LESSON 2

Question 1

The inputs needed for the creation of a good or service. This include land, labor, entrepreneurship, and capital.

Answer 1

Factors of Production

Question 2

The four factors of production

Answer 2

Land, labor, capital and entrepreneurship

Question 3

Factors of production were originally identified by early political
economists such as

Answer 3

Adam Smith, David Ricardo, and Karl Marx.

Question 4

A factor that is an essential component of most ventures, its importance can diminish or
increase based on industry.

Answer 4

Land

Question 5

refers to the effort expended by an individual to bring a product or service to the
market.

Answer 5

Labor

Question 6

refers to the work done by project managers and
developers in building the final product.

Answer 6

Labor

Question 7

the primary driver of economic value.

Answer 7

Labor

Question 8

Refers to the equipments/machines involved in producing a good or service.

Answer 8

Capital

Question 9

secret sauce that combines all the other factors of production into
a product or service for the consumer market

Answer 9

Entrepreneurship

Question 10

The so called special factor

Answer 10

Technology

Question 11

The two basic activities undertaken in any economy:

Answer 11

Production and consumption

Question 12

The 2 flows od Economic Activity

Answer 12

• Circular Flows
• Circular Flow of Economic Activity

Question 13

Refers to the economic processes illustrating the operation of the entire
economy. It simply shows the flow of the resources or goods and services being transferred from one economic unit or sector to the other as well as the corresponding money
payments is made.

Answer 13

Circular Flows

Question 14

the results in the interaction between household
and firms regarding production, consumption, employment, and income generation.

Answer 14

Circular Flow of Economic Activity

Question 15

Refers to the measure of quantity at a point of time.

Answer 15

Stock

Question 16

refers to the measure of movement of quantity over a period of time.

Answer 16

Flow

Question 17

The process of producing goods and services involves
households and firms in circular flow.

Answer 17

Production process

Question 18

According to the type of goods they produce, firms may be classified as:

Answer 18

Raw material producers
Intermediate goods producers
Final goods producers

Question 19

When the money is spent by households for consumption and by firms for production, a _____ is created.

Answer 19

circular flow of income

Question 20

Income takes two distinct circular flows:

Answer 20

Between household and firms
Between firms

Question 21

The economy will be in _______ if the amount of money received by firms from households
is equal to the amount received by households in the firms.

Answer 21

Equilibrium