O C test

What is opportunity cost?

• the value of the next best option that is not selected when a choice is made.

• there is not enough of it.

• things people make to earn money.

• actions people do to earn money.

The Welch family has saved some money.  They can spend it on a vacation to the Grand Canyon or build a swimming pool in their back yard.  They decide to spend the money on a swimming pool.  What is the opportunity cost of their decision?

• vacation 
• swimming pool 

The economic problem is that

• resources are limited and wants are limited.

• resources are unlimited and wants are limited.

• resources are limited and wants are unlimited.

• resources are unlimited and wants are unlimited.

The opportunity cost of a good is

• its price in dollars and cents.

• the alternative goods forgone.

• the price of alternative goods foregone.

• none of the other options

The opportunity cost of Australian households moving away from coal-powered energy to solar-powered energy includes (i) the loss of jobs in the coal industry, (ii) a cleaner environment, (iii) reduced coal production.

• (i), (ii) and (iii)

• (ii) and (iii)

• (iii) only

• (i) and (iii)

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

The production possibility curve shows

• alternative combinations of two goods that an economy is capable of producing.

• the actual levels of production of two goods that the economy is achieving.

• alternative combinations of productive resources that can be used to produce two goods.

• the total value of two goods produced in one time period.

If an economy is producing at a point inside its production possibility curve, then

• consumption is greater than production.

• productive resources are not used to their full potential.

• production of capital goods is inadequate.

• it cannot benefit by specialisation and trade.

When a country’s people and all its other resources are fully employed, which of the following must be true before more of any one item can be produced?

• Less of another good or goods must be produced.

• There must be a general rise in prices to encourage supply.

• The government must intervene to produce needed products.

• There must be a general fall in the general price level.

In terms of the production possibility curve, a decrease in unemployment would be best shown by

• a movement along the curve.

• an outward shift of the curve.

• a movement from a point inside the curve to a point closer to the curve.

• an inward shift of the curve.