Unit 1 Test

Question 1

SCARCITY

Answer 1

Fundamental economic problem facing
all societies resulting from a combination
of scarce resources and people’s virtually unlimited needs and wants.

Question 2

ECONOMICS

Answer 2

Social science dealing with how people satisfy seemingly unlimited and competing needs and wants with the careful use of scarce resources.

Question 3

Durable Good

Answer 3

A good that lasts for at least three years
when used regularly.

Question 4

NONDURABLE GOOD

Answer 4

An item that wears out, is used up, or
lasts for fewer than three years when
used regularly.

Question 5

UTILITY

Answer 5

The ability or capacity of a good or service to be useful and
give satisfaction to someone.

Question 6

Gross Domestic Product (GDP):

Answer 6

monetary value of all final goods,
services, and structures produced
within a country’s national borders during a one-year period.

Question 7

PRODUCTION POSSIBILITIES CURVE

Answer 7

Diagram representing all possible
combinations of goods and/or services
an economy can produce when all
productive resources are fully employed.

Question 8

OPPORTUNITY COST

Answer 8

Cost of the next best alternative use of
money, time, or resources, when one
choice is made rather than another.

Question 9

Trade-Offs

Answer 9

alternative
that must be given up
when one choice is made
rather than another.

Question 10

ECONOMIC
GROWTH

Answer 10

Increase in a nation’s total output of goods and services over time

Question 11

PRODUCTIVITY

Answer 11

Measure of the amount of output produced in a specific time period with a given amount of resources

Question 12

ECONOMIC iNTERDEPENDENCE

Answer 12

Mutual dependence of the economic activities of one person, company, or nation on that of another

Question 13

MARKET

Answer 13

Meeting Place or mechanism through which buyers and sellers of an economic product come together; may be local, regional, national, or global

Question 14

ECONOMIC SYSTEMS

Answer 14

Organized way of society provides for
the wants and needs of its people.

Question 15

TRADITIONAL ECONOMY

Answer 15

Economic system in which the allocation
of scarce resources, and other economic
activity, is the result of ritual, habit, or
custom.

Question 16

COMMAND
ECONOMY

Answer 16

Economic system characterized by a central authority that makes most of the major economic decisions

Question 17

SOCIALISM

Answer 17

Economic system in which government owns some factors of production and has a role in determining what and how goods are produced.

Question 18

MARKET ECONOMY

Answer 18

Economic system in which supply, demand, and the price system help people allocate resources and make the WHAT, HOW, and FOR WHOM to produce decisions; same as free enterprise economy.

Question 19

Capitalism:

Answer 19

economic system
in which private citizens own and use the factors of production in order to generate profits.

Question 20

COMMUNISM

Answer 20

Economic and political system in which factors of production are collectively owned and directed by the state; a theoretically classless society in which everyone works for the common good.

Question 21

PRIVATIZATION

Answer 21

Conversion of state-owned factories and
other property to private ownership.

Question 22

VOUCHERS

Answer 22

Certificates that could be used to purchase government-owned property
during privatization.

Question 23

Five Year Plan

Answer 23

Comprehensive, centralized economic plan used by the Soviet Union and China to coordinate development of agriculture and industry

Question 24

Collectivization

Answer 24

Forced Common ownership of factors of production; used in the former Soviet Union in agriculture and manufacturing

Question 25

Nationalization:

Answer 25

shift of an economy, or part of an economy, from private ownership to government ownership.

Question 26

KIERETSU

Answer 26

Independently owned group of Japanese
firms joined and governed by an external
board of directors in order to regulate
competition.

Question 27

BLACK MARKET

Answer 27

Market in which goods and services are
sold illegally.

Question 28

Capital-intensive

Answer 28

Production Process requiring large amounts of capital in relation to labor

Question 29

Population Density

Answer 29

Number of people per square mile of land area

Question 30

Why do all societies face scarcity?

Answer 30

All societies face scarcity because all have unlimited wants and needs with limited resources

Question 31

3 questions all societies have to face

Answer 31

WHAT to produce, HOW to produce, and FOR WHOM to produce

Question 32

Factors of Production

Answer 32

Land, Capital, Labor, Entrepreneurs

Question 33

Consumer Rights

Answer 33

The right to:
Safety
Be informed
Choose
Be heard
Redress