Name _____________________________
Chapter 1 Review / Practice Test
Matching: Fill in the blank with the correct term from the list.
scarcity
paradox of value
opportunity cost
value
economic growth
utility
trade-offs
productivity
economics
entrepreneur
wealth
market
labor
1. ______________________________ alternative choices
2. ______________________________ people with all their efforts, abilities, and skills
3. ______________________________ the capacity to be useful and provide satisfaction
4. ______________________________ the sum of tangible goods that are scarce, useful, and
transferable from one to another
5. ______________________________ condition resulting from society not having enough resources
to produce all the things people would like to have
6. ______________________________ situation in which some necessities have little value while some
non-necessities have a much higher value
7. ______________________________ study of how people try to satisfy unlimited wants with
limited resources
8. ______________________________ worth expressed in dollars and cents
9. ______________________________ location that allows buyers and sellers to exchange a certain
economic product
10. _____________________________ a risk-taker in search of profits who does something new with
existing resources
11. _____________________________ the cost of the next best alternative use of money, time, or
resources when one choice is made over another
12. _____________________________ measure of the amount of output produced by a given amount
of inputs in a specific time period
13. _____________________________ occurs when a nation’s total output of goods and services
increases over time
Multiple Choice: Select the letter of the best possible answer.
______ 14. An economy at its production possibilities frontier is operating
A. without a division of labor.
B. as a command economy.
C. at full efficiency.
D. with slow economic growth.
______ 15. What is the fundamental economic problem?
A. entrepreneurship
B. scarcity
C. land
D. opportunity cost
______ 16. A good is classified as durable if it lasts more than
A. 3 years.
B. 1 year.
C. 6 months.
D. 1 month.
______ 17. Manufactured goods needed to produce other goods and services are known as
A. nondurable goods.
B. consumer goods.
C. gross domestic products.
D. capital goods.
______ 18. Which of the following is NOT an example of a capital good?
A. a crane at a construction site
B. a pair of Nike shoes for sale at Foot Locker
C. a stove at a restaurant
D. a copy machine in an office
______ 19. The situation in which some necessities have little value while some non-necessities have a
much higher value is known as
A. production possibilities frontier.
B. entrepreneurship.
C. paradox of value.
D. scarcity.
______ 20. The study of economics helps people to
A. better understand the free-enterprise system and capitalism.
B. make wise choices when voting for political candidates.
C. become better decision-makers.
D. all of the above.
Short Answer: Answer the following in the space provided.
21.
List the 3 basic questions every society must answer.
22.
List the 4 factors of production.
23.
List 3 examples of durable goods.
24.
List 3 examples of nondurable goods.
25.
What does TINSTAAFL stand for?