Chapter 1: Basic Economic Concepts
Chapter Practice Review Quiz
1..What drives the economy? C) competition
A) goods and services D) a business
B) wants and needs
8. What is profit? C) resources
D) consumers A) commercial activity
B) motivation and wealth
2. Which is NOT true of public wants? C) money remaining after costs have been paid A) They are widely shared by many. D) an opportunity to earn a better living
B) Government satisfies public wants
9. Which is NOT true of businesses? C) They are often considered private
D) Examples include highways and parks. A) They pay taxes and provide jobs.
B) The wealth they create benefits the entire community.
3. Which is a name for items people can use to make or C) They are rewarded with profits by satisfying consumers.
obtain what they need or want? D) They can survive without profits.
10. What is competition? B) goods
C) services A) a contest to win customers D) products B) the freedom to produce new products
C) voluntary exchange
4. Which is true of resources? D) inexpensive goods and services
A) Resources are unlimited.
12. Which is NOT something a competitive business B) Businesses and governments lack resources.
needs to offer? C) Insurance and tourism are examples of resources.
D) Resources are limited. A) quality products
B) discontinued goods
4. What should you do before making a decision? C) outstanding service
A) Determine the pros and cons of alternatives. D) good prices
B) Satisfy your needs and wants.
13. What must a business do when developing new C) Think of another decision you have made.
products or services? D) Make the best use of limited resources.
A) evaluate demand
5. Which question would best help you evaluate a decision B) lend money
after you put it into effect? C) pay taxes
A) What resources are available to me? D) focus on customer service
B) What are my needs and wants?
14. What is one result of effective market research? C) Would I make the same choice again?
D) What is the problem and what are my options? A) immediate access to global markets
B) immediate access to start-up capital 6. Which is true of both personal and business decisions? C) information that helps a business identify opportunities
A) They should be made independently. D) improved production management
B) They should be made without regard for consequences.
15. What might a business do if its products don't meet C) They should consume the most resources available.
consumer's needs? D) They should be consistent with values and goals.
A) consider bankruptcy
7. What is a commercial activity that seeks profit by B) start a new business providing goods in exchange for money? C) try new selling techniques A) Profit D) modify its products to satisfy consumers B) market research
Feedback: Businesses provide consumers and other Hints: businesses with necessities and goods and services that
make life easier and better. 1. P7
2. P7 9.C
Feedback: Businesses offer goods and services to 3. P8
consumers with the motivation of making a profit. 4. P8
5. P9 10.D
Feedback: Business profits benefit the entire community 6. P9
because businesses pay taxes and provide jobs. 7. P10
8. P12 11.A
Feedback: Competition is possible because businesses 9. P12
have the freedom to produce the products they think will 10. P13
be most profitable. 11. P13
12. P13 12.B
Feedback: For companies to successfully compete, they 13. P14
must offer quality products with outstanding service at 14. P14
competitive prices. 15. P15
Feedback: Market research is the act of gathering and ANSWER KEYS: analyzing information about the wants, needs, and
preferences of consumers in a certain market. 1.B
Feedback: Wants and needs determine what products 14.C
and services businesses provide. Feedback: In addition to identifying opportunities, market
research can help businesses analyze and respond to 2.B
Feedback: Wants that are shared by many people in a consumer demand for new products and services. community are often public wants. 15.D
Feedback: When consumers choose not to purchase a 3.A
Feedback: People use resources to obtain what they business's products, the business usually fails. To avoid
need and want. Examples of resources are money, fuel, failure, a business can modify its products to satisfy
and labor. consumers.
Feedback: Because resources are limited, the number of needs and wants people can satisfy is limited.
Feedback: Consider your values and goals when determining the advantages and disadvantages of each alternative.
Feedback: Evaluate your decisions by asking yourself whether you achieved the results you expected.
Feedback: Good decisions are consistent with values and goals and conserve resources.