Civics & Economics
Mr. Patton
Name ____________________________________ Block ________________________ Date_________________
FILL IN THE BLANK. BASIC ECONOMICS
1. Land, labor, and capital are examples of ____________________________.
2. The dilemma of _____________________ wants and _____________________ resources is referred to as
the economic problem.
3. ___________________________ are combiners, innovators, and risk takers.
4. The term _______________________ is used by economists to describe the economic resources created
by nature.
5. When we sacrifice one alternative for another, the alternative forgone is called the _________________
of that action.
6. When the pursuit of one objective forces society to sacrifice or compromise some other objective,
economists say that a __________________________________ exists.
7. Because economists cannot conduct controlled experiments, they often make the assumption of
___________________________to state the conditions under which they expect their theory to hold.
FILL IN THE BLANK. ECONOMIC SYSTEMS
1. The driving force or engine of capitalism is ________________________________.
2. The United States and China are both examples of ____________________________ economies.
3. Because business people in a capitalist economy are motivated by self-interest, they want to produce the
goods and services that will allow them to earn the highest ________________________________.
Those products tend to be the ones that are most desired by _____________________________.
FILL IN THE BLANK. SUPPLY AND DEMAND
1. If the entire demand curve shifts to a new position, we describe this as a change in __________________.
2. Movement along a stationary supply curve due to a change in price is called a change in ______________.
3. The function of dividing up or allocating scarce items among those who desire to receive them is called
____________________________________.
4. Whenever the prevailing price is above equilibrium, a ___________________________ will exist.
5. Prices perform two important functions: they ration scarce items among the consumers who desire to
receive them; and they ________________________ producers to supply that quantity.
6. If supply increases more than demand, the equilibrium price will _________________________.
MULTIPLE CHOICE. BASIC ECONOMICS
1. Economics is the study of how to
a) Distribute output fairly.
b) Do the best we can with what we have.
c) Reduce our unlimited wants.
d) Expand our stock of economic resources.
2. The opportunity cost of attending summer school is
a) Whatever you could have purchased with the money spent for tuition and books.
b) Negative, because you will finish college more rapidly by attending summer school.
c) The income you could have earned over the summer.
d) The products, income, and recreational opportunities that must be forgone.
3. The four categories of economic resources are
a) Labor, management, machinery, and money.
b) Land, labor, capital, and entrepreneurship.
c) Money, land, capital, and labor.
d) Air, soil, water, and money.
4. Producing the most-wanted products in the least costly way is
a) Full employment.
b) Economic growth.
c) A fair income distribution.
d) Economic efficiency.
5. Economists have trouble testing their theories because
a) People are unpredictable.
b) The real world is too complicated to be explained.
c) They can’t hold constant the “other factors” that might influence the outcome of the experiment.
d) The necessary economic data are almost never available.
6. Of the three fundamental questions, the “distribution” question has to do with
a) Who will receive the output.
b) How the output will be shipped from the place of production to the consumer.
c) How economic resources are distributed to producers.
d) What products will be produced.
7. Suppose that you have just found $10 on the street and are thinking of using it to buy a ticket to the
movies. The opportunity cost of going to the show would be
a) Nothing – since you found the money, you are sacrificing nothing to spend it.
b) Whatever you would have bought with the money if you hadn’t used it to go to the show.
c) The other activities you would have to sacrifice to attend the show.
d) B and C.
MULTIPLE CHOICE. ECONOMIC SYSTEMS
1. In a market economy the scarcest resources will be used very conservatively because
a) Central planners will allocate such resources only where they are most needed.
b) The scarcest resources will tend to have the highest prices.
c) Government officials will not permit their use.
d) The scarcest resources will tend to have the lowest prices.
2. In a capitalist economy
a) Businesses are free to produce whatever products they choose.
b) Consumers are free to utilize their incomes as they see fit.
c) Resource owners have the freedom to sell their resources to whomever they choose.
d) All of the above
e) None of the above.
3. Consumer sovereignty means that
a) Consumers dictate which goods and services will be produced by the way they spend their
money.
b) Central planners allocate a major share of society’s resources to the production of consumer
goods.
c) The role of government in the economy is very limited.
d) All economic resources are used efficiently.
4. According to the “invisible hand” doctrine,
a) As individuals pursue their own interests, they tend to promote the interests of society as a
whole.
b) The actions of individuals often have unanticipated and undesirable effects on society.
c) Individuals should put the interests of society first.
d) When individuals attempt to promote the best interests of the entire society, they also further
their own personal interests.
5. Adam Smith recognized that the “invisible hand” would function as he envisioned only if
a) Individuals unconsciously considered the welfare of others in making their decisions.
b) Government regulations forced businesses to behave in an ethical manner.
c) A high degree of competition existed in the economy.
d) Individuals lived in accordance with the golden rule.
6. In a market economy, if consumers suddenly stop buying SUVs and start buying fuel efficient cars,
a) The price of SUVs will tend to fall and more of them will be produced.
b) The price of fuel-efficient cars will tend to rise, making them less profitable to produce and
encouraging producers to supply more of them.
c) Resources will tend to be shifted from the production of SUVs to the production of fuel-efficient
cars.
d) The price of SUVs will tend to rise, making them more profitable to produce and encouraging
producers to supply more of them.
7. Which of the following best describes command socialism?
a) An economic system where the means of production are privately owned and decision making is
highly centralized.
b) An economic system where the means of production are publicly owned and decision making is
highly decentralized.
c) An economic system where the means of production are privately owned and decision making is
highly decentralized
d) An economic system where the means of production are publicly owned and decision making is
highly centralized.
8. In a comparison of command socialism and pure capitalism, which of the following is true?
a) Prices play a larger role in command socialism than in pure capitalism.
b) Resources are likely to be used more efficiently in command socialism than in pure capitalism.
c) Economic planning plays a larger role in pure capitalism than in command socialism.
d) Decision making is more decentralized in pure capitalism than in command socialism.
9. One reason the United States is not an example of pure capitalism is that
a) Most producing units are publicly owned.
b) Commands are used to implement some economic decisions.
c) The pursuit of self-interest is a powerful force.
d) Markets are used to coordinate most economic decisions.
MULTIPLE CHOICE. SUPPLY AND DEMAND
1. If the price of automobiles increases and all other factors remain unchanged, it will be reasonable to
expect
a) An increase in the demand for automobiles.
b) A decrease in the demand for automobiles.
c) An increase in the quantity of automobiles demanded.
d) A decrease in the quantity of automobiles demanded.
2. An increase in the price of apples is likely to cause
a) A decrease in the demand for apples.
b) An increase in the quantity demanded of apples.
c) An increase in the demand for other types of fruit.
d) An increase in the quantity demanded of other types of fruit.
3. If the price of black walnuts increases and other factors remain unchanged, it is reasonable to expect
a) A decrease in the demand for black walnuts.
b) An increase in the supply of black walnuts.
c) An increase in the quantity of black walnuts supplied.
d) A decrease in the demand for pecans and other walnut substitutes.
4. A new labor settlement that increases the cost of producing computers will probably cause
a) A decrease in supply of computers.
b) A reduction in the demand for computers.
c) A reduction in the quantity of computers supplied.
d) The supply curve of computers to shift to the right.
5. If an excellent growing season doubles the corn harvest, the result will be
a) An increase in the demand for corn.
b) A lower price and an increase in the quantity of corn demanded.
c) An increase in the quantity of corn supplied.
d) A lower price and an increase in the demand for corn.
6. If demand increases and supply declines,
a) The equilibrium price and quantity will both increase.
b) The equilibrium price will rise, but the quantity will fall.
c) The equilibrium price will fall, but the quantity will rise.
d) The equilibrium price and quantity will both fall.
e) The equilibrium price will rise; quantity will be indeterminate.
7. If the demand for used cars declines, the likely result will be
a) An increase in the supply of used cars.
b) A reduction in the equilibrium price of used cars.
c) An increase in the equilibrium price of used cars.
d) A temporary shortage of used cars at the old price.
8. If the price of computer chips and other component parts falls, this would lead to
a) An increase in the supply of computers and lower computer prices.
b) A decrease in the supply of computers and higher computer prices.
c) An increase in the demand for computers and higher computer prices.
d) A decrease in the demand for computers and lowered computer prices.
9. When a drought destroys half of the orange crop, newspapers are likely to report a “shortage of oranges”.
An economist would say that
a) A drought would lead to a surplus of oranges, not a shortage.
b) This shortage will exist until the next season, when more oranges can be produced.
c) This shortage is temporary and will be eliminated when the price of oranges rises.
d) The existing price of oranges must be above the equilibrium level.
10. If the price of coffee increases, the probable result will be
a. A decrease in the demand for coffee.
b. A decrease in the price of substitutes for coffee.
c. An increase in the price of substitutes for coffee.
d. A decrease in the supply of coffee.