of resources.

• An increase in productivity.

• An unattainable use of resources.

• A maximally efficient use of resources.

Which of the following is a characteristic of a capitalist economic system?

• Government control of all industries.

• Private ownership of property and businesses.

• Central planning of the economy.

• Absence of market competition.

Which of the following is not typically associated with a socialist economic system?

• private ownership of major industries.

• centralized economic planning.

• government regulation of the economy.

• public ownership of resources.

In *An Inquiry Into Nature and Causes of the Wealth of Nations*, Adam Smith advocated for the policies of the 'Laissez Faire'. What does this concept suggest?

• Individuals pursuing their own self-interest can lead to positive economic outcomes for society.

• Government intervention is necessary to ensure economic stability.

• Monopolies are beneficial for economic growth.

• State-owned enterprises are more efficient than private businesses.

What is a socialist criticism of capitalism?

• Workers thrive under capitalist systems.
• Capitalism promotes equal wealth distribution.
• Capitalism encourages community cooperation.
• Capitalism leads to inequality and exploitation of workers.