Topic 1

Which one of the following expressions best states the idea of opportunity cost? 

• "A penny saved is a penny earned."

• "He who hesitates is lost."

• "There is no such thing as a free lunch."

• "All that glitters is not gold."

The scarcity problem

• persists only because countries have failed to achieve continuous full employment.

• persists because economic wants exceed available productive resources.

• has been solved in all industrialized nations.

• has been eliminated in affluent societies such as the United States and Canada

The alternative combinations of two goods which a consumer can purchase with a given money income is shown by: 

• a production possibilities curve.

• a demand curve.

• consumer expenditure line.
  

• a budget line.

A production possibilities curve illustrates: 

• scarcity.

• market prices.

• consumer preferences.

• the distribution of income.

A production possibilities curve shows: 

• that resources are unlimited.

• that people prefer one of the goods more than the other.

• the maximum amounts of two goods that can be produced assuming the full use of available resources.

• combinations of capital and labor necessary to produce specific levels of output.