AnswersPersonal Finance and EconomicsUnit 1: Fundamentals of Economic Decision-Making

Practice Test Answers

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1
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Resources needed to provide goods or services are called

A
functions of production.
B
facets of production.
C
facts of production.
D
factors of production.
2
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Which statement best explains the role of producers in economics?

A
Producers create theories about the market.
B
Producers purchase goods and services.
C
Producers supply goods and services.
D
Producers sell shares for companies in the market.
3

How do economists use data? Choose two correct answers.

A
to explain trends in production and shipping
B
to follow and predict unemployment rates
C
to apply automation to reduce production costs
D
to ship goods to countries all over the world
E
to communicate with customers instantly
4

Which statement best describes the body paragraphs of an argumentative essay?

A
The body paragraphs establish the focus of the essay and tell readers what the writer’s position will be.
B
The body paragraphs flesh out the argument and include counterclaims and evidence from research.
C
The body paragraphs acquaint readers with the topic and set up the ideas that will be presented.
D
The body paragraphs tie the essay together and tell readers what they have learned and should take away.
5

A clothing store has ordered a new supply of jeans for the fall season and wants to sell off the remaining items from the previous spring. What action would the store owner most likely take?

A
The store owner would most likely raise the price of the spring jeans to encourage producers.
B
The store owner would most likely lower the price of the spring jeans to encourage producers.
C
The store owner would most likely lower the price of the spring jeans to encourage consumers.
D
The store owner would most likely raise the price of the spring jeans to encourage consumers.
6

Why are utilities, such as electricity and water, examples of natural monopolies?

A
Consumers only trust known companies to provide these essentials.
B
The cost of production restricts competition in the market.
C
There are limited natural resources to meet demand.
D
There is no need for alternative options.
7

How does a counterclaim help support a writer’s position in an argumentative essay?

A
The counterclaim allows readers to provide their own interpretations.
B
The counterclaim shows how the position is misleading.
C
The counterclaim allows readers to state their own positions.
D
The counterclaim shows how the opposing opinion is incorrect.
8

Land is considered a resource because it

A
requires labor to be useful.
B
is used to produce things.
C
is always available to use.
D
costs little or nothing to use.
9

A monopoly is a market that has

A
many sellers of the same item.
B
few competing businesses.
C
a single supplier of a good or service.
D
many sellers of a variety of products.
10

Opportunity cost means that something needs to be

A
ignored.
B
given up.
C
replenished.
D
paid for.
11

Which of the would be considered a nonrenewable resource?

A
petroleum
B
lumber
C
wind
D
sun
12

The factors of production attempt to instill the idea that resources are

A
scarce.
B
unlimited.
C
expensive.
D
needed.
13

What are the cons of a mixed market economy for most citizens? Choose four correct answers.

A
Citizens often purchase their own health care and higher education.
B
It can be very difficult for citizens to start private businesses.
C
There may be a sizable gap between rich and poor people.
D
There is no guarantee of steady employment for many citizens.
E
Citizens may pay higher taxes than in other economic systems.
F
Citizens must pay for most basic necessities by themselves.
14

What role do government agencies play in a mixed market economy?

A
They run shipping companies and other sources of distribution.
B
They employ most of the workers in the economic system.
C
They own farms, factories, and other sources of production.
D
They regulate some aspects of production and distribution.
15

What does elasticity measure in economics?

A
how the amount of a good changes when its price goes up or down
B
how the amount of a good changes when the producer uses new materials
C
how the amount of a good changes when the producer hires more employees
D
how the amount of a good changes when its distribution expands
16

What most likely will happen if the pie maker bakes a seventh pie?

A
The marginal revenue will most likely increase to 12 point 0 0 dollars .
B
The marginal revenue will most likely decrease to 8 point 0 0 dollars .
C
The marginal cost will most likely increase to 2 point 0 0 dollars
D
The marginal cost will most likely decrease to 1 point 0 0 dollars
17

According to the graph, the marginal cost begins to increase when the producer makes

A
four pies.
B
two pies.
C
three pies.
D
five pies.
18

This chart is an example of a

A
demand schedule.
B
demand curve.
C
supply curve.
D
supply schedule.
19

This graph could help the US government

A
limit production nationwide.
B
make an economic prediction.
C
address a shortage emergency.
D
allocate natural resources.
20

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Answer:

three

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