1.1 and 1.2 Topic Questions

Which of the following is an example of a factor of production?

• A want

• A bank

• A bond

• Capital

• Stock

Which of the following describes scarcity?

• Wants are limited.

• Wants exceed resources.

• Resources are unlimited.

• Resources are fully employed.

• Resources are allocated efficiently.

All societies face a trade-off for every decision for which of the following reasons?

• A decision entails zero opportunity cost.

• Resources are scarce.

• Some resources are always unemployed.

• Resources have no alternative uses.

• Resources are not allocated efficiently.

Assume an economy produces two goods, capital goods and consumer goods. If the production of capital goods increases in the current period, which of the following will occur for the current and future production possibilities curve (PPC) for consumer goods and capital goods?

• A movement along the current PPC and a leftward shift of the future PPC

• A movement along the current PPC and a rightward shift of the future PPC

• A rightward shift of the current PPC and a leftward shift of the future PPC

• A rightward shift of the current PPC and a rightward shift of the future PPC

• A movement along the current PPC with no shift of the future PPC

The diagram above shows the production possibilities curve for the production of peaches and apples in Fruitland.

The production possibilities curve illustrates which of the following relationships?

• The production of peaches decreases as apple production decreases.

• The production of peaches increases as apple production increases.

• The opportunity cost of peach production decreases as apple production decreases.

• Fruitland cannot produce a combination of 5 units of peaches and 10 units of apples.

• Fruitland can produce only the combinations of peaches and apples illustrated by points X and Y.

The diagram above shows the production possibilities curve for the production of peaches and apples in Fruitland.

Between points X and Y on the PPC, the opportunity cost of one unit of peaches is which of the following?

• 2 units of apples

• 1 unit of apples

• 2 units of peaches

• 1 unit of peaches

• 10 units of apples