Production Possibilities Frontier & Opportunity Cost

Why must every nation answer the three fundamental economic questions?

• Because of increased international trade and cooperation.
• Because of the problem of scarcity.
• Because rich nations must subsidise the development of poor nations.
• Because some nations are more successful than others.

The opportunity cost of watching television is:

• the cost of not watching all other programs that appear on other stations.
• unable to be estimated because there is no money expenditure involved.
• the next best alternative you do instead of watching the program.
• zero if it benefits you.

Which of the following would be most likely to cause the production possibilities frontier for trucks and movies to shift outward?

• A choice of more trucks and less movies.
• A choice of more movies and fewer trucks.
• A reduction in the labour force.
• An increase in the quantity of resources.

When an economy’s resources are not fully employed, then it must be true that the:

• production point is located outside and to the right of the production possibilities frontier.
• production point is located along the production possibilities frontier.
• production point is located inside and to the left of the production possibilities frontier.
• production possibilities frontier shifts to the right.

A point outside a production possibilities curve reflects:

• the law of increasing costs.
• the economy cannot attain that point with the given state of technology and number of resources.
• less than full use of resources and technology.
• economic efficiency.

The production possibilities curve is:

• convex to the origin and bowed inwards.
• concave to the origin and bowed outwards.
• bowed inwards.
• convex to the origin and bowed outwards.

The economy experiences economic growth if:

• the resource base decreases.
• the production possibilities frontier shifts inwards.
• the number of workers decreases.
• the production possibilities frontier shifts outwards.

Scarcity is a situation:

• where people’s needs exceed their resources.

• where people’s wants exceed their resources.

• where the quantity of resources is sufficient to meet all wants

• where people’s needs exceed other people’s resources.

• where the quantity of resources is sufficient to meet all needs.

The central question in economics is how to:

• deal with the problem of scarcity.

• change government economic policy.

• change people’s wants to match their needs.

• manage money and become wealthy.

The three basic categories of resources are land, labour and:

• money.

• time.

• energy.

• capital.