VirtualSC Honors Economics Final Exam Review Summer 2026

In which of these systems is the government most likely to provide people with goods and services they could not otherwise afford?

A command economy

In a command economy, which of the following is true?

The government owns all factors of production.

In a command economy, prices may be determined by _____ .

a central planning committee

Which statement describes a disadvantage of a command economy?

Nothing stops the government from producing things people don't need.

As a consequence of scarcity, _____ .

producing more of one good means producing less of another good

In a mixed economy _____ .

firms can enter and exit the market as they wish

Why are consumers powerful?

They drive decisions about what to produce.

Tommy has two free hours to do whatever he wants. He thinks of the many activities he might do then settles on a choice between tutoring his younger brother in economics or playing video games. Tommy's parents pay him $10 an hour when he tutors his brother. He chooses to play video games for 2 hours. What is the opportunity cost of Tommy's decision?

$20 because opportunity cost is the value of the next best alternative given up when a decision is made.

What kind of economy offers the same wage no matter how productive a person is?

Command economies

Which of the following statements is NOT an example of a market economy?

Government ownership of the factors of production.

How many distinct factors of production do economists recognize?

Four

China decides to build an aircraft carrier. What is the opportunity cost of the aircraft carrier?

Any other good or service that China cannot provide because of resources used to build the aircraft carrier.

Match the type of resource with the definition.

A River

Land

Match the type of resource with the definition.

A bulldozer

Capital

Match the type of resource with the definition.

Time spent making pizza at a restaurant

Labor

Your school decides to build a new performing arts center. What is the opportunity cost of constructing the new performing arts center?

Any other goods and services that now cannot be provided due to the resources used for the performing arts center.

How are transactions shaped in a traditional economy?

Elders and ancestors make certain that things are done in specific ways.

What is a major advantage of a market economy?

There is a high degree of individual freedom.

Which of the following is the crucial problem of economics?

Allocating scarce productive resources to satisfy unlimited wants.

When one decision is made, the next best alternative not chosen is called which term?

Opportunity cost

Scarcity is best defined as which of the following?

A society's wants and needs are unlimited and material resources are limited.

Which of these economic systems have the most in common?

Free-enterprise economy and market economy

How are transactions shaped in a traditional economy?

Elders and ancestors make certain that things are done in specific ways.

Match the term with the statement.

Economic system that has some combination of traditional, command, and market economies

Mixed economy

Match the term with the statement.

Economic system in which economic activity is the result of ritual, habit, or custom

Traditional economy

Match the term with the statement.

Efficient way of allocating resources and producing and distributing goods and services in a society

Economic system

Match the term with the statement.

Economic system in which a central authority makes the major economic decisions

Command economy

Match the term with the statement.

Economic system in which private citizens own and use resources to make a profit

Market economy

If you wanted to understand the relationship between households, businesses, and resources, you would study _____ .

the Circular Flow model

Which of these economic systems have the most in common?

Free-enterprise economy and market economy

There is always some degree of government involvement in a mixed economy.

True

Economics is best defined as the study of how societies deal with which of the following?

The problem scarcity

Which of the following is a consequence of scarcity?

Producing more of one good means producing less of another one.

Which of the factors of production involves taking risks and combining resources to provide a good or service?

Entrepreneurship

Within the market system, prices are determined by which of the following _____ ?

buyers and sellers (demand and supply)

In a mixed economy, which of the following is true?

The government owns some of the factors of production.

Which of these statements describes a disadvantage of a traditional economy?

New ways of doing things are discouraged.

The study of economics involves _____ .

explaining how people deal with scarcity

Which of the following is an example of capital?

A factory

Scarcity in economics means:

This is not having enough resources to produce all the goods and services we want.

Which country is an example of a capitalist economy?

South Korea

Mineral deposits, human capital, and entrepreneurship use of technology and machinery are all examples of which of the following _____ ?

factors of production

What does Point A identify?

Under utilized resources

What does Point B identify?

Efficient use of resources

What does Point X identify?

Impossible use of resources

What does moving from Point B to D represent?

Trade-off

What does the outward shift of the PPC curve represent?

Economic Growth

Which of the following will cause an outward shift of the production possibilities curve?

An increase in skilled workers

Economic growth causes the production possibilities frontier to contract (move to the left).

False

In the mythical country Alpha, an entrepreneur has introduced a new technology that makes manufacturing twice as efficient as before. How is this likely to affect the production possibilities curve?

It would move the curve to the right.

Economic growth usually can be achieved without investing in new resources.

False

Opportunity cost is ...

that which we forgo, or give up, when we make an economic choice or decision

If a production possibilities curve shifts outward, that is a sign of __ .

economic growth

Which of the following would result in a change in the production possibilities frontier in the mythical country Alpha?

All of the above (new technology, workers moving in, discovery of resources)

Which of the following is the fundamental economic problem which causes every person, family, business, and society to make economic choices?

scarcity

Canada decides to spend oil and gas revenue on high speed rail instead of a new university. What does this decision indicate?

The marginal benefit of the new university is less than the marginal benefit of the high speed rail.

Marginal analysis is only used by corporations and businesses, not individual consumers.

False

__ are opportunity costs of a decision (foregone benefits) that is not defined in money.

Implicit costs

Marginal analysis can help a company determine pricing strategies.

True

An example of a business using marginal analysis is when ...

They compare costs vs. benefits of hiring a new employee.

Which of the following is true if eating one piece of cake yields a total utility of 50 and consuming a second piece increases total satisfaction

by 10?

The total utility of consuming two pieces of cake is 60.

Match the terms with the descriptions. Choose the letter of the correct answer.

the additional cost of producing one unit

marginal cost

Match the terms with the descriptions. Choose the letter of the correct answer.

evaluating the costs and benefits of additional units

thinking at the margin

Match the terms with the descriptions. Choose the letter of the correct answer.

the added benefit from adding one unit

marginal benefit

Match the terms with the descriptions. Choose the letter of the correct answer.

the next best alternative given up when a decision is made

Opportunity cost

Match the terms with the descriptions. Choose the letter of the correct answer.

giving up one thing for another

trade-off

In economics, utility refers to ...

Satisfaction or happiness

With marginal benefit, a consumer can get satisfaction from which of the following?

Goods and services

The chart shows the total utility a typical consumer receives for eating pieces of cake.

Which of the following is correct for this individual?

The marginal utility of the 4th slice is 4.

How would you describe an economy that is using its resources in a way that will maximize production?

efficient

In economics, the term capital goods refers to which of the following?

The equipment and structures used to produce goods and services.

An economy that is producing the maximum amount of goods and services is considered to be which of the following?

efficient

Economic growth is an increase in a nation's output of goods and services over time.

True

What is the name of a graph that shows all the combinations of goods and services that can be produced if all of society's resources are used?

production possibilities curve

A graph showing all the combinations of goods and services that can be produced if all of society's resources are used efficiently is called

which term?

production possibilities curve

Scarcity is an economic problem with which all societies are faced.

True

A production possibilities graph shows __ .

different ways to use an economy's resources

When a business or person needs to decide whether a certain action is worth the cost, the most helpful analysis would be a(n) ...

cost-benefit analysis

Marginal analysis/decision-making is best described as which of the following?

Making decisions based upon the marginal benefits and marginal costs of that decision

The satisfaction received from using one more unit of a good or service is called which of the following?

Marginal benefit

Which of the following shows the benefits and costs of a choice?

Cost-benefit analysis

__ can be figured easily in terms of money, or out of pocket costs.

Explicit costs

What is the additional cost of the use of consumption of a good or service?

Marginal cost

The additional cost of the use of consumption of a good or service is __ .

Marginal Cost

Marginal analysis can help a company determine the "sweet spot" (or ideal amount) of HOW MUCH to produce.

True

When deciding how to use resources, you need to evaluate the costs and benefits of each choice to decide which meets your criteria. What are

these called?

Trade-offs

Every decision involves trade-offs for which of the following reasons?

Everyone's resources are limited.

Which of the following will cause the demand curve for peanut butter to shift to the right?

an increase in the price of lunch meat, a substitute for peanut butter

When the price of something increases, the quantity demanded _____ .

decreases

Which of the following will cause the supply curve for doughnuts to shift outward, to the right (an increase in supply)?

An increase in the number of firms producing doughnuts.

The Law of Supply states that price and quantity supplied have a direct relationship (when one increases the other increases).

True

Which of the following will most likely happen in the market for shoes if the price of shoes decreases?

The quantity demanded for shoes will increase.

Thousands of people leave a small town due to a factory closing down. Sales at the local grocery store are reduced. What causes this change?

Change in the number of buyers

Which part of the market determines supply?

Producers

Why does a demand curve slope downward?

because quantity demanded increases as price decreases

Assume that the demand for apples is downward sloping. If the price of apples falls from $0.80 per pound to $0.65 per pound, which of the following will occur?

A larger quantity of apples will be demanded.

Use Grace's Cookie Demand Schedule and demand curve above to answer the questions.

According to the graph, how many cookies will Grace buy if the price is $1.00 per cookie?

4

Use Grace's Cookie Demand Schedule and demand curve above to answer the questions.

According to the graph, at what price will Grace's demand for cookies equal 1 cookie?

$2.50

Which of the following would be an example of complementary goods?

Hot dogs, hot dog buns

Equilibrium price and quantity is often referred to as the market clearing price and quantity.

True