Chapter 1 Test

Question 1

Business

Answer 1

Term for all the activities involved in developing and exchanging products.

Question 2

Product

Answer 2

Anything that can be bought or sold

Question 3

Good

Answer 3

Physical item that can be touched

Question 4

Service

Answer 4

Action or task that is performed, usually for a fee.

Question 5

Customer

Answer 5

Individual or group who buys products.

Question 6

Consumer

Answer 6

Customers who purchase goods and services for their own use.

Question 7

Need

Answer 7

Something a person must have to survive.

Question 8

Want

Answer 8

Something that a person desires, but can live without.

Question 9

Utility

Answer 9

Characteristics of a product that satisfy wants and needs.

Question 10

Market

Answer 10

Anywhere buyers and sellers meet to buy and sell goods and services.

Question 11

Profit

Answer 11

The difference between the income earned and expenses incurred by a business during a specific period of time.

Question 12

Wages

Answer 12

Money earned in exchange for work

Question 13

Standard of living

Answer 13

Level of material comfort measured by the goods, services, and luxuries available.

Question 14

Economics

Answer 14

Science that examines how goods and services can be produced, sold, and used.

Question 15

Factors of Production

Answer 15

Economics resources a nation uses to make goods and supply services for its population.

Question 16

Labor

Answer 16

Work performed by people in organizations, also called human resource.

Question 17

Capital

Answer 17

All the tools, equipment, and machinery used to produce goods or provide services

Question 18

Capital Goods

Answer 18

Products businesses use to produce other goods

Question 19

Entrepreneurship

Answer 19

Person who starts a new business or purchases an existing business.

Question 20

Entrepreneur

Answer 20

Person who starts a new business or purchases an existing business

Question 21

Scarcity

Answer 21

When demand is higher than available resources

Question 22

Trade-off

Answer 22

When something is given up in order to gain something else (sacrifice)

Question 23

Opportunity Cost

Answer 23

the value of the next best option that wasn’t selected.

Question 24

Systematic decision-making

Answer 24

Process of choosing an option after evaluating the available info and weighing the costs and benefits of your alternatives.

Question 25

Economic System

Answer 25

Organized way in which the nation chooses to use its resources to create goods and services.

Question 26

Traditional Economy

Answer 26

An economy in which economic decisions are based on a society’s values, culture, and economy.

Question 27

Command Economy

Answer 27

An economy in which the government makes all the economic decisions for its citizens

Question 28

Market Economy

Answer 28

An economy in which individuals are free to make their own economic decisions, also known as free enterprise or private enterprise.

Question 29

Capitalism

Answer 29

An economic system where the economic resources are privately owned by individuals rather than the government

Question 30

Mixed Economy

Answer 30

An economy in which both the government and individuals make decisions about economic resources.

Question 31

Law of supply demand

Answer 31

An economic principle that states the price of a product is determined by the relationship of the supply of the product and the demand for the product.

Question 32

Competition

Answer 32

Actions taken by two or more businesses attempting to attract the same customers