Economics Quiz on Key Concepts

What is the fundamental economic problem?

• Inefficient resource allocation

• Scarcity of resources

• Lack of government intervention

• Inequality of income

Scarcity arises because:

• Resources are unlimited.

• Wants are limited.

• Resources are finite, and wants are infinite.

• Wants are finite, and resources are infinite.

Opportunity cost is best defined as:

• The monetary cost of an alternative.

• The value of the next best alternative foregone.

• The total cost of all alternatives.

• The financial gain from a choice.

If a student chooses to spend time studying instead of going to a party, the opportunity cost is:

• The enjoyment missed at the party.

• The money saved by not partying.

• The marks earned by studying.

• The cost of party expenses.

Which of the following is not a factor of production?

• Land

• Labour

• Capital

• Money

A point inside the PPC indicates:

• Efficient resource use.

• Underutilization of resources.

• Overproduction.

• Unattainable output combinations.

What causes a PPC to shift outward?

• A decrease in resources.

• Economic growth or technological improvement.

• A decrease in population.

• An increase in unemployment.

The PPC is bowed outwards because:

• All resources are perfectly adaptable.

• Opportunity cost increases as resources are specialized.

• Resources are inefficiently allocated.

• Scarcity does not exist.

At a point on the PPC, an economy:

• Cannot produce more of one good without producing less of another.

• Can produce more of both goods.

• Has underutilized resources.

• Faces zero opportunity cost.

What does a movement along the PPC indicate?

• A change in resource quantity.

• A reallocation of resources between two goods.

• A shift in the curve due to growth.

• Inefficient use of resources.