Economics Unit I Practice Test

25 Questions

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Economics Quizzes & Trivia

The study of economics covers the topic of finance and the many ways in which it can be distributed, with the production, transport, and consumption of goods and services being the main culprit. It’s an incredibly intriguing realm of social science and in the following practice test, we’ll be seeing just how much you know about the topic. Think you can get all of the questions correct?


Questions and Answers
  • 1. 
    What does the term capital mean?
    • A. 

      Money that is spent by companies to produce goods

    • B. 

      Resources that are made and used to make other good and services

    • C. 

      The place where the company is located

  • 2. 
    • A. 

      Labor that is available because workers are employed at another business

    • B. 

      Food that is available because of a truckers strike

    • C. 

      Food that is available because no one wants to buy it

  • 3. 
    Which of the following would show an efficient economy?
    • A. 

      Resources are used to make the most goods and services possible

    • B. 

      Uses the least costly amount of resources available

    • C. 

      Has a small amount of people who do not work

  • 4. 
    What leads to the fact that all good and services are scarce?
    • A. 

      Some goods and services have a higher cost than others

    • B. 

      Needs and wants determine what is valuable

    • C. 

      All resources are scarce

  • 5. 
    • A. 

      How the military is supported through the government

    • B. 

      Whether or not a country spends its money on public services or the military

    • C. 

      How the economy is run by food production and domestic spending

  • 6. 
    A production possibilities graph looks at which of the following?
    • A. 

      The opportunity cost of a decision

    • B. 

      Factors of production

    • C. 

      Increasing costs over a time period

  • 7. 
    What are the factors of production?
    • A. 

      The trade offs that companies make with consumers

    • B. 

      The amount of good we take in versus the amount that we send out

    • C. 

      The resources used to produce all goods

  • 8. 
    • A. 

      The highest amount of output of good and services

    • B. 

      How technologically sound the economy is

    • C. 

      The higher costs which leads to less output

  • 9. 
    Why do we use production possibilities graphs?
    • A. 

      Allows us to look at different ways of using our resources

    • B. 

      To increase the economy's output of goods

    • C. 

      To show how unproductive workers are being

  • 10. 
    What do we call it when businesses are struggling to gain consumer's business?
    • A. 

      Trade-off

    • B. 

      Incentive

    • C. 

      Competition

  • 11. 
    • A. 

      Making the most of one good for consumers

    • B. 

      Using resources to reach the maximum amount of output possible

    • C. 

      Making the most money possible on a good or service

  • 12. 
    If you built a brand new store for your business what would that be an example of?
    • A. 

      Physical capital

    • B. 

      Technology

    • C. 

      Human capital

  • 13. 
    Which of the following is not a key economic question?
    • A. 

      What good and services should be produced?

    • B. 

      Who consumes these goods and services?

    • C. 

      How should it be ensured that goods and services are paid for?

  • 14. 
    What type of economy would China be characterized as?
    • A. 

      Mixed, but closer to a free market

    • B. 

      Mixed, but closer to centrally planned

    • C. 

      Socialism

  • 15. 
    What is one advantage of a free market?
    • A. 

      It can help encourage growth

    • B. 

      It is very easy to regulate and make changes

    • C. 

      It protects the poor and less fortunate

  • 16. 
    What does the term opportunity cost mean?
    • A. 

      All of the different decisions that could be made

    • B. 

      The most desirable alternative that is given up for a decision

    • C. 

      The best way that someone can decide a question

  • 17. 
    What is a benefit of specialization for the economy?
    • A. 

      Gets rid of unemployment

    • B. 

      Leads to more competition

    • C. 

      Helps to make it more efficient

  • 18. 
    Which of the statements below is a characteristic of a centrally planned economy?
    • A. 

      Government makes all economic decisions

    • B. 

      Each factory sets it own goals

    • C. 

      Each person gets to choose their own job

  • 19. 
    Who was a free market philosopher?
    • A. 

      Vladimir Lenin

    • B. 

      Karl Marx

    • C. 

      Adam Smith

  • 20. 
    What term means an economic side effect that generates unexpected benefits?
    • A. 

      Sovereignty

    • B. 

      Positive externality

    • C. 

      Socialism

  • 21. 
    Which of the following is not a public good?
    • A. 

      National park

    • B. 

      Restaurant

    • C. 

      Museum

  • 22. 
    What is the incentive for manufactuers selling a product?
    • A. 

      Trying to be the most popular store

    • B. 

      Trying to make the customer as happy as possible

    • C. 

      Making a profit for what they sell

  • 23. 
    Which of the following would you expect a safety net from the government to help with?
    • A. 

      Low income

    • B. 

      Natural disasters

    • C. 

      Car Accident

  • 24. 
    In what type of economy does the government make all of the decisions?
    • A. 

      Centrally planned

    • B. 

      Socialist

    • C. 

      Laissez faire

  • 25. 
    What is the benefit that is provided by Social Security?
    • A. 

      Medical care for the poor

    • B. 

      Cash payments to injured workers

    • C. 

      Money for when elderly retire