Sample Test: Economics
1. Which term is used to describe the study of how people make decisions in a world where
resources are limited?
a. scarcity
b. decision-making modeling
c. economics
d. cost-benefit analysis
2. According to economic theory, when does scarcity occur?
a. when a society has more resources than it needs to produce goods and services
b. when there are not enough resources to produce all of the things a society would
like to have
c. when inflation occurs and demand for goods and services decreases
d. when inflation occurs and demand for goods and services increases
3. When deciding between renovating a water treatment plant or building a new community
pool, what is the government most likely to consider?
a. scarcity vs. resources
b. wages vs. prices
c. wants vs. needs
d. consumers vs. producers
4. What term do economists use to describe the alternative you face if you decide to do one
thing instead of another?
a. trade-off
b. marginal cost
c. marginal benefit
d. measure of cost
5. Which of the following best describes an opportunity cost?
a. the additional cost of producing one additional unit of output
b. an individual goes to the movies and decides to buy popcorn
c. the real price of items increases as the value of money decreases
d. an individual pays for a guitar lesson instead of going to the movies
