Deck 2: Scarcity and the World of Trade-Offs

Question 1

Entrepreneurs are important to market economies because

A)they engage in risk taking and innovation.
B)they make up a large portion of low-skilled labor.
C)they take few risks and thereby, suffer fewer bankruptcies.
D)they represent the bulk of employment at large corporations.

Answer 1

they engage in risk taking and innovation.

Question 2

Which of the following are considered factors of production?
I. Land
II. Labor
III. Physical capital
IV. Entrepreneurship

A)I and II only
B)I and III only
C)I, II and III only
D)I, II, III and IV

Answer 2

I, II, III and IV

Question 3

Which of the following statements is TRUE about scarcity?

A)Both rich and poor people face the problem of scarcity.
B)Scarcity exists only when supply is insufficient to meet demand.
C)Scarcity exists only when a shortage exists.
D)Scarcity can be eliminated when a country becomes richer.

Answer 3

Both rich and poor people face the problem of scarcity.

Question 4

In 2006, hurricanes damaged many parts of Texas, destroying homes, businesses, schools, and infrastructure. In strictly economic terminology, these hurricanes are said to have caused

A)scarcity, because the damages made food and shelter scarce.
B)scarcity, because some goods were difficult to get.
C)shortages, because supplies were cut off and goods were destroyed.
D)tradeoffs, because some areas of the country were damaged when others were not.

Question 5

Scarcity implies that people must

A)be miserable.
B)be selfish.
C)make choices.
D)not be selfish.

Question 6

Human resources that perform the functions of organizing, managing, and assembling the other factors of production are called

A)physical capital.
B)venture capital.
C)entrepreneurs.
D)productive capital.

Question 7

Scarcity is caused by

A)unlimited wants running up against limited economic resources.
B)lazy workers.
C)an individual's budget that is insufficient to cover the expenses of certain goods or services.
D)shortages.

Question 8

In economic terminology, when a resource is used to produce output it is referred to as

A)an intangible.
B)a factor of production.
C)a service.
D)a fifth element.

Question 9

Scarcity refers to

A)a shortage in a good or service.
B)the ability of society to consume all that it produces.
C)the inability of society to satisfy all human wants because of limited resources.
D)the inability of an individual to purchase a good or service due to her limited income.

Question 10

In every economic system, choices must be made because resources

A)are unlimited, but human desires and wants are limited.
B)are limited, but human desires and wants are unlimited.
C)are unlimited, and so are human desires and wants.
D)are limited, and so are human desires and wants.

Question 11

Scarcity arises because

A)resources are finite and are inadequate to meet all human wants.
B)production of goods and services is always slow.
C)companies are slow to explore for new resources.
D)a large number of people live in poverty.

Question 12

Scarcity

A)does not exist in the United States.
B)applies only to developing countries.
C)is caused by production problems.
D)is not a shortage.

Question 13

In the production of goods and services, trade-offs exist because

A)not all production is efficient.
B)society has only a limited amount of productive resources.
C)buyers and sellers often must negotiate prices.
D)human wants and needs are limited at a particular point in time.

Question 14

Which of the following is the best example of scarcity?

A)The Talking Teddy is a surprise holiday hit, resulting in long lines of consumers trying to purchase the limited number of available Teddies.
B)Fred only gets a 10-hour lunch break and each day must decide between working out at the gym or socializing with his colleagues.
C)The local market's buy-one-get-one-free sale on strawberries results in more people wanting the berries than producers are able and willing to supply.
D)There is a bumper crop of strawberries, and stores have more berries than they can sell.

Question 15

Which of the following statements is FALSE?

A)Economic goods are available in desired quantities at a zero price.
B)A good is anything that gives satisfaction or happiness to individuals.
C)Services are intangible goods such as dry cleaning, hospital care, and restaurant meal preparation.
D)Wants are unlimited and include all material and nonmaterial desires.

Question 16

The problem of economic scarcity applies

A)only in developed countries, because resources are scarce in these nations.
B)only in underdeveloped countries, because there are no productive resources in these nations.
C)only to an economy with an insufficient supply of money.
D)to the economies of all nations, regardless of their level of development.

Question 17

The difference between scarcity and a shortage is that

A)scarcity is caused by poverty and shortages are caused by natural disasters.
B)shortages are a type of scarcity caused by natural disasters while scarcity is caused by human errors.
C)scarcity always is a part of human life while shortages usually are temporary.
D)shortages are always part of human life while scarcity is usually temporary.

Question 18

All of the following are examples of physical capital EXCEPT

A)buildings.
B)machinery.
C)company stocks and bonds.
D)a hydroelectric power plant.

Question 19

Which of the following statements about economic scarcity is FALSE?

A)Scarcity occurs among the poor and the rich.
B)Scarcity only occurs if there are shortages and people wait in line to buy things.
C)Scarcity results from not having enough resources to produce all the things we want.
D)Scarcity results in the necessity to make choices.

Question 20

Which of the following statements about scarcity is TRUE?

A)Scarcity is no longer a problem for industrialized countries.
B)Scarcity exists in all societies.
C)Scarcity is a problem only for greedy people.
D)Scarcity is a problem only in countries that do not use markets to organize economic activity.

Question 21

Services can be thought of as

A)unvalued goods.
B)unwanted goods.
C)free goods.
D)intangible goods.

Question 22

The most basic concept in economics is

A)wealth.
B)income.
C)scarcity.
D)spending.

Question 23

Scarcity implies that

A)people should limit their wants, since shortages exist.
B)firms should be more efficient when producing goods.
C)people must make choices.
D)nonrenewable resources should never be used.

Question 24

Scarcity is

A)a shortage of goods and services.
B)poverty and misery.
C)a situation in which the resources for producing the goods and services that people desire are sufficient to satisfy people's desires.
D)a situation in which the resources required to produce the goods and services that people desire are insufficient to satisfy all wants.

Question 25

Physical capital is distinguished from human capital because

A)physical capital refers to trained people.
B)physical capital refers to equipment and machinery, whereas human capital refers to trained people.
C)human capital refers only to day laborers.
D)physical capital refers to trained people, whereas human capital refers to equipment and machinery.

Question 26

At a zero price, which of the following conditions is TRUE for an economic good?

A)Its quantity supplied exceeds its quantity demanded.
B)Its quantity demanded exceeds its quantity supplied.
C)Its quantity demanded equals its quantity supplied.
D)Scarcity disappears.

Question 27

Economic goods are defined as

A)tangible items only.
B)services only.
C)anything from which an individual derives satisfaction.
D)any item which is available in sufficient quantity at zero price.

Question 28

Which is the best example of an intangible good?

A)the car you dream of owning but cannot afford
B)the suit you hope will make a good impression when you go on job interviews
C)the textbook study guide you hope will prepare you to perform well on examinations
D)the advice and expertise provided by the music store clerk who sold you that CD

Question 29

The existence of scarcity means that

A)there are not enough resources to satisfy unlimited human wants.
B)firms will increase their production to eliminate the scarcity.
C)the government will step in to eliminate the scarcity.
D)firms working with the government will allocate resources to eliminate the scarcity.

Question 30

All of the following are economic resources, or factors of production EXCEPT

A)land.
B)physical capital.
C)money.
D)entrepreneurship.

Question 31

Economic goods are

A)abundant goods, about which we must constantly make decisions about their best use.
B)all imaginable items from which individuals derive satisfaction or happiness.
C)goods that are scarce, for which the quantity demanded exceeds the quantity supplied at a zero price.
D)goods that are scarce, for which the quantity demanded exceeds the quantity supplied at any price.

Question 32

Scarcity exists because

A)the majority of people in the world are poor.
B)people are too greedy and refuse to share what they have with others.
C)human wants exceed what can be produced with the limited resources available.
D)not enough new technology is being used to eliminate scarcity.

Question 33

Scarcity affects

A)only rich people.
B)only poor people.
C)only middle income people.
D)all people.

Question 34

Human capital is

A)what people get from physical capital.
B)the accumulation of skills, training and education of workers.
C)the value obtained from selling stocks and bonds.
D)the human resources that perform the function of raising capital.

Question 35

Extremely cold winter weather has destroyed oranges in Florida. The freeze has caused

A)scarcity because there are less oranges now than people want.
B)scarcity because people have to switch to other types of citrus fruits.
C)a shortage because people cannot obtain as many oranges as they wish to buy at the pre-freeze price.
D)a shortage because the orange growers will have less income.

Question 36

If the quantity desired of something exceeds the amount available at zero price, that item is called

A)capital.
B)an economic good.
C)an intangible good.
D)a bad.

Question 37

The conversion of resources into consumer goods or services is called

A)human capital.
B)production.
C)opportunity cost.
D)absolute advantage.

Question 38

Scarcity

A)exists in all human societies.
B)is a problem for less-developed nations only.
C)used to be a problem, but is not an issue for modern industrial nations.
D)afflicts greedy people only.

Question 39

In economic terminology, the accumulated training and education that workers receive to increase their productivity is referred to as

A)entrepreneurship.
B)human capital.
C)labor.
D)physical capital.

Question 40

In economics, the term physical capital

A)refers to funds used by businesses to acquire goods and services.
B)refers to all manufactured resources used for production.
C)refers to the process of raising funds through the stock market.
D)defines the stock of merchandise already produced.

Question 41

Jane is a top-level executive earning a high salary. Jane has just ordered a luxury car only to be told that she will have to wait three weeks for it to be delivered. Which of the following statements is TRUE?

A)The car is not a scarce good.
B)The car is an economic good.
C)The car is human capital.
D)The car is an intangible good.

Question 42

A man-made resource such as a building or a machine is an example of which resource?

A)entrepreneurial ability
B)labor
C)physical capital
D)human capital

Question 43

A tractor used to prepare land for planting is called

A)land.
B)labor.
C)physical capital.
D)human capital.

Question 44

Naturally occurring diamonds are an example of

A)land.
B)labor.
C)physical capital.
D)human capital.

Question 45

Bonnie is a self employed. She makes floral arrangements in a building she rents. She owns the delivery vehicle and has hired a delivery driver. She is an example of

A)entrepreneurial ability.
B)labor.
C)physical capital.
D)human capital.

Question 46

Which of the following is NOT an economic resource?

A)money
B)low-skilled labor
C)coal
D)an engineer

Question 47

Which of the following is NOT an economic good?

A)a haircut
B)broccoli
C)garbage
D)a textbook

Question 48

Which of the following is NOT an example of investment in human capital?

A)a medical student's internship
B)the purchase of a personal computer for playing games
C)A mechanic attends a training workshop on a new type of engine.
D)Johnny learns how to read.

Question 49

Production refers to

A)physically producing material goods only.
B)any activity carried on by a firm, whether a corporation, partnership, or sole proprietorship.
C)any activity that results in the conversion of resources into goods and services that can be consumed.
D)any activity that causes a material conversion of manufactured goods.

Question 50

There are not enough of four goods to satisfy the wants of people. For good A, this is true when the price is $100. This is true for good B at a price of $10, for good C at a price of $1, and for good D at a price of zero. Which situation reflects scarcity rather than shortage?

A)A
B)B
C)C
D)D

Question 51

A person goes to college to become an engineer. This is an example of an

A)investment in physical capital.
B)investment in human capital.
C)increase in entrepreneurship.
D)increase in labor.

Question 52

An irrigation system is installed on a farm in North Dakota. This is an example of which factor of production?

A)labor
B)land
C)human capital
D)physical capital

Question 53

Bonnie volunteers to help make floral arrangements at a flower shop. She is an example of

A)entrepreneurial ability.
B)labor.
C)physical capital.
D)human capital.

Question 54

Which of the following is a TRUE statement?

A)All goods are economic goods.
B)All economic goods are goods, but not all goods are economic goods.
C)Economic goods and goods mean the same thing.
D)Economic goods do not include services while goods do include services.

Question 55

John has decided to view the solar eclipse tomorrow. The eclipse is an example of

A)a good.
B)an economic good.
C)a service.
D)entrepreneurship.

Question 56

In economics, resources are also known as

A)minerals.
B)factories.
C)factors of production.
D)human capital.

Question 57

Scarcity and shortages differ in that

A)scarcity is caused by natural disasters and shortages are caused by mistakes people make.
B)scarcity is a condition of human life while shortages are usually temporary phenomena related to an imbalance between the amount desired and the amount produced.
C)scarcity is a type of shortage but shortage is a broader concept.
D)shortages apply to resource markets while scarcity applies to product markets.

Question 58

Which of the following activities are production?

A)combining flour, milk, and eggs to make cookies
B)moving coal from southern Illinois to an electrical power plant in northern Illinois
C)taking ice cubes from a tray to put in a drink
D)All of the above are production.

Question 59

Which type of resource will improve through more education and training by workers?

A)money
B)physical capital
C)natural resources
D)human capital

Question 60

Juanita has just opened a new business selling pet supplies through the Internet.

A)Juanita is an entrepreneur.
B)Juanita is not providing economic goods since people purchase the goods.
C)Juanita is not providing economic goods since pet supplies are not being sold in a store.
D)Juanita is not an entrepreneur since there are other businesses that sell pet supplies.

Question 61

In economics, physical capital includes

A)money.
B)bank accounts.
C)machinery.
D)shares of stock.

Question 62

The fact that our wants are unlimited but our resources are limited implies that

A)we should limit our wants.
B)entrepreneurship has failed as an economic system.
C)we have to make choices.
D)the only way to make someone better off is to make someone else worse off.

Question 63

A waitress brings a free glass of wine when you sit down in a restaurant. This glass of wine is

A)a service because the waitress carried it instead of making it.
B)a good, but not an economic good because there is no price charged for the wine.
C)a nongood because there is no price charged for the wine.
D)an economic good because wine is produced with scarce resources, even if it is free to you.

Question 64

An example of an entrepreneur would be

A)the owner of a new Indian food restaurant.
B)the cafeteria employee who won the employee of the month award.
C)a Greyhound bus driver.
D)the cashier at your local supermarket.

Question 65

Which of the following is NOT a factor of production?

A)land
B)labor
C)a product
D)entrepreneurship

Question 66

The basic problem in economics is

A)unlimited needs.
B)scarcity.
C)demand.
D)limited resources.

Question 67

Which of the following is NOT a service?

A)physical labor purchased by a producer
B)things purchased by a consumer that do not have physical characteristics
C)a diamond used in an engagement ring
D)tasks performed by someone else

Question 68

Education increases the stock of which factor of production?

A)physical capital
B)human capital
C)land
D)entrepreneurship

Question 69

Education and training of workers would best be categorized as

A)land.
B)labor.
C)physical capital.
D)human capital.

Question 70

Which of the following items would be considered scarce?

A)water
B)diamonds
C)potato chips
D)All of the above are scarce.

Question 71

Which of the following would be categorized as "land"?

A)timber
B)human capital
C)buildings
D)entrepreneurship

Question 72

When an employee at a grocery store scans the price of your items, bags the groceries, and collects your paper, the individual has provided

A)physical capital.
B)entrepreneurship.
C)a service.
D)land.

Question 73

Which factor of production includes water?

A)physical capital
B)human capital
C)land
D)entrepreneurship

Question 74

Which of the following is NOT considered to be an economic resource?

A)your economics professor
B)the telephone company repair truck
C)the local gas station
D)a view of the stars on a clear night

Question 75

A typical economic good has which one of the following characteristics?

A)The desired quantity exceeds the quantity available at a zero price.
B)The quantity available exceeds the desired quantity at a zero price.
C)It uses no resources to produce.
D)It is never scarce.

Question 76

Scarcity implies that

A)the satisfaction of one person's want means another person's want can also be satisfied.
B)the satisfaction of one person's want means another person will be more than satisfied.
C)the satisfaction of one person's want means another person's want cannot be satisfied.
D)no person's wants can be satisfied.

Question 77

Scarcity exists because

A)there is a disruption in the distribution of goods caused by bad weather.
B)there is a shortage of goods caused by war.
C)there are not enough resources available to produce all the goods that people want.
D)there is a shortage of qualified workers throughout the world.

Question 78

Oil found in Alaska is an example of

A)physical capital.
B)land or natural resource.
C)human capital.
D)labor.

Question 79

The most basic concept of economics is

A)self-interest.
B)scarcity.
C)demand.
D)rationality.

Question 80

Which of the following is the LEAST scarce?

A)college education
B)medicine
C)housing
D)air