Economic Concepts and Principles

What is the concept of scarcity in economics?

• Unlimited resources available for use

• Limited resources to meet unlimited wants and needs

• Only natural resources are scarce

• Scarcity only affects poor countries

Opportunity cost is best defined as:

• The cost of every possible alternative

• The value of the next best alternative that is forgone

• The amount of money spent on an activity

• The total cost of all alternatives combined

Which of the following is NOT considered an economic resource?

• A) Land

• B) Labor

• C) Money

• D) Capital

What does a point inside the production possibility curve represent?

• Full employment of resources

• Unattainable production levels

• Underutilization of resources

• Maximum efficiency

Why do scarcity and choices force individuals to make trade-offs?

• Because resources are abundant

• Because opportunity cost is irrelevant

• Because we cannot have everything we want

• Because trade-offs are unnecessary

Which of the following is NOT a factor of production?

• Land

• Entrepreneurship

• Technology

• Labor

What can cause the production possibility curve to shift outward?

• A) A decrease in the workforce

• B) Technological advancements

• C) Natural disasters

• D) Increased unemployment

In a circular flow model, households primarily:

• Sell goods and services

• Purchase resources

• Provide labor and consume goods

• Produce capital goods

If a company decides to produce more of Product A, the opportunity cost is:

• The money spent on Product A

• The resources used for Product A

• The amount of Product B that is not produced

• The increased profit from Product A

How do different economic systems address the problem of scarcity?

• By ignoring it

• By determining how resources are allocated

• By creating more resources

• By reducing the population