Economics Basics — Answer Key
Part A: Multiple Choice
Circle the best answer for each question.
1. A toy store has only five dolls left and twenty children want one. What will most likely happen to the price?
A) The price will go down.
B) The price will stay the same.
C) The price will go up.
D) The store will give them away.
When more people want a product (higher demand) but the same amount is available (same supply), the price increases.
2. Maria wants to buy a book and a puzzle but only has enough money for one. The item she does not pick is her ___?
A) supply
B) demand
C) opportunity cost
D) service
Opportunity cost is the value of what you give up when you make a choice between two or more options.
3. Which of the following is the best example of a service?
A) A loaf of bread from a bakery.
B) A librarian helping you find a book.
C) A pair of sneakers from a shoe store.
D) A bicycle from a toy shop.
A librarian helping you find a book is a service because it is work done for you, not a physical item you take home.
4. A farmer grows tomatoes and sells them at a stand. In this example the farmer is a ___?
A) consumer
B) buyer
C) producer
D) saver
A producer is a person or company that makes, grows, or creates goods to sell to consumers.
Part B: Fill in the Blank
Write the correct answer on each line.
1. When supply is low and demand is high, the price usually goes up.
Price is the amount of money a seller charges for a good or service.
2. A person who earns money by working at a job is earning an income.
Earning means getting money by working at a job or providing a service.
3. Clothing is a need because people must wear it to stay safe and warm.
A warm coat in winter is a need because it protects you from cold weather and keeps you safe.
4. A lemonade stand owner who makes and sells drinks is a producer.
A baker who makes bread to sell is a producer because they create goods for consumers to buy.
5. Choosing to save your money now so you can buy a bike later shows good planning.
Planning how to use your money wisely through a budget helps you decide how much to save and spend.