Micro_lecture 2

What is the main concept that leads to tradeoffs in economics?

• Abundance

• Scarcity

• Equality

• Surplus

The frontier of the opportunity set is called the:

• Production possibility frontier

• Budget constraint

• Utility curve

• Indifference curve

What does the slope of the budget constraint represent?

• Total income

• Total expenditure

• Relative prices of goods

• Consumer preferences

What economic concept measures cost by what is given up in exchange?

• Sunk cost

• Marginal cost

• Opportunity cost

• Fixed cost

Most economic decisions involve:

• All-or-nothing choices

• Marginal analysis

• Sunk costs

• Fixed costs

The law of diminishing marginal utility states that:

• All goods provide equal utility

• Utility always increases with consumption

• Additional units of a good provide smaller gains in utility

• Utility is constant for all units consumed

What type of costs should be disregarded in current decision-making?

• Variable costs

• Fixed costs

• Opportunity costs

• Sunk costs

What does a production possibilities frontier (PPF) show?

• Consumer preferences

• Government policies

• Combinations of goods an economy can produce

• International trade patterns

The typical shape of a PPF is:

• Straight line

• Curved outward

• Curved inward

• Zigzag

Choices outside the PPF are:

• Efficient

• Desirable

• Unattainable

• Optimal