IB DP Economics Key Concepts

What does the concept of scarcity imply in economics?

• Resources are limited and cannot meet all human wants

• Resources are abundant and can meet all human wants

• Resources are limited but can be created indefinitely

• Resources are only limited in certain regions

Which of the following is a consequence of scarcity?

• Increased wealth for all

• Opportunity cost

• Decreased production

• Unlimited choices

When faced with scarcity, what must individuals and societies do?

• Avoid making any decisions

• Make choices on how to allocate resources

• Use all resources immediately

• Focus only on producing goods

What does opportunity cost represent in economic decision-making?

• The benefit gained from the chosen option

• The cost of all alternatives combined

• The next best alternative forgone

• The total cost of the chosen option

Which of the following is an example of allocative efficiency?

• Producing goods and services at the lowest cost

• Producing the mix of goods and services most desired by society

• Using the least amount of resources possible

• Producing goods at maximum output

What is productive efficiency?

• Maximizing consumer satisfaction

• Producing goods at the lowest possible cost

• Distributing resources equally

• Achieving full employment

How can a government promote equity in an economy?

• By implementing progressive taxation

• By allowing free market operations without intervention

• By reducing government spending

• • By subsidizing all businesses equally

What is a potential trade-off of pursuing equity in an economy?

• Increased efficiency

• Decreased government involvement

• Reduced economic growth

• Improved market outcomes

Which indicator is commonly used to measure economic well-being?

• Gross Domestic Product

• Inflation rate

• Unemployment rate

• Trade balance

How can economic well-being be improved?

• Increasing income inequality

• Investing in education and healthcare

• Reducing public services

• Increasing government debt