Question

economics chapters 1-2 test

1. what is economics?

a. the study of how people spend money
b. the study of government decisions
c. the study of how people satisfy their needs and wants by making choices.
d. the study of how the stock market works.

1. which of the following items is considered a want?

a. food
b. entertainment
c. shelter
d. clothing

1. which of the following items is an example of a service?

a. a snow shovel
b. a dvd
c. legal advice from a lawyer
d. a submarine sandwich.

1. which of the following factors of production are human made resources used to prod goods?

a. land
b. labor
c. capital
d. entrepreneurship

1. which of the following factors of production shows risk - taking to earn profits?

a. land
b. labor
c. capital
d. entrepreneurship

1. what is opportunity cost of a decision?

a. the cost of the next best choice.
b. the cost of all choice put together.
c. the amount of money you spent.
d. having to decrease total utility.

Explanation:

Question 1

Economics is about how people make choices to satisfy their needs and wants due to scarcity. Option a is too narrow (only about spending money), b is about government (not the core of economics), d is about stock market (a part of finance, not the definition of economics). Option c matches the definition.

Needs are essential for survival (food, shelter, clothing), wants are non - essential desires. Entertainment is a want as it's not necessary for survival.

A service is an intangible offering. A snow shovel (a), DVD (b), and submarine sandwich (d) are tangible goods. Legal advice from a lawyer is an intangible service.

Answer:

c. The study of how people satisfy their needs and wants by making choices.

Question 2