Test Your Knowledge 2

Which of the following is the central problem of Economics?

• How to increase population

• How to allocate scarce resources efficiently

• How to reduce costs

• How to produce more goods

What is meant by the basic problem of "scarcity"?

• The government lacks resources

• There are limited resources but unlimited wants

• Prices are always increasing

• There is too much money in the economy

Which of the following is a consequence of scarcity?

• Resources are always wasted

• People must make choices

• There are no alternatives

• Everything is freely available

What is an economic "good"?

• A product that is scarce and requires resources to produce

• A product that is freely available

• A product that has no value

• A service provided by the government

What does the basic economic question "What to produce?" refer to?

• The decision of which goods and services should be produced

• The method of producing goods

• How goods will be distributed

• Who will consume the goods

The question "For whom to produce?" in economics means:

• How to produce goods efficiently

• How goods and services are distributed among people

• What prices to charge

• Where to sell goods

Which of the following is NOT one of the basic economic questions?

• What to produce

• How to produce

• When to produce

• For whom to produce

Opportunity cost arises because of:

• Unlimited resources

• Scarcity of resources

• Overproduction

• Surplus of goods

What is the main reason for the need to make choices in economics?

• High costs of production

• Limited resources relative to unlimited wants

• Government control of resources

• Technological advancements

Which of the following statements best describes the concept of "efficiency"?

• Using more resources than required

• Making the best possible use of scarce resources

• Producing goods with maximum cost

• Increasing the cost of production