Chapter 1 Practice Test Mr Harris Economics Class

Chapter 1 Practice Test Mr Harris Economics Class Chapter 1 Practice Test Mr Harris Economics Class Instructions This test covers the material from Chapter 1 of your Economics textbook Answer all questions to the best of your ability Show your work where applicable You may use a calculator You have 60 minutes to complete the test Part 1 Multiple Choice 2 points each 20 points total Instructions Choose the best answer for each question 1 Which of the following is NOT a factor of production a Land b Labor c Capital d Money 2 The study of economics is primarily concerned with a How individuals make choices in the face of scarcity b How to increase the production of goods and services c How to eliminate poverty d How to create a fair and just society 3 Opportunity cost is defined as a The cost of producing one good in terms of another good b The value of the best alternative foregone c The total cost of producing a good or service d The cost of resources used in production 4 A production possibilities frontier PPF shows a The maximum combinations of two goods that can be produced with given resources b The actual production of two goods in a given period c The demand for two goods in a given market d The supply of two goods in a given market 2 5 A movement along a PPF represents a An increase in resources b A decrease in resources c A change in technology d A change in the relative prices of the two goods 6 Which of the following is an example of a positive economic statement a The government should raise taxes on gasoline to reduce pollution b Increasing the minimum wage will lead to higher unemployment c Economic growth is important for improving living standards d The government should invest more in education 7 A market economy is characterized by a Government control of all resources b Private ownership of resources and free markets c A centrally planned economy d A combination of government control and private ownership 8 The invisible hand refers to a The governments role in directing economic activity b The selfregulating forces of the market c The power of monopolies d The influence of consumer preferences on production 9 Which of the following is NOT a function of government in a market economy a Providing public goods b Enforcing property rights c Setting prices for goods and services d Promoting competition 10 The law of demand states that a As the price of a good increases the quantity demanded increases b As the price of a good increases the quantity demanded decreases c As the price of a good increases the quantity supplied increases d As the price of a good increases the quantity supplied decreases Part 2 Short Answer 5 points each 20 points total Instructions Answer each question in a clear and concise manner 1 Define the concept of scarcity and explain why it is a fundamental principle in economics 3 2 Explain the difference between a positive and normative economic statement Provide an example of each 3 Describe the three main types of economic systems and provide an example of a country that operates under each system 4 What is the role of prices in a market economy Explain how prices act as signals to producers and consumers Part 3 Application 15 points each 30 points total Instructions Apply the concepts from Chapter 1 to solve the following problems 1 Suppose you have a parttime job that pays 10 per hour and you have 20 hours available to work each week You are considering taking an economics course that meets for 3 hours each week a What is the opportunity cost of taking the economics course b What factors would you consider when deciding whether or not to take the course 2 Imagine a small island nation that produces only two goods coconuts and fish a Draw a hypothetical production possibilities frontier PPF for the island nation Explain what the PPF represents b What would happen to the PPF if a new fishing technology is introduced c What would happen to the PPF if a natural disaster destroys a significant portion of the islands coconut trees Part 4 Essay 20 points Instructions Write a wellorganized essay that addresses the following question Explain how the concepts of scarcity opportunity cost and tradeoffs are interconnected and play a significant role in individual and societal decisionmaking Grading Rubric Part 1 Multiple Choice 20 points total Each correct answer 2 points Part 2 Short Answer 20 points total Each answer should be clear concise and accurate 5 points per answer Part 3 Application 30 points total Each problem should be answered thoroughly and demonstrate understanding of the concepts 15 points per problem 4 Part 4 Essay 20 points Clear and concise thesis statement 3 points Wellorganized coherent argument 10 points Evidence and examples used to support argument 5 points Correct grammar and mechanics 2 points Total points 100 Note This is a sample test Your teacher may ask different questions or use a different format