Worksheetseconomic lowdown:production possibilities frontier segment 1
Total questions: 25
Worksheet time: 18mins
Why does scarcity exist?
people are greedy
there are not enough resources to produce everyone's wants
there are too many resources available
people have more wants than needs
What does a PPF graph display?
possible production options for an economy given its available resources
the amounts of real output that buyers desire to purchase at each possible price level
the amounts of real output that businesses will produce at each possible price level
total market value of all goods and services produced in an economy
With the current level of resources in Econ Isle, all points above the frontier are__________.
attainable with available resources
possible with current resources
unattainable with available resources
probable with current resources
Water, oil, and land are examples of _________
capital resources
natural resources
labor resources
human resources
Producing on the frontier means that an economy:
should change its production combination by producing more of one good and less of the other
is at maximum production using all available resources
is not using all of its resources efficiently
is underemployed
scarcity forces people to choose, and when people choose:
they bear an opportunity cost
they pay higher prices
total economic output increases
the frontier shifts outward
Give an example of an opportunity cost from your own life. What did you recently purchase, and what did you give up to make that purchase?
Why is it important to understand opportunity and production costs in YOUR personal life? Give 2-3 reasons.
The reason people cannot have everything they want is because of
scarcity
explicit althernatives
credit
shortages
Charleigh is buying a new car and chooses to pay $250 for upgraded floor mats because she is already spending $24,000; the $250 is only about 1 percent of the purchase price. This describes an example of
the unseen alternatives of her decision, such as saving money or paying for college
relative value because she is comparing the value of the floor mats relative to the value of the car
taking into account the opportunity costs of buying the car and making the best choice
the best way Charleigh can spend her money because she is thinking of everything she could do with her money
Quentin made an impulse purchase by buying a $1,000 Gucci wallet. An impulse purchase means that he most likely did not think of the _____________ alternatives for the $1,000.
worst
implicit
explicit
best
Opportunity cost is
the condition that exists when there are limited wants and unlimited resources
the price that is paid when purchasing something you do not really want
the value of the next-best alternative when a decision is made; it's what is given up.
all of the alternatives we have in making a decision
Which of the following best describes why people are impatient to make a purchase?
Consumption today is valued more than consumption in the future.
Many items are not available for purchase in the future.
People consider their opportunity costs carefully when making a decision.
There is nothing else that money can be spent on in the future.
One of the reasons people may find it difficult to save is because
they have more money to spend in the future
interest is earned when you save
they have less money to spend now
the benefits of saving are experienced immediately
The information, alternatives, and opportunity costs present at the time of making a decision are known as
benefits of making a decision
implicit alternatives
trade-offs
explicit alternatives
How is it possible for someone to spend more money than they make?
They can wait until their next paycheck to make the purchase
They can make a purchase using saved money
They can make enough to make a purchase
They can make a purchase using credit
Extended warranties or service contracts
highlight the chance of loss from an event
pay for expenses before the insurance pays
identify how much risk or liability is protected with an insurance policy
protect from problems that might happen and that are not covered by traditional insurance
With an extended warranty, you may still have to pay a
deductible
warranty fee
risk premium
standard fee
What is the fee people pay for insurance protection?
coverage
deductible
premium
risk
Insurance coverage refers to
how much risk or liability is protected with an insurance policy
an amount paid for expenses before the insurance company pays
the likelihood or chance of an event occurring.
the chance of loss
Risk is the
amount of premium paid for a policy
coverage required to insure a car or house
likelihood or chance of an event occurring
chance of loss
A movement from a point inside the frontier to the frontier represents:
An economy moving from full employment to recession.
. Economic expansion.
It cannot occur because it does not have enough reasons.
Economic growth.
If the economy is operating at a point inside the frontier, it is likely:
Fully employed.
Experiencing economic growth.
Experiencing economic expansion.
In recession.
Technological change, such as advances in factory machinery, may lead to
Decreased productivity.
Increased productivity.
A movement from the frontier inward represents:
An economy moving from full employment to recession.
Economic expansion.
It cannot occur because it does not have enough resources.
Economic growth.
