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Factors of Production, Business, and Labor — High School Economics practice questions

20 multiple-choice questions and 6 flashcards on Factors of Production, Business, and Labor, about 9% of the High School Economics bank. Every one carries a written rationale.

Written and maintained by the CoStudy team · last updated 2026-10-02 · how we write and review questions

What this chapter covers

Factors of Production, Business, and Labor is one of 11 chapters in CoStudy's High School Economics bank, and it holds 20 of the bank's 225 multiple-choice questions — roughly 9% of the total. That proportion is not arbitrary: chapters follow the certifying body's published exam outline, and the number of questions in each is set by that domain's published weight, so the share of your practice time this chapter takes matches the share of the real exam it accounts for.

Studying by chapter is worth doing once you have a diagnostic score. A single overall percentage tells you whether you are close; it does not tell you which domain is dragging. Working a weak chapter in isolation, and re-testing it in isolation, is the fastest way to move a score that has stalled — and it is why the mock exams in CoStudy report by domain rather than as one number.

Free Factors of Production, Business, and Labor practice questions

5 questions drawn from this chapter, with the full rationale shown — the controlling principle behind the right answer, and why each wrong option tempts and fails.

Surgeons earn more than cashiers mainly because surgeons:

  1. have scarce, valuable skills
  2. are mostly paid by the government
  3. belong to unions
  4. work fewer hours

Answer: A — have scarce, valuable skills

A) Correct — Few people can supply that labor. B) Most are not. C) Most surgeons are not union members. D) Hours are not the reason.

A key disadvantage of a sole proprietorship is:

  1. double taxation of profits
  2. difficulty in making decisions
  3. unlimited personal liability
  4. sharing profits with partners

Answer: C — unlimited personal liability

C) Correct — The owner's personal assets can be used to pay business debts. A) Applies to corporations. B) One owner decides quickly. D) There is only one owner.

Buying a share of stock means you:

  1. own part of a company
  2. lend money to a company
  3. open a bank account
  4. are guaranteed a fixed return

Answer: A — own part of a company

A) Correct — Shareholders may receive dividends and gains. B) Describes buying a bond. C) Stocks are not deposits. D) Stock returns are not guaranteed.

Dividing car production into many small tasks done by different workers is called:

  1. diminishing returns
  2. division of labor
  3. collective bargaining
  4. vertical merger

Answer: B — division of labor

B) Correct — Specialization raises output per worker. A) Is about each extra worker adding less. C) Is union negotiation. D) Is two firms in a supply chain joining.

A worker's computer is ___, while the worker's coding skill is ___.

  1. human capital; physical capital
  2. physical capital; human capital
  3. land; labor
  4. entrepreneurship; land

Answer: B — physical capital; human capital

B) Correct — Physical capital is a tool; human capital is knowledge and skill. A) Reverses the two. C) Neither is a natural resource. D) Neither matches.

Factors of Production, Business, and Labor flashcards

3 cards from the 6 in this chapter.

What do labor unions do?

Workers organize to bargain collectively with employers over wages, benefits, and working conditions.

What is limited liability?

Owners can lose only what they invested; their personal assets are protected from the business's debts. Corporations and LLCs offer it.

Sole proprietorship vs partnership vs corporation?

Sole proprietorship: one owner, easy to start, unlimited liability. Partnership: two or more owners share profits and liability. Corporation: owned by shareholders, limited liability, profits taxed twice.

Practise the full chapter

These are a sample. The full Factors of Production, Business, and Labor chapter runs 26 items with per-chapter progress tracking, on the web and in the iOS app.

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