Module 2: Economics Overview

What does the phrase “scarcity” refer to?

• The idea that resources are limited, and we cannot have everything we want.

• The act of selecting one option over another.

• The value of the next best alternative that we forgo when we make a choice.

• None of the above

What does the phrase “opportunity cost” refer to?

• The idea that resources are limited, and we cannot have everything we want.

• The act of selecting one option over another.

• The value of the next best alternative that we forgo when we make a choice.

• None of the above

Which of the following scenarios best illustrates the concept of choice in economics?

• A person buying their favorite ice cream flavor

• A government providing free healthcare to all citizens

• A company producing both smartphones and refrigerators

• An individual winning a lottery and receiving a lump sum of money

What does a point inside the production possibilities curve (PPC) of an economy indicate?

• Inefficient use of resources and underutilization of production potential

• Optimal resource allocation and maximum production capacity

• Balanced distribution of resources and stable economic growth

• An unattainable combination of goods and services

If a country's production possibilities curve (PPC) shifts outward over time, what does this suggest about the economy?

• The country is experiencing a recession.

• The country is becoming less efficient in resource allocation.

• The country's production capacity is increasing due to economic growth.

• The country is facing a scarcity of essential resources.

What does a PPC illustrate about the relationship between two types of goods or services?

• The cost of producing one good relative to another

• The government's control over resource allocation

• The unlimited availability of resources for production

• The price of goods and services in the market

What is the best definition of supply?

• The amount of a good or service that producers are willing and able to offer for sale at a given price.

• The amount of a good or service that consumers are willing and able to purchase at a given price.

• The point when the quantity supplied and the quantity demanded are equal at a certain price.

• A graphical representation of the different combinations of two goods that a country, a firm, or an individual can produce given a fixed set of resources and technology.

What is the best definition of demand?

• The amount of a good or service that producers are willing and able to offer for sale at a given price.

• The amount of a good or service that consumers are willing and able to purchase at a given price.

• The point when the quantity supplied and the quantity demanded are equal at a certain price.

• A graphical representation of the different combinations of two goods that a country, a firm, or an individual can produce given a fixed set of resources and technology.

What happens to the equilibrium price and quantity in a market when there is an increase in consumer demand, assuming no other factors change?

• Equilibrium price and quantity both increase.

• Equilibrium price increases, but quantity remains unchanged.

• Equilibrium price remains unchanged, but quantity increases.

• Equilibrium price and quantity both decrease.

Who benefits the most when demand increases and supply remains the same?

• The consumer

• The supplier

• They both benefit equally

• Neither benefits