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Chapter 2: Confronting Scarcity: Choices in Production

Multiple Choice

1. Economic/ resources/ used/ in/ the/ production/ process/ are/ called:
A) free/ gifts/ of/ the/ natural/ environment.
B) factors/ of/ production.
C) consumer/ items.
D) money/ capital.

Ans: B/
Difficulty:/Easy

2. An/ economic/ system/ is/ the/ set/ of/ rules/ that/ define/ and/ .
A) resources;/ prices
B) who/ gets/ to/ vote;/ when/ elections/ will/ be/ held
C) market/ prices;/ factors/ of/ production
D) how/ an/ economy's/ resources/ are/ to/ be/ owned;/ how/ decisions/ about/ the/ resources/ are/ to/ be/ made

Ans: D/
Difficulty:/Medium

3. The/ model/ that/ shows/ the/ goods/ and/ services/ the/ economy/ is/ capable/ of/ producing/ is/ the/ model/ of:
A) utility.
B) the/ fallacy/ of/ composition.
C) production/ possibilities.
D) scarcity.

Ans: C/
Difficulty:/Easy

4. Factors/ of/ production/ are:
A) the/ resources/ the/ economy/ has/ available/ to/ produce/ goods/ and/ services.
B) generally/ unlimited/ in/ modern/ economies.
C) always/ employed/ in/ modern/ economies.
D) the/ knowledge/ that/ can/ be/ applied/ to/ the/ production/ of/ goods/ and/ services.

Ans: A/
Difficulty:/Easy




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5. The/ three/ broad/ types/ of/ factors/ of/ production/ are:
A) capital,/ labor,/ and/ natural/ resources.
B) money,/ profit,/ and/ interest.
C) stocks,/ bonds,/ and/ financial/ assets.
D) technology,/ human/ capital,/ and/ comparative/ advantage.

Ans:/ A/
Difficulty:/Easy

6. The/ three/ broad/ types/ of/ resources/ used/ to/ produce/ goods/ and/ services/ are/ also/ known/
as:
A) economic/ systems.
B) factors/ of/ production.
C) production/ possibilities.
D) financial/ capital.

Ans:/ B/
Difficulty:/Easy

7. Capital/ is/ best/ considered/ as:
A) the/ natural/ environment.
B) a/ factor/ of/ production/ that/ has/ been/ produced.
C) financial/ assets.
D) money.

Ans:/ B/
Difficulty:/Easy

8. A/ factor/ of/ production/ that/ has/ been/ produced/ for/ use/ in/ the/ production/ of/ other/ goods/
and/ services/ is:
A) labor.
B) money.
C) capital.
D) natural/ resources.

Ans:/ C/
Difficulty:/Easy




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9. Labor/ is/ the/ that/ can/ be/ applied/ to/ production.
A) the/ natural/ environment.
B) produced/ resources.
C) financial/ assets.
D) human/ effort.

Ans:/ D
Difficulty:/ Medium

10. Any/ factor/ of/ production/ is/ capital/ if/ it:
A) was/ produced/ and/ can/ be/ used/ to/ produce/ other/ goods/ and/ services.
B) generates/ utility.
C) uses/ human/ effort/ to/ produce/ goods/ and/ services.
D) is/ included/ in/ financial/ capital.

Ans:/ A
Difficulty:/ Medium

11. The/ factors/ of/ production/ are:
A) money,/ labor,/ natural/ resources,/ and/ capital.
B) technology,/ human/ capital,/ and/ natural/ resources.
C) money,/ capital,/ and/ natural/ resources.
D) labor,/ capital,/ and/ natural/ resources.

Ans:/ D/
Difficulty:/Easy

12. A/ factor/ of/ production/ that/ is/ produced/ in/ order/ to/ produce/ something/ else/ is/ called:
A) money.
B) labor.
C) technology.
D) capital.

Ans:/ D/
Difficulty:/Easy

13. Human/ effort/ that/ can/ be/ applied/ in/ the/ production/ process/ is/ called:
A) natural/ resources.
B) technology.
C) labor.
D) specialization.

Ans:/ C/
Difficulty:/Easy
14. Resources/ from/ nature/ that/ can/ be/ used/ to/ produce/ other/ goods/ and/ services/ are/ called:
A) money.



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B) natural/ resources.
C) labor.
D) capital.

Ans:/ B/
Difficulty:/Easy

15. For/ a/ factor/ of/ production/ to/ be/ called/ capital/ it/ must:
A) be/ produced.
B) occur/ in/ the/ natural/ environment.
C) be/ a/ part/ of/ human/ skill.
D) be/ a/ result/ of/ a/ stock/ issue.

Ans:/ A/
Difficulty:/Easy

16. Which/ of/ the/ following/ is/ an/ example/ of/ capital?
A) a/ gravel/ truck
B) a/ savings/ account
C) a/ share/ of/ General/ Motors/ stock
D) a/ lake

Ans:/ A
Difficulty:/ Medium

17. To/ be/ considered/ capital, / a/ factor/ of/ production/ must:
A) have/ been/ produced.
B) occur/ naturally.
C) be/ part/ of/ a/ factory/ or/ building.
D) be/ a/ skill/ or/ talent/ possessed/ by/ a/ person.

Ans:/ A
Difficulty:/ Medium

18. One/ of/ the/ two/ criteria/ for/ a/ resource/ to/ be/ considered/ capital/ is/ that/ it/ must:
A) occur/ naturally.
B) be/ part/ of/ a/ factory/ or/ building.
C) be/ a/ skill/ or/ talent/ possessed/ by/ a/ person.
D) be/ possible/ to/ use/ it/ to/ produce/ other/ goods/ and/ services.

Ans:/ D
Difficulty:/ Medium




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