Topics Review: Economic Problem, Specilisation & Trade

Why does scarcity exist?

• Each year workers tend to produce less than previously 
• Machines wear out in time
• There are not sufficient resources to meet everyone's wants
• There is a limit to people's wants 

What factor of production's function is to make decisions and take risks?

• Capital
• Enterprise 
• Land 
• Labour 

What type of factor of production is a road?

• Capital
• Enterprise
• Labour
• Land 

What is meant by opportunity cost?

• The next best alternative foregone
• The cost of the item selected
• The cost of exploring business opportunities
• The labour used in producing the product 

Which is the following is a free good?

• A vaccination provided by the state without charge 
• Prizes of food items given away by a supermarket 
• Recycled paper
• Wind coming from the sea

What does a production possibility curve show?

• The prices of two types of products being produced
• The quantity of capital and consumer goods that people would like to be produced
• The maximum combination of two types of goods that can be produced with given resources.
• The relative profitability of capital and consumer goods 

What does a point outside the PPC represent?

• A currently unattainable position 
• An inefficient position
• The maximum use of resources 
• Unused resources 

What happens every time we make a decision?

• We win!

• We incur an opportunity cost

• We incur an opportunity loss

• We incur an opportunity cost of multiple other options

Define opportunity cost

• the value forgone from the all other alternatives

• the value forgone from the next two best alternatives

• the value forgone from the next best alternative

• the value gained from choosing

Which of the below is not scarce resource?

• Oil

• Sea water

• Natural gas

• Gold