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15 multiple-choice questions and 5 flashcards on Factors of Production, Business, and Labor, about 7% of the High School Economics bank. Every one carries a written rationale.
Factors of Production, Business, and Labor is one of 11 chapters in CoStudy's High School Economics bank, and it holds 15 of the bank's 225 multiple-choice questions — roughly 7% 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.
10 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.
A union that successfully negotiates a wage above the competitive equilibrium is likely to:
Answer: C — Reduce quantity of labor demanded and create an excess supply of workers seeking those jobs — some union insiders benefit, some potential entrants are shut out
C) Above-equilibrium wages create excess supply per standard model; incumbents benefit, outsiders lose. A) Reverses direction. B) Denies the market response. D) Wages rise for members — the union's goal.
A progressive income tax is one in which:
Answer: C — Higher incomes are taxed at higher rates than lower incomes
Progressive taxes raise the average rate as income rises (e.g., U.S. federal income tax). Regressive taxes do the opposite; proportional (flat) taxes apply one rate to all.
Which of the following is a factor of production classified as LAND?
Answer: C — A crude-oil deposit under a farmer's field
C) Land = all natural resources, including mineral and oil deposits. A) Capital. B) Labor. D) Intellectual property — related, but not classified as land.
HUMAN CAPITAL refers to:
Answer: B — The skills, education, and training embodied in workers that make them more productive
B) Human capital = knowledge and skills that raise a worker's productivity. A) Head count. C) Physical capital. D) Compensation, not capacity.
A key economic difference between a SOLE PROPRIETORSHIP and a CORPORATION is:
Answer: D — A sole proprietorship faces UNLIMITED PERSONAL LIABILITY, while a corporation offers LIMITED LIABILITY to shareholders
D) Personal liability is the defining legal distinction; it shapes risk-taking, borrowing, and investor appetite. B) Corporations face corporate income tax. C) Sole prop has one owner by definition. A) Corporations can and do go bankrupt.
A federal minimum wage set ABOVE the market-clearing wage will most likely cause:
Answer: C — A LABOR SURPLUS (unemployment) — quantity of labor supplied exceeds quantity demanded at the legal minimum
C) Binding wage floors reduce quantity of labor demanded and raise quantity supplied → surplus = unemployment (per standard model; empirical debates exist on magnitude). A/B) Reverse the direction. D) A binding floor affects the market.
Which factor of production is best described as organizing the other factors, taking risk, and driving innovation?
Answer: C — Entrepreneurship
C) Entrepreneurship = combining land, labor, and capital while bearing risk and innovating. B) Labor = human effort in production. A) Land = natural resources. D) Capital = tools/equipment.
Compound interest:
Answer: B — Pays interest on both the principal and previously earned interest, accelerating growth over time
Compound interest grows exponentially as interest earns interest — driving long-term investment growth (and debt) more powerfully than simple interest.
In a competitive labor market, an employer will keep hiring additional workers up to the point where:
Answer: C — The wage rate equals the MARGINAL revenue product of labor (MRP)
C) Employers hire until the extra revenue a worker generates (MRP) equals the extra cost (wage). Beyond that, additional workers are unprofitable. A) That's not a marginal criterion. B) Firms produce, not minimize labor. D) Wage equality isn't the hiring rule.
Inflation that results from rising production costs (e.g., oil prices) is best called:
Answer: B — Cost-push inflation
Cost-push inflation arises when input costs rise. Demand-pull inflation arises when aggregate demand exceeds aggregate supply.
2 cards from the 5 in this chapter.
What is a command economy?
An economic system in which government controls production and distribution decisions (e.g., former USSR, North Korea).
What is a traditional economy?
An economic system based on customs, traditions, and beliefs (e.g., subsistence farming, hunter-gatherer).
These are a sample. The full Factors of Production, Business, and Labor chapter runs 20 items with per-chapter progress tracking, on the web and in the iOS app.
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