Basic Economic Concepts

What is the basic economic problem that all societies face?

• Inflation

• Unemployment

• Scarcity

• Surplus

Which of the following is NOT a factor of production?

• Land

• Capital

• Money

• Labor

What does opportunity cost refer to?

• The total cost of all available choices

• The next best alternative forgone when making a decision

• The amount of money spent on an investment

• The cost of production

Which of the following is an example of capital?

•  A farmer’s tractor

•  A field of corn

• A worker planting crops

•  A business owner's decision

What type of economy is based on customs, traditions, and habits?

• Market economy

• Command economy

• Traditional economy

• Mixed economy

Which factor of production includes entrepreneurs?

• Land

• Capital

• Labor

• Entrepreneurship

If a farmer decides to grow peas instead of corn, what is the opportunity cost?

• The money used to buy pea seeds

• The amount of land used

• The corn that could have been grown instead

• The number of workers on the farm

What is the main characteristic of a market economy?

• Government makes all economic decisions

• Resources are owned by private individuals

• There is no competition

• Businesses are controlled by the government

In a command economy, who decides what goods are produced?

• Private businesses

• Consumers

• The government

• Entrepreneurs

Which of the following best defines specialization?

• Producing everything on your own

• Focusing on one type of good or service to increase efficiency

• Buying goods from different markets

• Avoiding economic decisions