Fundamentals_1

What is the concept of scarcity in economics?

• Unlimited resources available for use

• Limited resources to meet unlimited wants and needs

• Only natural resources are scarce

• Scarcity only affects poor countries

Opportunity cost is best defined as:

• The cost of every possible alternative

• The value of the next best alternative that is forgone

• The amount of money spent on an activity

• The total cost of all alternatives combined

Which of the following is NOT considered an economic resource?

• Land

• Labor

• Money

• Capital

Why do scarcity and choices force individuals to make trade-offs?

• Because resources are unlimited

• Because resources are limited

• Because wants are limited

• Because choices are unlimited

What is the main reason for the existence of opportunity cost?

• Unlimited resources

• Limited resources

• Unlimited wants

• Limited wants

What does the production possibility curve (PPC) illustrate?

• The maximum possible output combinations of two goods

• The minimum possible output combinations of two goods

• The total cost of production

• The total revenue from production

Which of the following is an example of a capital resource?

• A factory building

• A natural forest

• A worker's skills

• A piece of land

Why are trade-offs necessary in economics?

• Because resources are abundant

• Because opportunity cost is irrelevant

• Because we cannot have everything we want

• Because trade-offs are unnecessary

Which of the following is NOT a factor of production?

• Land

• Entrepreneurship

• Technology

• Labor

In a circular flow model, households primarily:

• Sell goods and services

• Purchase resources

• Provide labor and consume goods

• Produce capital goods