Understanding Scarcity and Opportunity Cost

What is the fundamental economic problem that arises due to unlimited wants and finite resources?

• Inflation

• Scarcity

• Unemployment

• Monopoly

Which of the following best describes opportunity cost?

• The total cost of producing goods

• The cost of the next best alternative foregone

• The cost of all available alternatives

• The cost of resources used in production

Who are the economic agents affected by opportunity cost?

• Only consumers

• Only producers

• Only the government

• Consumers, producers, and the government

What does a point inside the production possibility curve (PPC) indicate?

• Fully employed resources

• Unemployed resources

• Maximum productive potential

• Economic growth

What does a shift of the production possibility frontier (PPF) outwards indicate?

• Negative economic growth

• Positive economic growth

• Decrease in resources

• Increase in unemployment

Which of the following is a possible cause of negative economic growth?

• Technological advancement

• Increase in labour force

• Natural disasters

• Improved education

What does a point on the production possibility curve (PPC) represent?

• Unattainable production

• Inefficient production

• Efficient production

• Economic decline

Which of the following is NOT a question posed by Samuelson regarding resource allocation?

• What to produce?

• How to produce?

• When to produce?

• For whom to produce?

What does a point outside the production possibility curve (PPC) indicate?

• Unattainable production with current resources

• Maximum productive potential

• Fully employed resources

• Economic equilibrium

Which of the following can cause the production possibility frontier (PPF) to shift inwards?

• Discovery of new resources

• War

• Increase in skilled labour

• Technological innovation