Question

Let’s Measure:
Quiz I: Identify what is being described. Write the letter of the best answer on the line before each
number.
_______1.) The economic system in which production decisions are made according to customs and
traditions,

a. Traditional economic system c. market system
b. Command economy d. mixed economy

______ 2.) The system that works under the principle that the interest of society should prevail over
that of the individual.

a. Traditional economic system c. market system
b. Command economy d. mixed economy

______ 3.) The system in which market prices serve as signal to the producers about what goods to
produce and how much of these goods should be produced

a. Traditional economic system c. market system
b. Command economy d. mixed economy

_____ 4.) Under this system, the economic problems are answered predominantly through the price
mechanism and modified through government intervention.

a. Traditional economic system c. market system

16 Lesson 1 – Introduction to Economic Theory

b. Command economy d. mixed economy
_____ 5.) An economy where individuals exercise free enterprise
a. Traditional economic system c. market system
b. Command economy d. mixed economy

_____ 6.) It is considered as a basic consuming unit

a. Firm c. resource
b. household d. mixed economy

_____ 7.) It includes water, forests, mineral and animals.

a. Land c. resource owners
b. Labor d. none of the above
_____ 8.) It refers to man’s mental and physical efforts exerted in production.
a. Land c. Entrepreneur
b. Labor d. capital
_____ 9.) It refers to machines, tools and equipment used in production.
a. Land c. entrepreneur
b. Labor d. capital

_____ 10.) “The brains” behind the business

a. Land c. entrepreneur
b. Labor d. capital

_____ 11.) Inputs used in production.

a. Land c. Capital
b. Labor d. All of the above

_____ 12.) It corresponds to the price of capital

a. Rent c. Profits
b. Wages d. Interest

_____ 13.) The payment made for labor

a. Rent c. Profits
b. Wages d. Interest

_____ 14.) The payment for the use of land

a. Rent c. Profits
b. Wages d. Interest

17 Lesson 1 – Introduction to Economic Theory
_____ 15) It pertains to the national income analysis.

a. Macroeconomics c. Normative Economics
b. Microeconomics d. Positive Economics

_____ 16.) The study of what is

a. Macroeconomics c. Normative Economics
b. Microeconomics d. Positive Economics

_____ 17.) It also known as price theory

a. Macroeconomics c. Normative Economics
b. Microeconomics d. Positive Economics

_____ 18.) It deals with what should be.

a. Macroeconomics c. Normative Economics
b. Microeconomics d. Positive Economics

_____ 19.) The desires of consumers that have to be satisfied.
a. Basic needs c. wants
b. Luxury d. all of the above

_____ 20.) Man’s needs required for survival

a. Basic needs c. wants
b. Luxury d. all of the above

Answer 1

1 A traditional economic system means economic decision made on traditions and customs

2 B command economy dictates welfare of society over individual

3 C market economy takes signals from market regarding price and production decision

4 D mixed economy calls for an intersection of both market signals as well as likited government regulation.

5 C market system is economy where individual exercise free enterprise

6 B household is considered as basic consuming unit of economy for its main aim is of consumption

7. A land consists of water,forests,minerals and animals.

8 B labor consists of both physical and mental efforts exerted in production

9 D capital consists of machines,tools used in production

10. C entrepreneur is the brain behind production

11. D all of the above

12 D interest is the price of the capital

13 B wages are cost of labor

14 A Rent are price of land

15 A macroeconomic deals with the national income

16 D postive economics deal with "what is"

17 B microeconomics deal with price theory

18 C normative economic deal with what economy should be or what ought be

19 C wants are the desires of consumers

20 A man's needs required for survival are basic needs