Economics Basics — Answer Key
Part A: Multiple Choice
Circle the best answer for each question.
1. A town has many apple trees this year so stores are full of apples. What will most likely happen to the price of apples?
A) The price will go up.
B) The price will go down.
C) The price will double.
D) Apples will disappear.
When apple trees produce a huge crop, supply is very high while demand stays about the same. Stores often lower the price so all the extra apples will sell.
2. Which sentence best describes a consumer?
A) A person who makes clothes in a factory.
B) A person who buys a shirt at a store.
C) A person who delivers packages to homes.
D) A person who grows wheat on a farm.
A consumer is the person who pays money for a good or service, like buying a shirt at a store. The other choices describe people who make or deliver goods, which are producers.
3. Jake earns five dollars for doing chores. He spends three dollars on candy. How much does he save?
A) Five dollars.
B) Three dollars.
C) Two dollars.
D) Zero dollars.
Jake earned five dollars and spent three of them, so he has two dollars left. The money he did not spend is what he saved.
4. Which pair are both needs rather than wants?
A) A tablet and a video game.
B) Food and shelter.
C) A skateboard and ice cream.
D) A comic book and a toy car.
Food keeps people alive and shelter keeps them safe, so both are needs. Tablets, video games, skateboards, ice cream, comic books, and toy cars are wants because life does not depend on them.
Part B: Fill in the Blank
Write the correct answer on each line.
1. When there are more items than people want, the supply is high.
Supply is how much of something is available to buy. When there are more items than people want, the supply is larger than the demand.
2. A mechanic who fixes cars is providing a service.
A mechanic fixes cars by doing work for the owner instead of handing them an object. Helpful work people do for others is a service.
3. If you choose a cookie over a cupcake, the cupcake is your opportunity cost.
Whenever you pick one option, the thing you give up is your opportunity cost. Choosing the cookie means the cupcake is what you traded away.
4. People earn money so they can pay for things they need or want.
People work at jobs to receive money, and getting money for work is called earning. They earn so they can pay for the things they need or want.
5. A store that sells many kinds of goods to families is meeting consumer demand.
Demand is what shoppers want to buy. A store stocks many goods to give families what they are asking for, so it is meeting consumer demand.