Chapter 2 Test

Question 1

scarcity

Answer 1

a shortage of resources

Question 2

factors of production

Answer 2

all the economic resources necessary to produce a society’s goods and services

Question 3

natural resources

Answer 3

raw materials from nature used to produce goods

Question 4

labor resources

Answer 4

individuals that make the goods + services for which they are paid

Question 5

capital resources

Answer 5

things used to make goods + services

Question 6

entrepreneurial resources

Answer 6

the people who recognize opportunities and start businesses

Question 7

entrepreneur

Answer 7

a person who recognizes a business opportunity and organizes, manages, and assumes the risk

Question 8

economics

Answer 8

the study of how individuals and groups of individuals strive to satisfy with making choices

Question 9

equilibrium price

Answer 9

the point in which the quantity demanded and the quantity supplied meet

Question 10

price

Answer 10

the amount of money given or asked for when goods + services are bought or sold

Question 11

supply

Answer 11

the amount of goods + services that producers will provide at various prices

Question 12

demand

Answer 12

the amount or quantity of goods + services that consumers are willing to buy at various prices

Question 13

market economy

Answer 13

economic system which decisions are made in the marketplace

Question 14

command economy

Answer 14

economic system where central authority makes key economic decisions

Question 15

mixed economy

Answer 15

a combination of a market economy and command economy

Question 16

how are entrepreneurial resources different from labor resources?

Answer 16

both people. Entrepreneurs start business that produce goods + services. Labor resources get paid for making them

Question 17

Describe the three basic economic questions that each country must answer to make decisions about using resources

Answer 17

What should be produced?, How should it be produced?, Who should share in what’s produced?

Question 18

Explain how the following are in a market economy

Answer 18

Resources (who owns them)- privately owned
Role of Buisness- Make a profit, supply + demand determines $
Income distribution- varies; rich and poor

Question 19

Are cost and price the same thing?

Answer 19

No, Price is how much you pay for an item, cost is how much it costs to make the item

Question 20

Most nations have a ____ economy

Answer 20

mixed

Question 21

Explain how the following are in a command economy

Answer 21

Resources (who owns them)- Government
Role of Business- Government determines the $ of goods + services
Income distribution- Equally. High and low skilled workers get paid the same

Question 22

When the supply goes down, the demand and price goes ______

Answer 22

up

Question 23

When the supply goes up, the demand and price go _____

Answer 23

down

Question 24

Capitalism

Answer 24

market determines $, gov is hands off

Question 25

Socialism

Answer 25

Gov controls more, gap between rich and poor is similar

Question 26

Communism

Answer 26

equality, gov is in total command