UNIT ONE SAMPLE QUESTIONS
Multiple Choice
Identify the choice that best completes the statement or answers the question.
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1. You go to a restaurant and order a veggie sandwich on wheat bread. The water that a farmer used to irrigate
the wheat and vegetables is best categorized as which factor of production?
a. physical capital
b. land
c. labor
d. human capital
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2. A production possibilities curve can be used to illustrate
a. economic growth over time.
b. decision making in a centrally planned economy.
c. how public goods are created.
d. opportunity costs in a nation’s economy.
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3. Every society must answer the three key economic questions because
a. resources are scarce.
b. government involvement in the economy is limited.
c. every economy goes through cycles.
d. individuals want to pursue their own self-interest.
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4. Which type of economic system does this diagram best illustrate?
a. mixed economy
b. command economy
c. free market economy
d. traditional economy
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5. In order to earn money for college, David charges his friends a fee to act as a DJ for their parties. This is an
example of what principle?
a. negative incentive
b. consumer sovereignty
c. legal equality
d. profit motive
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6. The saying, “There is no such thing as a free lunch,” best illustrates which economic concept?
a. underutilization
b. trade-offs
c. factors of production
d. thinking at the margin
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7. What does a production possibilities curve illustrate?
a. economic growth over time
b. decision making in a centrally planned economy
c. how public goods are created
d. opportunity costs in a nation’s economy
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8. Why must every society answer the three key economic questions?
a. Resources are scarce.
b. Government involvement is limited.
c. Every economy has cycles.
d. Self-interest motivates people.
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9. You work in a clothing store and receive a paycheck. Where in this diagram does the paycheck belong?
a. product market: monetary flow
b. product market: physical flow
c. factor market: physical flow
d. factor market: monetary flow