Economics B 1.1

What is the central purpose of economic activity?

• To create scarcity

• To produce goods and services to satisfy needs and wants

• To increase government spending

• To reduce consumer preferences

What is an example of a renewable resource?

• Oil

• Natural gas

• Wind

• Coal

What does scarcity refer to in economics?

• Unlimited resources

• Shortage of resources in relation to human wants

• Excess of goods

• Surplus of services

Which of the following is a non-renewable resource?

• Solar

• Biomass

• Geothermal

• Coal

What must producers consider when deciding how to produce goods?

• Consumer preferences

• Minimizing production costs

• Government regulations

• Environmental impact

What is the definition of opportunity cost?

• The benefit gained from a choice

• The benefit lost of the next best alternative when making a choice

• The total cost of all alternatives

• The monetary cost of a decision

Which of the following is an example of opportunity cost?

• Buying a Pepsi instead of a Fanta

• Choosing to sleep instead of studying

• Investing in consumer goods instead of capital goods

• All of the above

In a free market economy, what determines what goods and services to produce?

• Government regulations

• Random selection

• Demand and supply

• Historical trends

What is the opportunity cost of going to university according to the table?

• Getting a job

• Buying clothes

• Watching a live concert

• Drinking tap water

Why is opportunity cost important to economic agents?

• It helps in making decisions where resources are unlimited

• It allows for the production of all goods and services

• It is crucial for making choices where resources are scarce

• It eliminates the need for economic incentives