Economics Unit 1 Study Guide

1. Economics is the study of how people

• Calculate their income tax
• Choose from limited resources to meet their needs
• Respond to war and drought
• Gain knowledge and skills from study and experience

2. Physical objects such as clothes or shoes are defined as

• goods
• labor
• capital
• services

3. Something such as air, food, or shelter that is necessary for survival is a

• need
• service
• want
• worker

4. All goods and services we produce are

• expensive
• scarce
• recyclable
• efficiently produced

5. The resources used to make all goods and services are called

• factors of production
• the gross national product
• the production possibilities frontier
• opportunity costs

6. Which of the following is not a factor of production?

• a woman who makes a quilt
• the cotton cloth and thread used to make the quilt
• the children whom the woman supports with her labor
• the wood frame on which the quilt is sewn

7. Any human-made resource that is used to create other goods and services is

• a service
• an entrepreneur
• capital
• labor

8. Which of the following is not an example of capital?

• the paint used by a house painter
• the computer used by an accountant
• the trees used to make paper
• the factory where a good is produced

9. Natural resources that are used to make goods and services are considered

• equipment
• money
• labor
• land

10. A student buys a soda from the vending machine with a choice of soda or water. What is the opportunity cost?

• the soda that was purchased
• the vending machine
• water
• orange soda