Question

quiz 1.1 - the basic problem in economics
do not write on this paper
(directions: for #1 - 5, match the correct letter with each of the statements. each letter may be used more than once.)
a. land
b. labor
c. capital

1. goods used to produce other goods
2. equipment or tools
3. natural resources used to produce goods
4. material used to produce goods
5. raw materials

(directions: for #6 - 10, identify whether the statement is a) true or b) false. use a or b only.)

1. the basic problem of economics is the existence of unlimited wants and limited resources.
2. machines are not factors of production.
3. \there are not enough hours in a day.\ this is an example of scarcity.
4. goods are tangible objects and services are intangible. both satisfy our wants.
5. if the benefit is greater than the cost, we will say

o\ to our particular decision.
(directions: for #11 - 15, identify the most correct letter for each question. there is only one correct answer.)

1. the need to make choices arises because: a) some things are not limited, b) shortages always exist, c) everything that exists is limited, d) people need to share their resources.
2. all of the following are examples of the factors of production except: a) tools, b) books, c) metal, d) worker.
3. which of the following is not an example of capital: a) worker, b) equipment, c) tools, d) machines.
4. which of the following is the core difference between needs and wants: a) wants are necessary while needs are secondary, b) wants are unlimited while needs are limited, d) wants are usually less expensive while needs are always expensive.
5. a new robot that helps to produce more goods would be an example of which of the following: a) land and labor, b) capital and technology, c) labor and technology, d) labor and capital.

Explanation:

1. Goods used to produce other goods are capital (C). Equipment, machinery and tools are part of capital which is a factor of production used to create other goods. Natural resources are land (A). Raw - materials are also part of what is used in the production process related to capital.
2. The basic problem of economics is the existence of unlimited wants and limited resources (True - A).
3. Machines are factors of production (True - A). There are not enough hours in a day is a result of limited time which is related to scarcity (True - A). Goods are tangible objects and services are intangible (True - A).
4. The need to make choices arises because resources are limited (c).
5. Tools, books, and machines are examples of capital. A worker is not capital (a).
6. The core difference between needs and wants is that wants are desires while needs are necessities (c). A new robot for production is an example of capital (b).

Answer:

1. C
2. A
3. A
4. A
5. A
6. c
7. a
8. c
9. c
10. b
11. c
12. a
13. a
14. a
15. b