economic lowdown:production possibilities frontier segment 1

Why does scarcity exist?

• people are greedy

• there are not enough resources to produce everyone's wants

• there are too many resources available

• people have more wants than needs

What does a PPF graph display?

• possible production options for an economy given its available resources

• the amounts of real output that buyers desire to purchase at each possible price level

• the amounts of real output that businesses will produce at each possible price level

• total market value of all goods and services produced in an economy

With the current level of resources in Econ Isle, all points above the frontier are__________.

• attainable with available resources

• possible with current resources

• unattainable with available resources

• probable with current resources

Water, oil, and land are examples of _________

• capital resources

• natural resources

• labor resources

• human resources

Producing on the frontier means that an economy:

• should change its production combination by producing more of one good and less of the other

• is at maximum production using all available resources

• is not using all of its resources efficiently

• is underemployed

scarcity forces people to choose, and when people choose:

• they bear an opportunity cost

• they pay higher prices

• total economic output increases

• the frontier shifts outward

Give an example of an opportunity cost from your own life. What did you recently purchase, and what did you give up to make that purchase?

Why is it important to understand opportunity and production costs in YOUR personal life? Give 2-3 reasons.

The reason people cannot have everything they want is because of

• scarcity

• explicit althernatives

• credit

• shortages

Charleigh is buying a new car and chooses to pay $250 for upgraded floor mats because she is already spending $24,000; the $250 is only about 1 percent of the purchase price. This describes an example of

• the unseen alternatives of her decision, such as saving money or paying for college

• relative value because she is comparing the value of the floor mats relative to the value of the car

• taking into account the opportunity costs of buying the car and making the best choice

• the best way Charleigh can spend her money because she is thinking of everything she could do with her money