Level 1: Scarcity, Opportunity Cost, Tradeoffs

All societies must answer these three questions:

• WHAT to produce, HOW to produce it, and FOR WHOM it is to be produced?

• WHAT to produce, HOW to produce it, and WHEN to produce it?

• WHAT to produce, HOW to produce it, and WHY to produce it?

• WHAT to produce, HOW to produce it, and WHO produces it?

Economics if the study of -

• business

• finance

• international trade

• choice

The crucial problem of economics is:

• establishing a fair tax system

• roviding social goods and services

• developing a price mechanism that reflects the relative scarcities of products and resources

• allocating scarce resources to satisfy unlimited wants

Land, capital, labor, and entrepreneurs are referred to as –

• Factors of production

• Consumer expenditures

• Goods and services

• Business income

A factory owner decides to change from textiles to clothing. What economic question is being answered?

• How to produce?

• How much to produce?

• For whom to produce?

• What to produce?

Any resources that are made by humans and used to create other goods and services are called

• Land

• Labor

• Capital

• Entrepreneurship

In Japan, factories that require fewer workers, Machines do the work. 

Which economic question is answered by the use of machines to produce goods?

• What to produce?

• How to produce?

• For whom to produce?

• Where to produce?

What does a point on the interior (under the curve) of the graph represent?

• points in the interior of the PPC are inefficient,

• points in the interior of the curve are efficient,

• points in the interior of the curve are unattainable.

• They mean nothing

What does a point on the PPC represent?

• Points on the PPC are inefficient,

• Points on the PPC are efficient,

• Points on the PPC are unattainable.

• Points on the PPC are meaningless

What does a point beyond the Production Possibilities Curve (PPC) represent?

• Points beyond the interior of the PPC are inefficient,

• Points beyond the PPC are efficient

• Points beyond the PPC are unattainable.

• These points are meaningless.