Principles of Economics Exam
Questions with Answers
What is Scarcity and who does it affect? - ✔✔Scarcity is the lack of enough resources to satisfy
all desired uses of those resources and it affects all countries.
What are the Factors of Production? - ✔✔The four factors of production is land. Labor, capital,
and entrepreneurship.
Define Economics - ✔✔Economics is the study of how best to allocate scarce resources among
competing uses.
Define and understand opportunity cost. - ✔✔An opportunity cost is a trade off that comes
with a cost.
Define and Understand the Invisible Hand Argument (market mechanism) - ✔✔The market will
correct itself.
Define Gross Domestic Product (GDP). - ✔✔Measure of an economy's size is gross domestic
product, the total market value of all final goods and services produced within a nation's border
in a given time period
Is the U.S. primarily an agriculture, manufacturing or service economy? - ✔✔A service based
economy
What is a Production Possibility Curve? What causes shifts in the curve? - ✔✔It shows us
possible productions, 4 factors, technology, education/human capital
Define human capital. - ✔✔The knowledge and skills possessed by the workforce
Questions with Answers
What is Scarcity and who does it affect? - ✔✔Scarcity is the lack of enough resources to satisfy
all desired uses of those resources and it affects all countries.
What are the Factors of Production? - ✔✔The four factors of production is land. Labor, capital,
and entrepreneurship.
Define Economics - ✔✔Economics is the study of how best to allocate scarce resources among
competing uses.
Define and understand opportunity cost. - ✔✔An opportunity cost is a trade off that comes
with a cost.
Define and Understand the Invisible Hand Argument (market mechanism) - ✔✔The market will
correct itself.
Define Gross Domestic Product (GDP). - ✔✔Measure of an economy's size is gross domestic
product, the total market value of all final goods and services produced within a nation's border
in a given time period
Is the U.S. primarily an agriculture, manufacturing or service economy? - ✔✔A service based
economy
What is a Production Possibility Curve? What causes shifts in the curve? - ✔✔It shows us
possible productions, 4 factors, technology, education/human capital
Define human capital. - ✔✔The knowledge and skills possessed by the workforce
