Unit 1 Microeconomics Review

Which of the following best defines scarcity in economics?

• The unlimited availability of resources

• The limited nature of society’s resources

• The ability to produce all goods and services

• The absence of opportunity cost

What is an example of a resource in economics?

• Money only

• Land, labor, and capital

• Only natural resources

• Only human effort

Which of the following is a basic economic question that all societies must answer?

• How to eliminate scarcity

• What goods and services to produce

• How to increase opportunity cost

• How to avoid trade

On a production possibilities curve (PPC), what does a point inside the curve represent?

• Efficient use of resources

• Unattainable production

• Inefficient use of resources

• Maximum possible output

Comparative advantage is based on:

• Who can produce more of a good

• Who can produce a good at a lower opportunity cost

• Who has more resources

• Who has absolute advantage

Which of the following best describes opportunity cost?

• The total cost of all alternatives

• The value of the next best alternative forgone

• The price paid for a good

• The cost of production

Which economic system relies primarily on voluntary exchange in markets?

• Command economy

• Market economy

• Traditional economy

• Mixed economy

What does the slope of the production possibilities curve represent?

• The total output

• The opportunity cost of one good in terms of the other

• The efficiency of production

• The amount of resources available

If a country can produce either 10 cars or 20 computers with its resources, what is the opportunity cost of producing 1 car?

• 2 computers

• 0.5 computers

• 10 computers

• 20 computers

A consumer is deciding whether to buy one more slice of pizza. Which economic concept is most relevant to this decision?

• Absolute advantage

• Marginal analysis

• Resource allocation

• Production possibilities