Scarcity as the Central Economic Problem

How does the central economic problem of scarcity arise?

• Unlimited resources and limited wants.

• Limited resources and unlimited wants.

• Society is forced to make a choice or a trade-off.

• Opportunity costs are incurred because of scarcity.

There are nine economic concepts. Which economic concept is illustrated by a point OUTSIDE the PPC?

• Sustainability

• Scarcity

• Choice

• Efficiency

Which factor causes a movement from a point inside the PPC to a point closer to the PPC line?

• Improvement in the quality of labour

• Increase in the quantity of labour

• Greater utilisation of existing labour

• Improvement in the state of technology

For an economy to be operating at a point ON its PPC, which two assumptions must be satisfied?

• Producing output at the highest possible cost and full employment of resources.

• Productive efficiency and full employment of capital.

• Allocative efficiency and increased use of labour.

• 1. Productive efficiency and full employment of resources.

Which of the following scenarios represents an under-utilisation of resources in an economy?

• High unemployment during a recession.

• Workers killed because of an earthquake.

• Producing output using the fewest amount of resources.

• Factories operating at full capacity.

Which of the following is NOT representative of a market economy?

• The price mechanism determines the economic question of 'for whom to produce'?

• Some factors of production are owned by private individuals and some are owned by the government.

• Profit-maximising firms determine the economic question of 'how to produce'.

• The government determines the economic question of 'what and how much to produce'.

What must follow when scarcity exists?

• Consumers have to make choices.

• Governments are unable to supply public goods.

• Producers must be misallocating resources.

• Workers must be earning low wages.

What is likely to be introduced in the market for bus travel if an economy moved from a mixed economy to a market economy?

• Allowing private companies to bid for bus routes.

• Government (public) ownership of all bus services

• Government subsidies for bus travel to keep prices low.