Economics, Scarcity & Opportunity Cost

A government decided to spend $36 billion to repay a national debt. As a result, national funding for education was cut by 15%. This is an example of

• market efficiency.

• supply and demand.

• comparative edge.

• opportunity cost.

What is the definition of scarcity?

• limited wants, unlimited resources

• unlimited wants, unlimited resources

• limited wants, limited resources

• unlimited wants, limited resources

The overall cost of producing goods and services usually decreases per unit as the quantity of units made increases. Which term is used to describe the cost of producing one more unit of output?

• fixed cost

• marginal cost

• total cost

• opportunity cost

Marginal benefit typically

• increases as marginal costs increase.

• decreases as more is consumed.

• increases as more is consumed.

• remains constant as more is consumed.

What are three basic questions of economics? (click all that apply)

• What should we produce?

• Where should we produce it?

• How should we produce it?

• For whom should produce it?

A ___________ is something thought to be a necessity or essential items required for life. Examples include food, water, and shelter. A ___________ is something unnecessary but desired or items which increase the quality of living.

(a)  

A firm operating at 'X' produces 70 whips and 60 saddles. It changes production to 'Y' producing 20 whips and 90 saddles. The opportunity cost of this production change is

• 20 whips

• 30 saddles

• 50 whips

• 60 saddles

Using cost-benefit analysis, a local government would decide to build a new bridge if

• The additional tax paid by an individual resident is greater than the additional benefit of building the bridge for all residents.

• The toll paid by an individual resident crossing the bridge is less than the resident’s benefit from crossing the bridge.

• The total costs of building the bridge are less than the total benefits from building the bridge.

• The total costs of building the bridge are greater than the total benefits from building the bridge.

• Total costs are at a minimum and total benefits are at a maximum.

Marginal Cost is?

• The highest amount that customers will pay for a good

• The lowest amount that customers will pay for a good

• The cost of producing one additional good

• The cost of producing 2 additional goods

Name that cereal!

• Frosted Flakes

• Kix

• Captain Crunch

• Cinnamon Toast Crunch