Economics: Supply & Demand — Answer Key
Part A: Multiple Choice
Circle the best answer for each question.
1. Maya has ten dollars and chooses to buy a book instead of a puzzle. What is her opportunity cost?
A) The ten dollars she spent
B) The book she bought
C) The puzzle she did not buy
D) The store she visited
Opportunity cost is the best alternative given up. Maya gave up the puzzle to buy the book.
2. Which best explains why a country would import goods from another country?
A) To make its own factories work harder
B) To get products it cannot make as cheaply itself
C) To give away all its own resources
D) To stop its citizens from shopping
Countries import when another country has a comparative advantage — producing goods more cheaply or efficiently.
3. A town has three pizza shops instead of one. How does this most likely affect pizza buyers?
A) Buyers have fewer choices and pay more
B) Buyers cannot find any pizza to buy
C) Buyers get better prices because shops compete
D) Buyers must travel farther to buy pizza
More competition among pizza shops → lower prices and better quality to attract customers.
4. Which situation best shows the problem of scarcity?
A) A store has more shoes than anyone wants to buy
B) A family must choose between a vacation and fixing the roof
C) A factory makes thousands of identical pencils
D) A farmer grows enough food for the whole neighborhood
The family must choose because they have limited money — classic scarcity forcing a trade-off.
Part B: Fill in the Blank
Write the correct answer on each line.
1. Opportunity cost is what you give up when you make a choice.
Every choice has an opportunity cost — the best alternative not chosen.
2. A good budget helps a family track income and expenses each month.
A budget is a financial plan that tracks money coming in and going out to avoid overspending.
3. Countries trade with each other so each can get what it needs.
International trade allows countries to obtain goods and resources they cannot produce efficiently themselves.
4. Scarcity forces people to make decisions about how to use resources.
Because resources are limited (scarce), individuals, businesses, and governments must make careful decisions.
5. An entrepreneur takes risks to start a new business and earn profit.
Entrepreneurs risk money, time, and effort. If the business succeeds, they earn profit; if it fails, they lose their investment.