Introduction to economics (1)

Which of the following statements is true about scarcity?

• A. Scarcity is our inability to satisfy all of our wants.

• B. Scarcity problem arises because our wants are greater than resources available.

• C. The poor and the rich both face scarcity.

• D. All of the above.

The night before an economics test, you decided to attend your friend’s wedding party instead of studying for the test. You received 70% for the test – not the 95% you normally score. What was the opportunity cost of attending the wedding party?

• A. 70%

• B. 95%

• C. 25%

• D. More information required to answer the question.

Which of the following statements is correct?

• A. The production possibilities curve/frontier (PPC/PPF) is the boundary between those combinations of goods and services that can be consumed and those which cannot.

• B. Choices above the PPC/PPF are attainable with different combination of given resources.

• C. Production is efficient inside the PPC/PPF because we may have unused resources.

• D. All choices on the PPC/PPF curve are the maximum attainable production efficiency points.

Which of the following statements is incorrect?

• A. The marginal cost of a good is the opportunity cost of producing one more unit of it.

• B. The marginal cost of a good or service is the change in cost resulting from producing one more unit of it.

• C. The marginal benefit of a good or service is the change in benefit resulting from consuming one more unit of it.

• D. As the opportunity cost of producing more goods increases, the marginal cost of producing the good decreases.

7. Which of the following would cause a shift in the supply curve of a good to the right?

• A. A fall in the price of the good.

• B. A reduction in the price of an input used in the production process.

• C. An increase in demand for the good.

• D. A rise in the price of intermediate goods used in the production of the good.

If buyers expect the price of a product to increase in the future, the result is:

• A. an increase in supply today.

• B. an increase in demand today

• C. that demand and supply remain unchanged until the price increases.

• D. a price decrease today.

9. Which of the following best explains why the quantity demanded of a slice of Supreme pizza falls as the price of the slice rises? It falls because…

• A. The opportunity cost of the slice grows smaller.

• B. The opportunity cost of the slice grows larger.

• C. Buyers have smaller effective incomes when the price of pizza rises.

• D. Sellers have larger effective incomes when the price of pizza rises.

10. As the price of a slice of pizza rises, quantity demanded ____ and quantity supplied ______.

• A. Rises, Rises

• B. Rises, Falls

• C. Falls, Rises

• D. Falls, Falls

Which of the following would lead to an increase in demand for pasties?

• A decrease in Australia's population.

• A decrease in the price of meat pies, a substitute.

• A decrease in consumer income.

• An increase in the price of tomato sauce, a complement.