Mr. Lee Scarcity and Opportunity Costs

Which of the following is an example of opportunity cost?

• Buying a car instead of a bike

• Choosing to study instead of going out

• Eating at home instead of a restaurant

• All of the above.

Explain why scarcity and choice are basic economic problems faced by every society.

• Because resources are limited and wants are unlimited

• Because resources are abundant and wants are limited

• Because societies have no needs

• Because choices are easy to make

The production possibilities curve illustrates the concept of ________.

• Unlimited resources

• Opportunity cost

• Economic growth

• Market equilibrium

Who defined economics as 'a study of mankind in the ordinary business of life'?

• Adam Smith

• Alfred Marshall

• John Maynard Keynes

• Karl Marx

What is the main reason people face tradeoffs?

• Abundance of resources

• Scarcity of resources

• Unlimited resources

• None of the above

Which of the following statements is true?

• A) Resources are unlimited, so people face no tradeoffs.

• B) Resources are scarce, so people face tradeoffs.

• C) Society has limited wants in the face of unlimited resources.

• D) The real limit is the abundance of productive resources.

Opportunity cost is defined as

• The monetary cost of a decision

• The time spent on a decision

• The value of the next best alternative when a decision is made

• The satisfaction gained from a decision.

Which point on the Production Possibility Curve represents an inefficient use of resources?

• A

• B

• C

• D

What is the main purpose of the Production Possibility Curve?

• To show the maximum possible output combinations of two goods

• To illustrate economic decline

• To demonstrate consumer preferences

• To indicate market equilibrium

What does point A on the Production Possibility Curve likely represent?

• Inefficiency

• Maximum production of one good

• Balanced production

• Economic decline