Economics Unit 1 Test Questions with
Correct Answers GRADED A
1. What is capital? - ANS ✔Any human-made resource that is used to create
other goods or services.
2. What are factors of production? - ANS ✔Land, labor, and capital; the three
groups of resources that are used to make all goods and services.
3. 3. What is the purpose of the production possibilities graph? - ANS
✔Shows alternative ways to use an economy's productive resources.
4. 4. What makes an economy efficient? - ANS ✔Using resources in such a
way as to maximize the production or output of goods and services
5. What is opportunity cost? - ANS ✔Opportunity cost is the alternative we
give up when we choose one option over the other.
6. 6. Why is a production possibilities graph curved? - ANS ✔The axes of the
graph can show categories of goods and services, such as farm goods and
factory goods or capital goods and consumer goods.
, 7. What is a physical capital? - ANS ✔All human-made goods that are used to
produce other goods and services; tools and buildings
8. What is human capital? - ANS ✔The skills and knowledge gained by a
worker through education and experience.
9. 9. Why is efficiency so important? - ANS ✔Lesser goods and services will
be produced in an inefficient economy.
10.10. Why is technology important to the economy? - ANS ✔A countries
production possibilities depend on both its technological level and the
resources it has available.
11.What is an entrepreneur? - ANS ✔Ambitious leader who combines land,
labor, and capital to create and marked new goods or services
12.12. What is the purpose of a decision-making grid? - ANS ✔Using a
decision making grid can help you determine whether you are willing to
accept the opportunity cost of a choice you are about to make.
Correct Answers GRADED A
1. What is capital? - ANS ✔Any human-made resource that is used to create
other goods or services.
2. What are factors of production? - ANS ✔Land, labor, and capital; the three
groups of resources that are used to make all goods and services.
3. 3. What is the purpose of the production possibilities graph? - ANS
✔Shows alternative ways to use an economy's productive resources.
4. 4. What makes an economy efficient? - ANS ✔Using resources in such a
way as to maximize the production or output of goods and services
5. What is opportunity cost? - ANS ✔Opportunity cost is the alternative we
give up when we choose one option over the other.
6. 6. Why is a production possibilities graph curved? - ANS ✔The axes of the
graph can show categories of goods and services, such as farm goods and
factory goods or capital goods and consumer goods.
, 7. What is a physical capital? - ANS ✔All human-made goods that are used to
produce other goods and services; tools and buildings
8. What is human capital? - ANS ✔The skills and knowledge gained by a
worker through education and experience.
9. 9. Why is efficiency so important? - ANS ✔Lesser goods and services will
be produced in an inefficient economy.
10.10. Why is technology important to the economy? - ANS ✔A countries
production possibilities depend on both its technological level and the
resources it has available.
11.What is an entrepreneur? - ANS ✔Ambitious leader who combines land,
labor, and capital to create and marked new goods or services
12.12. What is the purpose of a decision-making grid? - ANS ✔Using a
decision making grid can help you determine whether you are willing to
accept the opportunity cost of a choice you are about to make.
