Chapter 1 Quiz

What is the basic economic problem?

• Resources are abundant but wants are limited

• Resources are scarce but wants are infinite

• Resources are unlimited and wants are scarce

• Resources are finite and wants are finite

Which of the following is NOT a factor of production?

• Wealth

• Capital

• Labour

• Land

What does opportunity cost refer to?

• The cost of resources used

• The total cost of production

• The cost of free goods

• The cost of the best alternative forgone

What is an example of a free good?

• Water

• Food

• Air

• Clothing

What is the purpose of a production possibility curve (PPC)?

• To analyze consumer behavior

• To determine the opportunity cost of goods

• To illustrate the concept of scarcity

• To show the maximum output combinations of two goods

Which of the following can lead to an outward shift in the PPC?

• Increased unemployment

• Higher taxes

• Technological advancements

• Decrease in natural resources

What is the opportunity cost of choosing to study Economics over Math?

• The benefit of studying Math

• The cost of tuition

• The benefit of studying Economics

• The time spent studying

Which question is NOT part of the economic problem?

• What to produce?

• When to produce?

• How to produce?

• For whom to produce?

What is economic growth?

• A reduction in the workforce

• A decline in technological advancements

• An increase in the production of goods over time

• A decrease in production capacity

Which of the following is a characteristic of scarcity?

• Wants are limited

• Resources are unlimited

• Goods are free

• Resources are finite