Microeconomics - Chapters 1-2

Why does scarcity exist?

• Each year workers tend to produce less than previously 
• Machines wear out in time
• There are not sufficient resources to meet everyone's wants
• There is a limit to people's wants 

Why will scarcity continue to be a problem in the future?

• Prices will rise
• Resources will always be finite 
• Needs will decrease in the future 
• World population will fall 

What factor of production's function is to make decisions and take risks?

• Capital
• Enterprise 
• Land 
• Labour 

What type of factor of production is a road?

• Capital
• Enterprise
• Labour
• Land 

What is meant by 'labour' in economics?

• Hard physical work used to produce manufactured goods 
• Human mental and physical effort used for producing goods and services
• Natural resources used in the productive process
• Risk taking and organising the factors of production

Which factor of production is the least mobile?

• Capital 
• Enterprise
• Labour
• Land 

What is meant by opportunity cost?

• The next best alternative foregone
• The cost of the item selected
• The cost of exploring business opportunities
• The labour used in producing the product 

Which is the following is a free good?

• A vaccination provided by the state without charge 
• Prizes of food items given away by a supermarket 
• Recycled paper
• Wind coming from the sea

What does a production possibility curve show?

• The prices of two types of products being produced
• The quantity of capital and consumer goods that people would like to be produced
• The maximum combination of two types of goods that can be produced with given resources.
• The relative profitability of capital and consumer goods 

What does a point outside the PPC represent?

• A currently unattainable position 
• An inefficient position
• The maximum use of resources 
• Unused resources